EXHIBIT 1
$60,000,000
CONVERSE INC.
___% Convertible Subordinated Notes Due 2004
UNDERWRITING AGREEMENT
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May , 1997
XXXXX XXXXXX INC.
XXXXXX, READ & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX, SACHS & CO.
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Converse Inc., a Delaware corporation (the "Company"), proposes, upon
the terms and conditions set forth herein, to issue and sell $60,000,000
aggregate principal amount of its ___% Convertible Subordinated Notes due 2004
(the "Firm Notes") to Xxxxx Xxxxxx Inc., Xxxxxx, Read & Co., Inc., Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation and Xxxxxxx, Sachs & Co. (the
"Underwriters"). The Company also proposes to issue and sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up to
an additional $9,000,000 aggregate principal amount of its _____% Convertible
Subordinated Notes due 2004 (the "Additional Notes"). The Firm Notes and the
Additional Notes are hereinafter collectively referred to as the "Notes". The
Notes will be issued pursuant to the provisions of an Indenture to be dated as
of May ___, 1997 (the "Indenture") between the Company and First Union National
Bank, as Trustee (the "Trustee"). The Company's common stock, without par
value, is hereinafter referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with you in
connection with the several purchases of the Notes by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared
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and filed with the Securities and Exchange Commission (the "Commission") in
accordance with
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-3 under the Act (the "registration statement"),
including a prospectus subject to completion relating to the Notes and the
shares of Common Stock issuable upon conversion of the Notes. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Notes may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If an abbreviated registration statement is prepared and filed with
the Commission in accordance with Rule 462(b) under the Act (an "Abbreviated
Registration Statement"), the term "Registration Statement" as used in this
Agreement includes the Abbreviated Registration Statement. The term "Prospectus"
as used in this Agreement means the prospectus in the form included in the
Registration Statement, or, if the prospectus included in the Registration
Statement omits information in reliance on Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act, the term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
herein, the term "Incorporated Documents" means the documents which at the time
are incorporated by reference in the registration statement, the Registration
Statement, any Prepricing Prospectus, the Prospectus, or any amendment or
supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees,
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subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of ___% of the principal
amount
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thereof, the principal amount of Notes set forth opposite the name of such
Underwriter in Schedule I hereto (or such principal amount of Notes increased as
set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Company, pursuant to an option (the "over-
allotment option") which may be exercised at any time and from time to time
prior to 9:00 P.M., New York City time, on the 30th day after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange is open for
trading), up to $9,000,000 aggregate principal amount of Additional Notes. The
purchase price of any Additional Notes which the Underwriters may elect to
purchase shall be the same as the purchase price of the Firm Notes, plus accrued
interest, if any, from the date of issuance of the Firm Notes to the date of
delivery of and payment for the Additional Notes. Additional Notes may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Notes. Upon any exercise of the over-allotment
option, each Underwriter, severally and not jointly, agrees to purchase from the
Company the principal amount of Additional Notes which bears the same proportion
to the aggregate principal amount of Additional Notes to be purchased by the
Underwriters as the principal amount of Firm Notes set forth opposite the name
of such Underwriter in Schedule I hereto (or such principal amount of Firm Notes
increased as set forth in Section 10 hereof) bears to the aggregate principal
amount of Firm Notes.
3. Terms of Public Offering. The Company has been advised by you
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that you propose to make a public offering of your respective portions of the
Notes as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable and initially to offer the Notes upon
the terms set forth in the Prospectus.
4. Delivery of the Notes and Payment Therefor. Delivery to you of
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and payment for the Firm Notes shall be made at the office of Xxxxx Xxxxxx Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New York City time, on
__________________ ,1997 (the "Closing Date"). The place of closing for the
Firm Notes and the Closing Date may be varied by agreement between you and the
Company.
Delivery to you of and payment for any Additional Notes to be
purchased by you shall be made at the aforementioned office of Xxxxx Xxxxxx Inc.
at such time on such date (the "Option Closing Date"), which may be the same as
the Closing Date but shall in no event be earlier than the Closing Date nor
earlier than two nor later than ten business days after the giving of the notice
hereinafter referred to, as shall be specified in a written notice from you to
the Company of your determination to purchase a number, specified in such
notice, of Additional Notes. The place of closing for any Additional Notes and
the Option Closing Date for such Notes may be varied by agreement between you
and the Company.
