EXHIBIT 1.1
6,700,000 SHARES
▇▇▇ RIVER INC.
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
November , 1997
[CS&M Draft--11/18/97]
November , 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
SBC Warburg Dillon Read Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
▇▇▇ River Inc., a Georgia corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS"), and certain shareholders of the Company (the "SELLING
SHAREHOLDERS") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of 6,700,000 shares (the "FIRM SHARES") of
the Class A Common Stock , par value $.01 per share, of the Company (the "COMMON
STOCK"), of which 4,700,000 shares are to be issued and sold by the Company and
2,000,000 shares are to be sold by the Selling Shareholders, each Selling
Shareholder selling the amount set forth opposite such Selling Shareholder's
name in Schedule I hereto.
The Selling Shareholders also propose to sell to the several
Underwriters not more than an additional 1,005,000 shares of Class A Common
Stock (the "ADDITIONAL SHARES"), if and to the extent that you, as Managers of
the offering, shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such Additional Shares. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "SHARES". The
Company and the Selling Shareholders are hereinafter sometimes collectively
referred to as the "SELLERS".
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS".
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "REGISTRATION STATEMENT" shall be deemed to include such Rule 462
Registration Statement.
As part of the offering contemplated by this Agreement, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") has agreed to reserve out of the Shares
set forth opposite its
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name on Schedule II to this Agreement, up to 335,000 shares, for sale to the
Company's directors, officers, employees, business associates and related
persons (collectively, "PARTICIPANTS"), as set forth in the Prospectus under the
heading "Underwriters" (the "DIRECTED SHARE PROGRAM"). The Shares to be sold by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the Directed Share Program (the "DIRECTED SHARES")
will be sold by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to this Agreement at the public offering
price. Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the first business day after the date on which this
Agreement is executed will be offered to the public by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as set
forth in the Prospectus.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the knowledge
of the Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended, if applicable, will not contain any 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, (ii) the Registration Statement and the Prospectus comply and,
as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iii) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit 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, except that the representations
and warranties set forth in this paragraph 1(b) do not apply to statements
or omissions in the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Georgia, has the corporate
power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing
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would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(d) (i) ▇▇▇ River Factory Stores, Inc., a Georgia corporation
("Factory Stores") and DanPren LLC, a Mississippi limited liability company
("DanPren"), are the only subsidiaries of the Company, (ii) Factory Stores
has been duly incorporated, is validly existing as a corporation in good
standing under the laws of Georgia, and DanPren has been duly organized, is
validly existing as a limited liability company in good standing under the
laws of Mississippi, and each has the corporate power and authority to own
its property and to conduct its businesses as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, (iii) all of the issued shares of capital stock of Factory Stores
have been duly and validly authorized and issued, are fully paid and non-
assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims and (iv) the Company owns a 50%
membership interest in DanPren, free and clear of all liens, encumbrances,
equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock".
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Shareholders) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are validly issued,
fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement against payment therefor as provided herein, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not violate
any statute, rule or regulation applicable to the Company or any of its
subsidiaries or the Amended and Restated Articles of Incorporation or By-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its
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subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any of its subsidiaries,
and no consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as have been
obtained under the Securities Act and such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or any contracts
or other documents required to be filed as exhibits to the Registration
Statement that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, when so filed complied in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are 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 in all material
respects with all terms and conditions of any such permit,
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license or approval, except, in the case of all matters set forth in
clauses (i), (ii) and (iii), or as described in the Prospectus or 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 on the Company and its
subsidiaries, taken as a whole.
(o) In the ordinary course of its business, the Company conducts a
periodic review of the effect of the Environmental Laws on the business,
operations and properties of the Company and its subsidiaries. On the
basis of such review, the Company has reasonably concluded that with
respect to only those Environmental Laws in effect as of the date of this
Agreement, the cost of complying in all material respects with such
Environmental Laws will not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(p) Except as set forth in the Prospectus, there are no contracts or
agreements between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered pursuant
to the Registration Statement.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth
or described in the Prospectus, (1) the Company and its subsidiaries have
not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course of
business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock other than ordinary and customary dividends;
and (3) there has not been any material change in the capital stock, short-
term debt or long-term debt of the Company and its consolidated
subsidiaries.
