1
EXHIBIT 1
THORN APPLE VALLEY, INC.
$[17,500,000] Principal Amount of [_____]%
Convertible Subordinated Debentures
Due April 1, 2007
UNDERWRITING AGREEMENT
April __, 1997
XXXXX & CO., L.L.C.
As Representative of the Several
Underwriters Named in Schedule 2
One Griswold
Detroit, Michigan 48226
Ladies and Gentlemen:
Thorn Apple Valley, Inc., a Michigan corporation (the "Company"),
hereby confirms its agreement with Xxxxx & Co., L.L.C. (the "Representative")
and the several Underwriters named in Schedule 2 (the "Underwriters") as set
forth below.
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Underwriters an
aggregate of $[17,500,000] principal amount of [_____]% Convertible
Subordinated Debentures due April 1, 2007. Such $[17,500,000] principal amount
of Debentures are referred to in this Agreement as the "Firm Debentures". The
Company also proposes to issue and sell to the Underwriters not more than an
aggregate of $[2,250,000] principal amount of additional Debentures if
requested by the Underwriters as provided in Section 3 of this Agreement. Any
and all Debentures to be purchased by the Underwriters pursuant to such options
are referred to in this Agreement as the "Option Debentures", and the Firm
Debentures and any Option Debentures are collectively referred to in this
Agreement as the "Debentures". The Debentures are to be issued pursuant to an
indenture to be dated as of April 1, 1997 (the "Indenture") between the Company
and ____________________________ (the "Trustee").
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
2
(a) The Company meets the requirements for use of a
registration statement on Form S-2 under the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder (collectively, the "Act"). A
registration statement on such Form (File No. 333-_____) with respect to the
Debentures, including a prospectus subject to completion, has been prepared and
filed by the Company with the Commission in accordance with the provisions of
the Act, and one or more amendments to such registration statement may have
been so filed. As soon as practicable after the execution of this Agreement,
the Company will file with the Commission either (1) if such registration
statement, as it may have been amended, has been declared by the Commission to
be effective under the Act, a prospectus in the form most recently included in
amendments to such registration statement (or, if no such amendments shall have
been filed, in such registration statement), with such changes or insertions as
are required by Rule 430A under the Act or permitted by Rule 424(b) under the
Act and as have been provided to and approved by the Underwriters prior to the
execution of this Agreement, or (2) if such registration statement, as it may
have been amended, has not been declared by the Commission to be effective
under the Act, amendments to such registration statement, including a form of
prospectus, copies of which amendments have been furnished to and approved by
the Underwriters prior to the execution of this Agreement.
As used in this Agreement, the term "Registration Statement" means
such registration statement, as amended at the time when it was or is declared
effective, and, in the event of any amendment to such registration statement
after the effective date and before the Firm Closing Date and any Option
Closing Date (as defined in Sections 3(a) and 3(b), respectively), such
registration statement as so amended, but only from and after the effectiveness
of such amendment, including (1) all financial statements, schedules and
exhibits thereto, (2) all documents (or portions thereof) incorporated by
reference therein filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (3) any information omitted therefrom pursuant to
Rule 430A under the Act and included in the Prospectus (as hereinafter
defined). As used in this Agreement, the term "Preliminary Prospectus" means
the prospectus subject to completion filed with such registration statement or
any amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective), including all documents (or portions thereof)
incorporated by reference therein filed under the Exchange Act. As used in
this Agreement, the term "Prospectus" means the prospectus first filed with the
Commission pursuant to Rule 424(b) under the Act or, if no prospectus is
required to be filed pursuant to said Rule 424(b), such term means the
prospectus included in the Registration Statement, at the time the Registration
Statement or any amendment thereto became effective, and, in the event of any
supplement or amendment to such prospectus before the Firm Closing Date and any
Option Closing Date, such prospectus as so supplemented or amended but only
from and after the filing with the Commission of such supplement or the
effectiveness of such amendment, in any case including all documents (or
portions thereof) incorporated by reference therein filed under the Exchange
Act.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any Preliminary
Prospectus was filed with the Commission, it (1) contained all statements
required to be stated therein in accordance with, and complied in all material
respects with the requirements of, the Act, the Exchange Act, the Trust
Indenture Act of 1939 as
2
3
amended, if required (the "Trust Indenture Act"), and the respective rules and
regulations of the Commission thereunder, and (2) did not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective and at all times subsequent
thereto up to and including the Firm Closing Date and any Option Closing Date,
it (A) contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material respects with
the requirements of, the Act, the Trust Indenture Act, if required, the
Exchange Act and the respective rules and regulations of the Commission
thereunder, and (B) did not or will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement thereto is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or such amendment or supplement
is not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the Prospectus was
or is declared effective), on the date when the Prospectus is otherwise amended
or supplemented and at all times subsequent thereto up to and including the
Firm Closing Date and any Option Closing Date (as defined in Sections 3(a) and
3(b), respectively), the Prospectus, as amended or supplemented at any such
time, (x) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act, the Trust Indenture Act, if
required, the Exchange Act and the respective rules and regulations of the
Commission thereunder and (y) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (b) do
not apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by you specifically for use
therein.