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The Firm Notes and any Additional Notes which you may elect to
purchase will be delivered to you for your several accounts against payment of
the purchase price therefor in immediately available funds and registered in
such names and in such denominations as you shall request prior to 1:00 P.M.,
New York City time, on the third business day preceding the Closing Date or the
Option Closing Date, as the case may be. The Notes to be delivered to you shall
be made available to you in New York City for inspection and packaging not later
than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date or the Option Closing Date, as the case may be.
5. Agreements of the Company. The Company agrees with each of you as
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follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
or any Abbreviated Registration Statement to be declared effective before the
offering of the Notes may commence, the Company will endeavor to cause the
Registration Statement or such post-effective amendment to become effective as
soon as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing, when the Registration Statement or such post-
effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Notes for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations thereunder
to be stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) five signed
copies of the registration statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits to
the registration statement, (ii) such number of conformed copies of the
registration statement as originally filed and of each amendment thereto, but
without exhibits, as you may reasonably request, (iii) such number of
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copies of the Incorporated Documents, without exhibits, as you may reasonably
request, and (iv) five copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus or, prior to the
end of the period of time referred to in the first sentence in subsection (f)
below, file any document which, upon filing becomes an Incorporated Document, of
which you shall not previously have been advised or to which, after you shall
have received a copy of the document proposed to be filed, you shall reasonably
object.
(e) Prior to the execution and delivery of this Agreement, the Company
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Notes are offered by you and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a Prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the Underwriters and by all dealers to whom Notes
may be sold, both in connection with the offering and sale of the Notes and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the Act or any
other law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto (or to such document), and will expeditiously furnish to the
Underwriters and dealers a reasonable number of copies thereof. In the event
that the Company and you agree that the Prospectus should be amended or
supplemented, the Company, if requested by you, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and with your counsel in
connection with the registration or qualification of the Notes for offering and
sale by the Underwriters and by dealers under the securities or Blue Sky laws of
such jurisdictions as you
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may designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such registration or
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Notes, in any jurisdiction
where it is not now so subject.
(h) The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a twelve
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as practicable after the
end of such period, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by you because of any failure or refusal on the part of the
Company to comply with the terms or fulfill any of the conditions of this
Agreement, the Company agrees to reimburse you for all out-of-pocket expenses
(including reasonable fees and expenses of your counsel) incurred by you in
connection herewith.
(k) The Company will apply the net proceeds from the sale of the Notes
substantially in accordance with the description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectus pursuant to Rule 424(b) under the Act and will advise you of the
time and manner of such filing.
(m) The Company will not sell, contract to sell or otherwise dispose
of any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or grant any options or warrants to purchase
Common Stock, for a period of 120 days after the date hereof, without the prior
written consent of Xxxxx Xxxxxx Inc., except for sales to the Underwriters
pursuant to this Agreement and issuances of Common Stock upon conversion of the
Notes. The foregoing sentence shall not apply to (i) the issuance of shares of
Common Stock upon exercise of options outstanding under the Company's 1994 Stock
Option Plan, as amended and restated (the "1994 Plan") or the Company's 1995
Non-Employee Director Stock Option Plan (the "1995 Plan") and (ii) the grant of
options to purchase shares of Common Stock under the 1994 Plan or the 1995 Plan
in an aggregate amount not to exceed 1,000,000 shares.
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(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by the officers,
directors and stockholders listed on Schedule II hereto.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Notes.
(p) The Company will use its best efforts to have the Notes and the
shares of Common Stock issuable upon conversion of the Notes listed, subject to
notice of issuance, on the New York Stock Exchange on or before the Closing
Date.
6. Representations and Warranties of the Company. The Company
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represents and warrants to each of you that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the provisions of the Act. The Commission has not issued
any order preventing or suspending the use of any Prepricing Prospectus.
(b) The Company and the transactions contemplated by this Agreement
meet the requirements for using Form S-3 under the Act. The Registration
Statement in the form in which it became or becomes effective and also in such
form as it may be when any post-effective amendment thereto shall become
effective and the Prospectus and any supplement or amendment thereto when filed
with the Commission under Rule 424(b) under the Act, complied or will comply in
all material respects with the provisions of the Act and will not at any such
times contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except that this representation and warranty does not apply to
(i) statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information relating to you
furnished to the Company in writing by you or on your behalf expressly for use
therein, or (ii) the Trustee's Statement of Eligibility and Qualification (Form
T-1) under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(c) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, any further
Incorporated Documents so filed will, when they are filed, conform in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in
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order to make the statements therein not misleading; and no such further
document, when it is filed, will contain an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading.