(r) The Company and its subsidiaries have marketable title in fee
simple to all real property and marketable title to all personal property
owned by them which is material to the business of the Company and its
subsidiaries, 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
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such
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exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries, in each case except as set forth or described in the
Prospectus and except for matters which would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(s) Except as set forth or described in the Prospectus, the Company
and its subsidiaries own or possess, or can acquire on reasonable terms,
all material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, except where the failure
to own or possess or to have the right to acquire does not have a material
adverse effect on the Company and its subsidiaries taken as a whole; and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(t) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, or, to the knowledge of the Company, is
imminent except for disputes that do not or would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(u) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the business in which they are
engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any
such subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(v) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses except where the failure to possess any certificate,
authorization or permit would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of
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any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the Company and its subsidiaries,
taken as a whole, except as described in or contemplated by the Prospectus.
(w) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) The Company has not offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
2. Representations and Warranties of the Selling Shareholders. Each
of the Selling Shareholders represents and warrants to and agrees with each of
the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement, and the Power of Attorney and Custody Agreement signed by such
Selling Shareholder, the attorneys-in-fact named therein (as defined below)
and Wachovia Bank, N.A., as Custodian, relating to the deposit of the
Shares to be sold by such Selling Shareholder and appointing certain
individuals as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
"POWER OF ATTORNEY AND CUSTODY AGREEMENT") will not violate any provision
of any statute, rule or regulation applicable to such Selling Shareholder,
or the certificate of incorporation or by-laws of such Selling Shareholder
(if such Selling Shareholder is a corporation), or any material agreement
or other material instrument binding upon such Selling Shareholder or any
judgment, order or decree of any governmental body, agency
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or court having jurisdiction over such Selling Shareholder; and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by such Selling
Shareholder of its obligations under this Agreement or the Power of
Attorney and Custody Agreement of such Selling Shareholder, except such as
has been obtained under the Securities Act and such as may be required by
the securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares.
(c) Such Selling Shareholder has, and on the Closing Date will have,
valid title to the Shares to be sold by such Selling Shareholder and the
legal right and power, and all authorization and approval required by law,
to enter into this Agreement, and the Power of Attorney and Custody
Agreement and to sell, transfer and deliver the Shares to be sold by such
Selling Shareholder.
(d) The Power of Attorney and Custody Agreement has been duly
authorized, executed and delivered by such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder.
(e) Upon, delivery of the Shares to be sold by such Selling
Shareholder pursuant to this Agreement against payment therefor as provided
herein, good and valid title to such Shares will pass to the Underwriters
free and clear of any security interests, claims, liens, equities and other
encumbrances.
(f) (i) The information furnished by or on behalf of such Selling
Shareholder for use in the Registration Statement and the Prospectus does
not, and on the Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make such
information not misleading; and (ii) the sale of Shares by such Selling
Shareholder pursuant hereto is not prompted by any material non-public
information relating to or concerning the Company.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $______ a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and
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conditions, the Selling Shareholders agree, severally and not jointly, to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, all or any portion of the
Additional Shares at the Purchase Price. If you, on behalf of the Underwriters,
elect to exercise such option, you shall so notify the Attorneys-in-Fact for the
Selling Shareholders in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule II hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 180 days after the date of the Prospectus, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Shares to be sold hereunder, (B) the issuance by the Company of shares of
Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date of the Prospectus of which the Underwriters
have been advised in writing or which is set forth in the Prospectus, (C)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares or (D) bona fide gifts to donees who
agree in writing to be bound by the restrictions set forth in the foregoing
sentence. Notwithstanding the foregoing, the restrictions contained in this
paragraph shall cease to be binding on the Sellers if the offering of shares
contemplated hereby has not been consummated on or before January 31, 1998.