(c) The Company's only subsidiaries are listed on
Schedule 1 to this Agreement (the "Subsidiaries"). The Company and each of its
Subsidiaries have been duly organized and are validly existing as corporations
in good standing under the laws of their respective jurisdictions of
incorporation and are duly qualified to transact business as foreign
corporations and are in good standing under the laws of all other jurisdictions
where the ownership or leasing of their respective properties or the nature or
conduct of their respective businesses requires such qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
(d) The Company and each of its Subsidiaries have full
power (corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus); and the Company has full power (corporate and other)
to enter into this Agreement and to carry out all the terms and provisions of
this Agreement to be carried out by it.
(e) The authorized, issued and outstanding shares of
capital stock of each of the
3
4
Company's subsidiaries are set forth on Schedule 1 to this Agreement. Such
issued and outstanding shares have been duly authorized and validly issued, are
fully paid and nonassessable and are all owned beneficially by the Company free
and clear of all restrictions on transfer (other than those imposed by the Act
and the securities or blue sky laws of various jurisdictions and any security
interests, liens, encumbrances, equities and claims.
(f) The Company has an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), under the caption "Capitalization". All of the issued and
outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable and free of preemptive
rights and contractual rights to purchase (to the extent the Company or any of
its Subsidiaries is a party to such contract), except for those contractual
rights to purchase described in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus). The Common Stock, $.10 par value, of the Company (the "Common
Stock") into which the Debentures may be converted as provided in the Indenture
(the "Underlying Common Stock", and together with the Debentures, the
"Securities") have been duly authorized and duly reserved for issuance and,
upon issuance in accordance with the terms of the Debentures and the Indenture,
the Underlying Common Stock will be duly authorized, validly issued, fully paid
and nonassessable. No holder of outstanding shares of capital stock of the
Company is entitled as such to any preemptive or other rights to subscribe for
any of the Securities, and no holder of securities of the Company has any right
which has not been fully exercised or waived to require the Company to register
the offer or sale of any securities owned by such holder under the Act in the
public offering contemplated by this Agreement.
(g) The capital stock of the Company conforms to the
description thereof contained in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(h) The Indenture has been duly authorized, and when duly
executed and delivered by the Company, will constitute the valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
(1) enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting enforcement of creditors' rights
generally, (2) enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law), and (3) rights to indemnification may be limited by applicable law.
(i) The Debentures have been duly authorized for issuance
and sale pursuant to this Agreement and, when duly executed, authenticated and
delivered to the Underwriters against payment therefor pursuant to the
provisions of the Indenture and this Agreement, will be valid and binding
obligations of the Company enforceable in accordance with their terms (except
as (1) enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting enforcement of creditors' rights
generally, (2) enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law), and (3) rights to indemnification may be limited by applicable law),
and will be entitled to the benefits of the Indenture,
4
5
which will be substantially in the form previously delivered to you; and the
Debentures and the Indenture conform to all statements relating thereto
contained in the Registration Statement and Prospectus (or if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(j) The consolidated financial statements and schedules
of the Company and its consolidated Subsidiaries included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) fairly present the financial condition of
the Company and its consolidated Subsidiaries and the results of operations and
cash flows as of the dates and periods therein specified. Such financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein). The selected financial data set
forth under the caption "Selected Consolidated Financial Data" in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present, on the basis
stated in the Registration Statement and the Prospectus (or such Preliminary
Prospectus), the information included therein.
(k) Coopers & Xxxxxxx L.L.P., who have certified certain
financial statements of the Company and its consolidated Subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are independent public accountants as required by the
Act, the Exchange Act and the related published rules and regulations
thereunder.
(1) The execution and delivery of this Agreement have
been duly authorized by the Company. This Agreement has been duly executed and
delivered by the Company and, assuming due execution by the other parties to
this Agreement, is the legal, valid and binding agreement of the Company,
enforceable by any such party against the Company in accordance with its terms,
except as (1) enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting enforcement of creditors' rights
generally, (2) enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law), and (3) rights to indemnification may be limited by applicable law.