(d) The Indenture has been duly and validly authorized and, upon its
execution and delivery by the Company and assuming due execution and delivery by
the Trustee, will be a valid and binding agreement of the Company, enforceable
in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally, and has been (or will have been) duly qualified under the 1939 Act
and conforms to the description thereof in the Registration Statement and the
Prospectus.
(e) The Notes have been duly authorized and, when executed by the
Company and authenticated by the Trustee in accordance with the Indenture and
delivered to you against payment therefor in accordance with the terms hereof,
will have been validly issued and delivered, and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally, and the Notes will conform to the
description thereof in the Registration Statement and the Prospectus.
(f) All the outstanding shares of Common Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the shares of Common Stock
issuable upon conversion of the Notes have been duly authorized and reserved for
issuance and, when delivered upon conversion of the Notes, will have been
validly issued and fully paid and will be nonassessable and free of any
preemptive or similar rights; and the capital stock of the Company conforms to
the description thereof in the Registration Statement and the Prospectus.
(g) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a "Material Adverse Effect"); and the States of Massachusetts, North
Carolina and Texas are the only States where the nature of the Company's
properties or the conduct of its business requires such registration and
qualification.
(h) All the Company's subsidiaries (collectively, the "Subsidiaries")
are listed in an exhibit to the Company's Annual Report on Form 10-K which is
incorporated by reference into the Registration Statement. Each Subsidiary is a
corporation duly organized, validly
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existing and in good standing in the jurisdiction of its incorporation, with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a Material Adverse Effect; all the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are owned by the Company directly, or indirectly through
one of the other Subsidiaries (except that with respect to certain foreign
Subsidiaries a nominal number of shares is owned by qualified residents of
countries in which such Subsidiaries are located), free and clear of any lien,
adverse claim, security interest, equity, or other encumbrance (except the
pledge to secure the Company's obligations under the Credit Agreement (as
defined in the Prospectus)).
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be described
in the Registration Statement or the Prospectus but are not described as
required, and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required by the Act or
the Exchange Act.
(j) Neither the Company nor any of the Subsidiaries is in violation of
its certificate or articles of incorporation or by-laws, or other organizational
documents, or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries (except for
violations that would not have a Material Adverse Effect) or of any decree of
any court or governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries or in default in any material respect in the performance
of any obligation, agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any material agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be bound
(except where any such default or defaults would not, individually or in the
aggregate, have a Material Adverse Effect).
(k) Neither the issuance and sale of the Notes, the issuance of Common
Stock upon conversion of the Notes, the execution, delivery or performance of
this Agreement or the Indenture by the Company nor the consummation by the
Company of the transactions contemplated hereby and thereby (i) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration of
the Notes under the Act and the Exchange act, registration under the Act of the
shares of Common Stock issuable upon conversion of the Notes, qualification of
the Indenture under the 1939 Act, and compliance with the securities or Blue Sky
laws of various jurisdictions, all of which have
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been or will be effected in accordance with this Agreement) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation or bylaws, or other organizational
documents, of the Company or any of the Subsidiaries or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
any agreement, indenture, lease or other instrument to which the Company or any
of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate any statute,
law, regulation or filing (except the securities or Blue Sky laws of the various
jurisdictions, as to which no representation or warranty is made) or judgment,
injunction, order or decree applicable to the Company or any of the Subsidiaries
or any of their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject.
(l) The accountants, Price Waterhouse LLP and KPMG Peat Marwick LLP,
who have certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (or
any amendment or supplement thereto) are independent public accountants as
required by the Act.
(m) The historical and pro forma financial statements, together with
related schedules and notes, included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), comply as to form in all material respects with the requirements of
the Act. Such historical financial statements present fairly in accordance with
generally accepted accounting principals the consolidated financial position,
results of operations and cash flows of the Company and the Subsidiaries on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply. Such historical statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein. The pro forma financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), have been prepared on a basis consistent
with such historical financial statements, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable basis and
present fairly in accordance with generally accepted accounting principals the
historical and proposed transactions contemplated by this Agreement and the
Prospectus (and any amendment or supplement thereto). The other financial and
statistical information and data included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company and the
Subsidiaries.