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4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on ____________, 1997, or at such other time on the same or such other
date, not later than _________, 1997, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "CLOSING
DATE".
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the notice described in
Section 3 or at such other time on the same or on such other date, in any event
not later than _______, 1997, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "OPTION CLOSING
DATE".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:00 p.m. (New York City time) on the date hereof.
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The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date (i) a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 6(a)(i) above and to the effect
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date and
(ii) a certificate, dated the Closing Date and signed by each of the Selling
Shareholders, to the effect that the representations and warranties of the
Selling Shareholders contained in this Agreement are true and correct as of
the Closing Date and that the Selling Shareholders have complied with all of
the agreements and satisfied all of the conditions on their part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of
King & Spalding, outside counsel for the Company, dated the Closing Date, to
the effect that:
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(i) (A) the Company has been duly incorporated, and based solely on
an attached certificate from the Secretary of State of Georgia is
validly existing as a corporation in good standing under the laws of
the State of Georgia and (B) has the corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement;
(ii) 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";
(iii) the shares of Common Stock (including the Shares to be sold
by the Selling Shareholders) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable;
(iv) the Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement against payment therefor as provided herein, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any statutory or, to such counsel's knowledge,
contractual, preemptive rights;
(v) this Agreement has been duly authorized, executed and delivered
by the Company;
(vi) to such counsel's knowledge, (a) there are no contracts or
other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto that are not
filed as required, and (b) no default exists in the performance or
observance of any material obligation, agreement, covenant or
condition contained in the Loan and Security Agreement, dated
February 3, 1997, among the Company and Fleet Capital Corporation, or
the Indenture, dated December 15, 1993, between the Company and Marine
Midland Bank, N.A., except for any such default that would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
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(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not violate (A) any statute, rule or regulation applicable to the
Company or any of its subsidiaries, (B) the Restated and Amended
Articles of Incorporation or Bylaws of the Company, (C) any agreement
or other instrument binding upon the Company or its subsidiaries that
is filed as an exhibit to the Registration Statement, or (D) any
judgment, order or decree known to us of any governmental body, agency
or court having jurisdiction over the Company or any of its
subsidiaries; and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement,
except such as has been obtained under the Securities Act and such as
may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares;
(viii) the statements (A) in the Prospectus under the captions
"Certain Transactions-Recapitalization", "Description of Capital
Stock" and "Underwriters" and (B) in the Registration Statement in
Items 14 and 15, in each case insofar as such statements constitute
summaries of the legal matters or documents (or provisions thereof)
referred to therein, fairly present the information required to be
described with respect to such legal matters and documents (or
provisions thereof) and fairly summarize in all material respects such
legal matters and documents (or provisions thereof) required to be
described;
(ix) to such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject which are
required to be disclosed in the Registration Statement or the
Prospectus, other than those disclosed therein;
(x) the Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended;
(xi) the Registration Statement is effective under the Securities
Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Securities Act or proceedings therefor initiated or threatened by the
Commission;
14
(xii) at the time the Registration Statement became effective,
the Registration Statement (other than the financial statements and
other financial and statistical data included therein, as to which no
opinion need be rendered) complied as to form in all material respects
with the requirements of the Securities Act and the rules and
regulations of the Commission thereunder;
(xiii) nothing has come to their attention that would lead them
to believe that the Registration Statement and any amendment thereto
made prior to the Closing Date (other than the financial statements
and schedules and the other financial and statistical data therein, as
to which such counsel need express no belief) at the time it became
effective 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 the Prospectus
(other than the financial statements and schedules and the other
financial and statistical data therein, as to which such counsel need