(m) No legal or governmental proceedings are pending, or,
to the best of the Company's knowledge, threatened to which the Company or any
of its subsidiaries is a party or to which the property 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 described therein (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus).
No contract or other document is required to be described in the Registration
Statement or the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as required.
(n) The execution and delivery of this Agreement, the
issuance, offering and sale of the Debentures to the Underwriters by the
Company pursuant to this Agreement, the compliance by the
5
6
Company with the other provisions of this Agreement and the performance and
consummation of the other transactions contemplated by this Agreement do not
(1) require the consent, approval, authorization, registration or qualification
of or with any court or governmental authority, except such as have been
obtained, such as may be required under state securities or blue sky laws and,
if the registration statement (as amended) filed with respect to the Debentures
is not effective under the Act as of the time of execution of this Agreement,
such as may be required (and shall be obtained as provided in this Agreement)
under the Act or the Trust Indenture Act, or (2) contravene or violate the
Company's articles of incorporation, its bylaws or any shareholder agreement,
voting trust or similar arrangement applicable to any of its authorized shares
of capital stock (the "Company's Organic Documents"), (3) contravene or violate
any of the Subsidiaries' articles of incorporation, bylaws or other charter or
organizational documents (the "Subsidiaries' Organic Documents"), (4)
contravene or violate any indenture, mortgage, deed of trust, lease, instrument
or other agreement or contractual restriction, law or governmental rule or
regulation or decree or order of any court or other governmental authority or
arbitrator binding or affecting the Company or any of its Subsidiaries or any
of their respective properties, except as described in or contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and except for such
contravention or violation which, in the aggregate, could not reasonably be
expected to result in a material adverse change in the condition (financial or
otherwise), business, management, prospects, net worth, results of operations
or cash flows of the Company or any of its Subsidiaries, taken as a whole, (a
"Material Adverse Change"), or (5) result in, or require the creation or
imposition of, any mortgage, lien, pledge, adverse claim, equity, restriction,
charge, security interest or other encumbrance or defect in or on any property
or asset of the Company or any of its Subsidiaries (a "Lien"), except as
described in or contemplated by the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and except for any such Lien which could not reasonably be expected
to have a Material Adverse Change.
(o) The Company has not, directly or indirectly, (1)
taken any action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Debentures or (2) since the filing of the registration
statement originally filed with respect to the Debentures (A) sold (except for
sales of Common Stock upon exercises of warrants or stock options or pursuant
to employee benefit plans, which warrants, options and plans are described in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus)), bid for, purchased, or
paid anyone any compensation for soliciting purchases of, the Debentures or the
Common Stock or (B) except as disclosed to the Representative before the date
of this Agreement, paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(p) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary 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; and (3) there has
not been
6
7
any change in the capital stock (except for sales of Common Stock upon
exercises of warrants or stock options or pursuant to employee benefit plans,
which warrants, options and plans are described in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus)), short-term debt (other than incurred in the ordinary
course of business) or long-term debt (other than capital leases totaling no
more than $___ million in the aggregate) of the Company and its consolidated
Subsidiaries or any loss or damage to the property of the Company or any of its
Subsidiaries that results in a Material Adverse Change, any material adverse
change in the condition (financial or otherwise), business, results of
operations, cash flows or prospects of the Company or any of its Subsidiaries,
taken as a whole, except in each case as described in or contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(q) The Company and each of its Subsidiaries have good
and marketable title in fee simple to all items of real property and good and
marketable title to all personal property owned by each of them or described in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) as owned by them, in each
case free and clear of any Lien, except such as do not, singly or in the
aggregate, materially and adversely affect the condition, (financial or
otherwise), business, results of operations, cash flows, working capital or
prospects of the Company or any of its Subsidiaries, taken as a whole, and any
real and personal property and buildings held under lease by the Company or any
of its Subsidiaries are held under valid, subsisting and enforceable leases,
with such exceptions as do not, singly or in the aggregate, materially and
adversely affect the condition (financial or otherwise), business, results of
operations, cash flows, working capital or prospects of the Company or any of
its Subsidiaries, taken as a whole, in each case mentioned in this paragraph
except as described in or contemplated by the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). The Company and its Subsidiaries own or lease all
properties as are necessary to its operations as now conducted and as proposed
to be conducted as set forth in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) except to the extent the failure to own or lease such property
would not result in a Material Adverse Change and except as otherwise stated in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(r) No labor dispute with the employees of the Company or
any of its Subsidiaries exists or, to the best of the Company's knowledge, is
threatened or imminent that could result in a Material Adverse Change.