(n) The execution and delivery of, and the performance by the Company
of its obligations under, this Agreement have been duly and validly authorized
by the Company, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance
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with its terms, except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws and subject to the qualification
that the enforceability of the Company's obligations hereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally, and by general
equitable principles.
(o) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(p) With only such exceptions as would not have a Material Adverse
Effect, each of the Company and the Subsidiaries has good and, in the case of
real property, marketable title to all property (real and personal) owned by it,
free and clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the Prospectus or
in a document filed as an exhibit to the Registration Statement and all the
property being held under lease by each of the Company and the Subsidiaries is
held by it under valid, subsisting and enforceable leases.
(q) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Notes,
will not distribute any offering material in connection with the offering and
sale of the Notes other than the Registration Statement, the Prepricing
Prospectus, the Prospectus or other materials, if any, permitted by the Act.
(r) The Company and each of the Subsidiaries has such material
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus; the Company and each of
the Subsidiaries has fulfilled and performed all its material obligations with
respect to such permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
-11-
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
(u) The Company and each of the Subsidiaries have filed all material
tax returns required to be filed, which returns are complete and correct in all
material respects, and neither the Company nor any Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(v) Except as has been waived, no holder of any security of the
Company has any right to require registration of shares of Common Stock or any
other security of the Company because of the filing of the Registration
Statement or consummation of the transactions contemplated by this Agreement.
(w) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing which would have
a Material Adverse Effect.
(x) The Company has complied with all provisions of Florida Statutes,
Section 517.075, relating to issuers doing business with Cuba.
(y) The Company and each of the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged; all
policies of insurance and fidelity or surety bonds insuring the Company or any
of the Subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; the Company and the Subsidiaries are
in compliance with the terms of such policies and instruments in all material
respects; and there are no material claims by the Company or any of the
Subsidiaries under any
-12-
such policy or instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause.
(z) To the Company's knowledge, no labor problem exists with its
employees or with employees of any Subsidiary or is imminent that could
materially adversely affect the Company and the Subsidiaries, taken as a whole,
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or the Subsidiaries' principal suppliers,
contractors or customers that could be expected to have a Material Adverse
Effect.
(aa) The Company, and the Subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a Material
Adverse Effect. Neither the Company nor any of the Subsidiaries have been named
as a "potentially responsible party" under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended ("CERCLA").
(bb) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on its and its Subsidiaries
business, operations and properties, in the course of which it identifies and
evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not have a Material
Adverse Effect.
(cc) Converse Europe, Inc. and Converse Japan, Inc. (the "Material
Subsidiaries") are the only significant subsidiaries of the Company, as such
term is defined in Rule 1-02 of Regulation S-X.
7. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Prepricing Prospectus or in the Registration
Statement or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses,
-13-
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information relating to such Underwriter furnished in writing to the Company
by or on behalf of any Underwriter expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
respect to any Prepricing Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Notes by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time required by
the Act and the regulations thereunder, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the Underwriters in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel and
payment of all fees and expenses. Such Underwriter or any such controlling
person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such Underwriter or such
controlling person and the Company and such Underwriter or such controlling
person shall have been advised by its counsel in writing, with a copy furnished
to the Company, that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Company shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The Company
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter,
to the extent provided in the
-14-
preceding paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, or any such controlling
person based on the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph (c),
such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Notes, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus; provided, that in the event the
Underwriters shall have purchased any Additional Notes hereunder, any
determination of the relative benefits received by the Company or the
Underwriters from the offering of the Notes shall include the net proceeds
(before deducting expenses) received by the Company and the underwriting
discounts and commissions received by the Underwriters, from the sale of such
Additional Notes, in each case computed on the basis of the respective amounts
set forth in the notes to the table on the cover page of the Prospectus. The
relative fault of the Company on the
-15-
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Notes underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in proportion
to the respective principal amounts of Firm Notes set forth opposite their names
in Schedule I hereto (or such principal amounts of Firm Notes increased as set
forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Notes and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any
-16-
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
7.
8. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase the Firm Notes hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
(or an Abbreviated Registration Statement) to be declared effective before the
offering of the Notes may commence, the Registration Statement or such post-
effective amendment or Abbreviated Registration Statement shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectus, which in your opinion, would
materially adversely affect the market for the Notes, or (ii) any event or
development relating to or involving the Company or any officer or director of
the Company which makes any statement made in the Prospectus untrue or which, in
the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or development
would, in your reasonable opinion, materially adversely affect the market for
the Notes.