express no belief), at the date of the Prospectus or at the Closing
Date, 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 are made,
not misleading;
(xiv) Factory Stores (A) has been duly incorporated, and based
solely on the attached certificate from the Secretary of State of
Georgia, is validly existing as a corporation in good standing under
the laws of the State of Georgia, (B) has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement, (C) based solely
on the certificates of the Secretaries of State of the Commonwealth of
Virginia and the states of North Carolina, Ohio, Pennsylvania, South
Carolina, Tennessee and West Virginia, is duly qualified as a foreign
corporation to transact business and is in good standing in each such
jurisdiction and (D) all of the issued shares of capital stock of
Factory Stores have been duly authorized and validly issued, are fully
paid and non-assessable and, as of the close of business on the
Closing Date are owned of record by the Company and, to such counsel's
knowledge, free and clear of any liens, encumbrances, equities or
claims; and
(xv) DanPren (A) based solely on the attached certificate from
the Secretary of State of Mississippi is validly existing as a limited
liability company in good standing under
15
the laws of Mississippi, (B) has the corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement, (C) based solely on the
certificates of the Secretaries of State of [insert states where
qualified to transact business], is duly qualified as a foreign
corporation to transact business and is in good standing in each such
jurisdiction and (D) the Company owns a 50% membership interest in
DanPren and, as of the close of business on the Closing Date such
membership interest is owned of record by the Company and, to such
counsel's knowledge, free and clear of any liens, encumbrances,
equities or claims.
(d) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Kotel, counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement and the Power of Attorney and Custody Agreement
of such Selling Shareholder will not contravene any provision of any
statute, rule or regulation applicable to such Selling Shareholder, or
the certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or, to the
best of such counsel's knowledge, any material agreement or other
instrument binding upon such Selling Shareholder or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by such Selling Shareholder of its obligations
under this Agreement or the Power of Attorney and Custody Agreement of
such Selling Shareholder, except such as has been obtained under the
Securities Act and such as may be required by the securities or Blue
Sky laws of the various states in connection with offer and sale of
the Shares;
(iii) each of the Selling Shareholders is the sole registered
owner of the Shares to be sold by such Selling Shareholder and each
Selling Shareholder has
16
the legal right and power, and all authorization and approval required
by law, to enter into this Agreement and the Power of Attorney and
Custody Agreement of such Selling Shareholder and to sell, transfer
and deliver the Shares to be sold by such Selling Shareholder;
(iv) the Power of Attorney and Custody Agreement of each Selling
Shareholder has been duly authorized, executed and delivered by such
Selling Shareholder and is a valid and binding agreement of such
Selling Shareholder; and
(v) upon delivery of the Shares to be sold by each Selling
Shareholder pursuant to this Agreement and the Power of Attorney and
Custody Agreement against payment therefor, and assuming that such
Shares are purchased in good faith and without notice of any adverse
claim (in each case within the meaning of the New York Uniform
Commercial Code (the "UCC"), the Underwriters purchasing such Shares
will acquire good and valid title to such Shares free and clear of any
adverse claim pursuant to Section 8-302 of the UCC.
(e) The Underwriters shall have received on the Closing Date an
opinion of Cravath, Swaine & ▇▇▇▇▇, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 6(c)(v),
6(c)(vi), 6(c)(viii) (but only as to the statements in the Prospectus under
"Description of Capital Stock" and "Underwriters") and 6(c)(xiii) above.
With respect to Section 6(c)(xiii) above, King & Spalding and Cravath,
Swaine & ▇▇▇▇▇ may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified. In rendering the foregoing opinions,
such counsel shall be entitled to rely (i) with respect to matters of fact,
on certificates of officers of the Company and (ii) as to matters set forth
therein, on certificates and telegrams of public officials. With respect
to Section 6(d) above, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Kotel may rely upon an opinion
or opinions of counsel for any Selling Shareholders and, with respect to
factual matters and to the extent such counsel deems appropriate, upon the
representations of each Selling Shareholder contained herein and in the
Custody Agreement and Power of Attorney of such Selling Shareholder and in
other documents and instruments; provided that (A) each such counsel for
the Selling Shareholders is reasonably satisfactory to your counsel, (B) a
copy of each opinion so relied upon is delivered to you and is in form and
substance reasonably satisfactory to your counsel, (C) copies of the
17
Power of Attorney and Custody Agreement and of any such other documents and
instruments shall be delivered to you and shall be in form and substance
satisfactory to your counsel and (D) ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Kotel shall state
in their opinion that they are justified in relying on each such other
opinion.