(c) You shall have received on the Closing Date, an opinion of Xxxxxx,
Xxxxx & Xxxxxxx LLP, counsel for the Company, dated the Closing Date and
addressed to you, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with all
necessary corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly registered and
qualified to conduct its business and is in good standing in the States of
Massachusetts, North Carolina and Texas;
-17-
(ii) Each of the Material Subsidiaries is a corporation duly
incorporated and validly existing in good standing under the laws of the
jurisdiction of its incorporation, with all necessary corporate power and
authority to own, lease, and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any amendment
or supplement thereto); and all the outstanding shares of capital stock of each
of the Material Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by the Company directly, or
indirectly through one of the other Material Subsidiaries, free and clear of any
perfected security interest (except the pledge to secure obligations of the
Company under the Credit Agreement (as defined in the Prospectus), or, to the
knowledge of such counsel, any other security interest, lien, adverse claim,
equity or other encumbrance;
(iii) The authorized and outstanding capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectus; and the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock";
(iv) The Indenture has been duly and validly authorized, executed
and delivered by the Company and, assuming due execution and delivery by the
Trustee, is a valid and binding agreement of the Company, enforceable in
accordance with its terms except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally, and has been duly qualified under the 1939 Act;
(v) The Notes have been duly and validly authorized and executed by
the Company and, assuming due authentication of the Notes by the Trustee, upon
delivery to the Underwriters against payment therefor in accordance with the
terms hereof, will have been validly issued and delivered, and will constitute
valid and binding obligations of the Company entitled to the benefits of the
Indenture;
(vi) The Notes and the Indenture conform in all material respects to
the descriptions thereof contained in the Prospectus;
(vii) The shares of Common Stock issuable upon conversion of the
Notes have been validly authorized and reserved for issuance and, when delivered
upon conversion of the Notes, will have been validly issued and fully paid and
will be nonassessable and free of preemptive or similar rights;
(viii) The Registration Statement and all post-effective amendments,
if any, have become effective under the Act and, to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose are pending before
or contemplated by the Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) has been made in accordance with Rule 424(b);
(ix) The Company has corporate power and authority to enter into the
Underwriting Agreement and to issue, sell and deliver the Notes to the
Underwriters as provided therein, and the Underwriting Agreement has been duly
authorized, executed and delivered by
-18-
the Company and is a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement of rights to indemnity and contribution thereunder may be limited by
Federal or state securities laws or principles of public policy and subject to
the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally, and by general equitable principles;
(x) Neither the offer, sale or delivery of the Notes, the issuance
of Common Stock upon conversion of the Notes, the execution, delivery or
performance of the Underwriting Agreement or the Indenture, compliance by the
Company with the provisions of the Underwriting Agreement or the Indenture nor
consummation by the Company of the transactions contemplated by the Underwriting
Agreement or by the Indenture conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Material Subsidiaries or any agreement, indenture, lease or other
instrument to which the Company or any of the Material Subsidiaries is a party
or by which any of them or any of their respective properties is bound that is
an exhibit to the Registration Statement or to any Incorporated Document, or is
known to such counsel or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Material Subsidiaries, nor will any such action result in any violation of any
existing law, regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree known to
such counsel, applicable to the Company, the Material Subsidiaries or any of
their respective properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or the 1939 Act or such as
may be required under state securities or Blue Sky laws governing the purchase
and distribution of the Notes and the shares of Common Stock issuable upon
conversion of the Notes) for the valid issuance and sale of the Notes to the
Underwriters as contemplated by the Underwriting Agreement;
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act; and each
of the Incorporated Documents (except for the financial statements and the notes
thereto and the schedules and other financial and statistical data included
therein, as to which counsel need not express any opinion) complies as to form
in all material respects with the Exchange Act and the rules and regulations of
the Commission thereunder;
(xiii) To the knowledge of such counsel, (A) other than as described
or contemplated in the Prospectus (or any supplement thereto), there are no
legal or governmental
-19-
proceedings pending or threatened against the Company or any of the Material
Subsidiaries, or to which the Company or any of the Material Subsidiaries, or
any of their property, is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement thereto)
and (B) there are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement or any Incorporated Document that are not
described or filed as required, as the case may be;
(xiv) The statements in (a) the Prospectus under the captions
"Prospectus Summary-Recent Developments-Favorable Resolution of Outstanding
Litigation", "Risk Factors-Anti-Takeover Provisions", "Management's Discussion
and Analysis of Financial Condition and Results of Operations-Financing
Arrangements", "Business-Legal Proceedings", "Certain Transactions",
"Description of Capital Stock" and "Certain United States Tax Consequences", (b)
the Company's Annual Report on Form 10-K for the year ended December 28, 1996
under the captions "Risk Factors-Anti-Takeover Provisions", "Legal Proceedings-
A. Apex-related Litigation" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Financing Arrangements", and (c)
the Company's Form 10/A, Amendment No. 2 filed with the Commission on November
23, 1994 under the caption "Description of Capital Stock-Converse Common Stock",
insofar as they are descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions, are accurate and
present fairly the information required to be shown; and
(xv) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in the
Registration Statement, such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review and discussion of
the contents thereof (including review and discussion of the contents of all
Incorporated Documents), and nothing has come to the attention of such counsel
that has caused them to believe that the Registration Statement (including the
Incorporated Documents) at the time the Registration Statement became effective,
or the Prospectus, as of its dates and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any amendment or
supplement to the Prospectus, as of its respective date, and as of the Closing
Date or the Option Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief with respect to the financial statements and the notes thereto
and the schedules and other financial and statistical data included in the
Registration Statement or the Prospectus or any Incorporated Document).
-20-
In rendering such opinion as aforesaid, counsel may limit their
opinion to the federal laws of the United States, the General Corporation Law of
the State of Delaware and the laws of the State of New York.
(d) You shall have received on the Closing Date, an opinion of Xxxx X.
Xxxxx, Esq., General Counsel of the Company, dated the Closing Date and
addressed to you, to the effect that:
(i) The Company and each of the Subsidiaries has all necessary
corporate power and authority, and, to such counsel's knowledge, all necessary
governmental authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental regulatory officials and
bodies (except where the failure so to have any such authorizations, approvals,
orders, licenses, certificates, franchises or permits would not have a Material
Adverse Effect), to own their respective properties and to conduct their
respective businesses as now being conducted, as described in the Prospectus;
(ii) Except as disclosed in the Prospectus, the Company owns of
record, directly or indirectly, all the outstanding shares of capital stock of
each of the Subsidiaries (except that with respect to certain foreign
Subsidiaries a nominal number of shares is owned by qualified residents of the
countries in which such Subsidiaries are located) free and clear of any lien,
adverse claim, security interest, equity, or other encumbrance (except the
pledge to secure the Company's obligations under the Credit Agreement (as
defined in the Prospectus));
(iii) Other than as described or contemplated in the Prospectus (or
any supplement thereto), there are no legal or governmental proceedings pending
or, to such counsel's knowledge, threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement thereto);
(iv) To such counsel's knowledge, there are no agreements, contracts,
indentures, leases or other instruments, that are required to be described in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required, as the case
may be;
(v) The Company and the Subsidiaries own all patents, trademarks,
trademark registrations, and other intellectual property described in the
Prospectus as being owned by them or any of them or necessary for the conduct of
their respective businesses, and such counsel is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company and
the Subsidiaries with respect to the foregoing that would have a Material
Adverse Effect;
(vi) To such counsel's knowledge, neither the Company nor any of the
Subsidiaries is in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or
-21-
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries except for any such violations that would not have a Material
Adverse Effect;
(vii) Except as described in the Prospectus, to such counsel's
knowledge there are no outstanding options, warrants or other rights calling for
the issuance of, and such counsel does not know of any commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of the
Company;
(viii) Except as described in the Prospectus, to the knowledge of
such counsel, there is no holder of any security of the Company or any other
person who has the right, contractual or otherwise, to cause the Company to sell
or otherwise issue to them, or to permit them to underwrite the sale of, the
Notes or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(ix) Neither the Company nor any of the Material Subsidiaries is in
violation of its respective certificate or articles of incorporation or bylaws,
or other organizational documents, or to the knowledge of such counsel, is in
default in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of indebtedness, except
as may be disclosed in the Prospectus; and
(x) All the shares of capital stock of the Company outstanding
prior to the issuance of the Notes have been duly authorized and validly issued,
and are fully paid and nonassessable.