The opinions of King & Spalding, and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Kotel
described in Sections 6(c), and 6(d) above, respectively (and any opinions
of counsel for any Selling Shareholder referred to in the immediately
preceding paragraph), are to the Underwriters at the request of the Company
or one or more of the Selling Shareholders, as the case may be, and shall
so state therein.
(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance reasonably satisfactory to the
Underwriters, from Ernst & Young LLP, independent auditors, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
(h) Each of the Company and the Selling Shareholders shall have
furnished to you and to your counsel, in form and substance reasonably
satisfactory to you and your counsel, such other documents, certificates
and opinions as your counsel may reasonably request in order to pass upon
the matters referred to in Section 6(e) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements, the performance of any covenant by any of the Company or the
Selling Shareholders theretofore to be performed, or the compliance with
any of the conditions herein contained.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
18
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, [4] signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 7(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made when the Prospectus is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Underwriters, it
is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; 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.
19
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending December 26, 1998 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) That in connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will notify the
Company as to which Participants will need to be so restricted. The
Company will direct the transfer agent to place stop transfer restrictions
upon such securities for such period of time.
(g) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of the Sellers'
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and one counsel for
the Selling Shareholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated there with, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all reasonable expenses in connection
with the qualification of the Shares for offer and sale under state securities
laws as provided in Section 7(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
20
connection with such qualification and in connection with the Blue Sky
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to listing the Shares on the
New York Stock Exchange, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, and (ix) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section.
Notwithstanding the foregoing, it is understood that the Selling Shareholders
will pay or cause to be paid all transfer taxes and counsel fees (of any
additional counsel retained in addition to the one counsel provided by the
Company to the Selling Shareholders) in connection with the Shares to be sold by
them. It is further understood, that except as provided in this Section, Section
9 entitled "Indemnity and Contribution", and the last paragraph of Section 11
below, the Underwriters will pay all of their costs and expenses, including
without limitation fees and disbursements of their counsel, stock transfer taxes
payable on resale of any of the Shares by them and any advertising expenses
connected with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter, each Selling Shareholder and each
person, if any, who controls any Underwriter, or any Selling Shareholder
within the meaning of either Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any
21
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue
statement or omission (i) with respect to any Selling Shareholder, based
upon information relating to any Selling Shareholder furnished to the
Company in writing by such Selling Shareholder through you expressly for
use therein, or (ii) with respect to any Underwriter, based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect to
-------- -------
any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages
or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 7(a) or
Section 7(c).
(b) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and each person, if any, who controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ENTITIES"), from and against any and all losses, claims,
damages, and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating
any such action of claim) (i) caused by the failure of any Participant to
pay for and accept delivery of the shares which, immediately following the
effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase; or (ii) related to, arising out of, or in
connection with the Directed Share Program, provided that, the Company
shall not be responsible under this subparagraph (ii) for any losses,
claim, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have
22
resulted from the bad faith or gross negligence of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities.
(c) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, the Company, its directors,
its officers who sign the Registration Statement and each person, if any,
who controls any Underwriter or the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent such losses, claims, damages or
liabilities are based upon any untrue statement or omission or alleged
untrue statement or omission based upon information relating to such
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto. Notwithstanding anything contained herein to the contrary, no
Selling Shareholder shall be liable under this Section 9 for any amount in
excess of the total proceeds (before deducting expenses) received by such
Selling Shareholder from the Underwriters for the Shares sold by such
Selling Shareholder hereunder.