(e) You shall have received on the Closing Date an opinion of
Xxxxxx & Xxxxxxx, counsel for the Underwriters, dated the Closing Date and
addressed to you, with respect to the matters referred to in clauses (iv)
through (ix), (xii) and (xv) of the foregoing paragraph (c) and such other
related matters as you may reasonably request.
(f) You shall have received letters addressed to you, and dated the
date hereof and the Closing Date from Price Waterhouse LLP and KPMG Peat Marwick
LLP, independent certified public accountants, substantially in the forms
heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
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Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company (or such other officers
as are acceptable to you), to the effect set forth in this Section 8(g) and in
Section 8(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) Prior to the Closing Date the Notes and the shares of Common Stock
issuable upon conversion of the Notes shall have been listed, subject to notice
of issuance, on the New York Stock Exchange.
(j) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Notes hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c), (d) and
(e) shall be revised to reflect the sale of Additional Notes.
9. Expenses. The Company agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
each amendment or supplement to any of them, this Agreement, the Indenture and
the Statement of Eligibility and Qualification of the Trustee; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, each Prepricing Prospectus, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as may be
reasonably requested for use in connection with the offering and sale of the
Notes; (iii) the preparation, printing, authentication, issuance and delivery of
the Notes, including any stamp taxes in connection with the original issuance
and sale of the Notes; (iv) the printing (or reproduction)
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and delivery of this Agreement, the preliminary and supplemental Blue Sky
Memoranda and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Notes; (v) the registration of
the Notes under the Exchange Act and the listing of the Notes and the shares of
Common Stock issusable upon conversion of the Notes on the New York Stock
Exchange; (vi) the registration or qualification of the Notes and the shares of
Common Stock issuable upon conversion of the Notes for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing or reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the fees and expenses of the Trustee; (ix) the fees and expenses
associated with obtaining ratings for the Notes from nationally recognized
statistical rating organizations; (x) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Notes; and (xi) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Notes may commence, when
notification of the effectiveness of the registration statement or such post-
effective amendment has been released by the Commission. Until such time as this
Agreement shall have become effective, it may be terminated by the Company, by
notifying you, or by you, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Firm Notes which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate principal amount of Firm Notes which such
defaulting Underwriter or Underwriters are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate principal amount of Firm
Notes, each non-defaulting Underwriter shall be obligated, severally, in the
proportion which the principal amount of Firm Notes set forth opposite its name
in Schedule I hereto bears to the aggregate principal amount of Firm Notes set
forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify in accordance with Section 20 of the Master
Agreement Among Underwriters of Xxxxx Xxxxxx Inc., to purchase the Firm Notes
which such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Firm Notes
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which it or they are obligated to purchase on the Closing Date and the aggregate
principal amount of Firm Notes with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Firm Notes and arrangements
satisfactory to you and the Company for the purchase of such Firm Notes by one
or more non-defaulting Underwriters or other party or parties approved by you
and the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. The term "
Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Notes which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Notes), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York shall have been
declared by either federal or state authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Notes on the terms set forth on the cover page
of the Prospectus or to enforce contracts for the resale of the Notes by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
-----------------------------------------
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover, and the statements in the first, third and sixth paragraphs
under the caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus, constitute the only information furnished by you or on your behalf
as such information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
-------------
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at Xxx Xxxxxxx Xxxx, Xxxxx Xxxxxxx, XX 00000, Attention: Xxxx X. Xxxxx,
General Counsel; or (ii) if to you, care of Xxxxx
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Barney Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager,
Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 7 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Notes in his status
as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed
----------------------------
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement between the
Company and you.
Very truly yours,
CONVERSE INC.
By ________________________________
Chairman of the Board and
Chief Executive Officer
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
XXXXXX, READ & CO. INC.
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX, SACHS & CO.
By XXXXX XXXXXX INC.
By________________________________
Managing Director
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SCHEDULE I
CONVERSE INC.
Principal Amount
Underwriter of Notes
----------- ----------------
Xxxxx Xxxxxx Inc. .
Xxxxxx, Read & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxx, Sachs & Co.
___________
Total $60,000,000
===========
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SCHEDULE II
===========
Lock-up Letters
Xxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxx
Apollo Investment Fund, L.P.
Lion Advisors, L.P.
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