(d) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of
the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Shareholder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only to the extent such losses, claims, damages or liabilities are based
upon any untrue statement or omission or alleged
23
untrue statement or omission based upon information relating to such
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(e) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 9(a), 9(b), 9(c) or 9(d), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (i) the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers
who sign the Registration Statement and each person, if any, who controls
the Company within the meaning of either such Section and (iii) the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that
all such reasonable fees and expenses shall be reimbursed as they are
incurred. Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 9(b) hereof in respect of such
action or proceeding, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in
addition to any local counsel) for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for the defense of any
losses, claims, damages and liabilities arising out of the Directed Share
Program, and all persons, if any, who control ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
24
within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act. In the case of any such separate firm for the Underwriters
and such control persons of any Underwriters, such firm shall be designated
in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated. In the case of any such
separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling Shareholders
and such control persons of any Selling Shareholders, such firm shall be
designated in writing by the persons named as attorneys-in-fact for the
Selling Shareholders under the Powers of Attorney. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(f) To the extent the indemnification provided for in Section 9(a),
9(b), 9(c) or 9(d), is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause 9(f)(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 9(f)(i) above but also the relative
25
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Sellers on the one hand and the
Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses)
received by each Seller and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate Public Offering
Price of the Shares. The relative fault of the Sellers on the one hand and
the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Sellers or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section
9 are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint. Notwithstanding anything contained
herein to the contrary, no Selling Shareholder shall be liable under this
Section 9 for any amount in excess of the total proceeds (before deducting
expenses) received by such Selling Shareholder from the Underwriters for
the Shares sold by such Selling Shareholder hereunder.
(g) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 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 that does not take
account of the equitable considerations referred to in Section 9(f). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 9, (i) 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
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and (ii)
no Selling Shareholder shall be required to contribute any amount in excess
of the amount by which the net proceeds received from the sale of
26
Shares by such Selling Shareholder exceeds the amount of any damages that
such Selling Shareholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 9 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(h) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, or the
Company, its officers or directors or any person controlling the Company
and (iii) acceptance of and payment for any of the Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the later of (a) execution and delivery hereof by the
parties hereto or (b) notification of the effectiveness of the Registration
Statement by the Commission.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of
27
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of the
Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite
their respective names in Schedule II bears to the aggregate number of Firm
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 11 by an amount in excess of one-ninth of such number
of Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you, the Company and the Selling
Shareholders for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter, the Company or the Selling Shareholders. In
any such case either you or the relevant Sellers 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 in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated (other than pursuant to Section
10) by the Underwriters, or any of them, because of any failure or refusal on
the part of any Seller to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason any Seller shall be unable to
perform its obligations under this Agreement, the Sellers will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
28
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
▇▇▇ River Inc.
By:____________________________
Name:
Title:
The Selling Shareholders
named in Schedule I hereto,
acting severally
By:____________________________
Attorney-in-Fact
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
SBC Warburg Dillon Read Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:___________________________
Name:
Title:
SCHEDULE I
NUMBER OF
FIRM SHARES
SELLING SHAREHOLDER TO BE SOLD
_______________
Total........
===============
SCHEDULE II
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
SBC Warburg Dillon Read Inc.
_______________
Total ........
===============
EXHIBIT A
[FORM OF LOCK-UP LETTER]
____________, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
SBC Warburg Dillon Read Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with ▇▇▇ River Inc., a Georgia corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "UNDERWRITERS"), of ___
shares (the "SHARES") of the Class A Common Stock [par value] of the Company
(the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) the sale of
any Shares to the Underwriters pursuant to the Underwriting Agreement, (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering or (c) bona
fide gifts to donees who agree in writing to be bound by the restrictions set
forth in the foregoing sentence. In addition, the undersigned agrees that,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the
Underwriters, it will not during the period commencing on the date hereof and
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
2
This Agreement shall automatically terminate if the Public Offering
has not been consummated on or before January 31, 1998.
Very truly yours,
_________________________
(Name)
_________________________
(Address)