(s) The Company and its Subsidiaries own or possess, or
can acquire on reasonable terms, all material patents, patent applications,
trademarks, service marks, trade names, licenses, copyrights and proprietary or
other confidential information currently used or employed by them in connection
with their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of infringement of or conflict with asserted
rights of any third party with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Change; and the expiration of any of the
foregoing, singly
7
8
or in the aggregate, would not result in a Material Adverse Change.
(t) 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 businesses 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 materially and adversely affect the
condition (financial or otherwise), business prospects, net worth, results of
operations or cash flows of the Company or any of its Subsidiaries, taken as a
whole, except as described in or contemplated by the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(u) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or any
other subsidiary of the Company, except as described in or contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(v) The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate foreign,
federal, state or local regulatory authorities which are material to the
conduct of their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth, results of operations or cash flows
of the Company or any of its Subsidiaries, taken as a whole, except as
described in or contemplated by the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(w) The Company will conduct its operations in a manner
that will not subject it to registration as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
this transaction will not cause the Company to become an investment company
subject to registration under the Investment Company Act.
(x) The Company and its Subsidiaries have filed all
foreign, federal, state and local tax returns that are required to be filed by
them or have requested extensions thereof (except in any case in which the
failure so to file would not have a material adverse effect on the Company or
any of its Subsidiaries taken as a whole, and for which adequate reserves in
accordance with generally accepted accounting principles shall have been set
aside on their books) and have paid all taxes required to be paid by them, and
any other assessment, fine or penalty levied against them, to the extent that
any of the foregoing is due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith, except as described
in or contemplated by the Registration Statement and the
8
9
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and except to the extent that the failure to pay such
taxes could not result in a Material Adverse Change.
(y) Neither the Company nor any of its Subsidiaries is in
violation of any foreign, federal, state or local law or regulation, including,
without limitation, laws or regulations relating to fresh meat and processed
meat and poultry products, to occupational safety and health and to the
storage, handling or transportation of hazardous or toxic materials, and the
Company and its Subsidiaries have received all permits, licenses or other
approvals required of them under such applicable foreign, federal, state and
local laws and regulations to conduct their respective businesses, and the
Company and each such Subsidiary is in compliance with all terms and conditions
of any such permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, result in a material
adverse change in the condition (financial or otherwise), business prospects,
net worth, results of operations or cash flows of the Company or any of its
Subsidiaries, taken as a whole, except as described in or contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(z) In the ordinary course of business, the Company
conducts a periodic review of the effect of all applicable foreign, federal,
state and local laws and regulations relating to fresh meat or processed meat
and poultry products and to the protection of human health, safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants on the business, operations and properties of the Company and its
Subsidiaries, 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
such laws or regulations 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, singly or in the
aggregate, have a Material Adverse Change.
(aa) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(bb) Except for the shares of capital stock of each of the
Subsidiaries, neither the Company nor any such Subsidiary owns any shares of
stock or any other equity securities of any corporation or has any equity
interest in any firm, partnership, association or other entity, except as
described in or contemplated by the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(cc) 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
9
10
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.
(dd) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default, in the due
performance and observance by the Company or any of its Subsidiaries of any
term, covenant or condition of any bond, debenture, indenture, note, evidence
of indebtedness, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties is bound which would have a material adverse effect on the property,
business or operations of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is in violation of any foreign, federal,
state or local law, regulation, rule or any decree, order or judgment
applicable to the Company or any of its Subsidiaries, taken as a whole.
Neither the Company nor any of its Subsidiaries is in violation of its articles
of incorporation, bylaws or other charter or organizational documents.
(ee) None of the Company, its Subsidiaries or any employee
of the Company or its Subsidiaries has made any payment of funds of the Company
or its Subsidiaries prohibited by law and no funds of the Company or its
Subsidiaries have been set aside to be used for any payment prohibited by law.
3. Purchase, Sale and Delivery of the Debentures.
(a) On the basis of the representations, warranties,
agreements and covenants contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, the Company agrees to sell to each
of the Underwriters, and each of the Underwriters, individually and not
jointly, agrees to purchase from the Company, at a purchase price equal to ___%
of the principal amount, the respective principal amount of Firm Debentures set
forth opposite the name of such Underwriter in Schedule 2 to this Agreement.
One or more certificates in definitive form for the Firm Debentures that the
several Underwriters have agreed to purchase under this Agreement, and in such
denomination or denominations and registered in such name or names as you
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company to you on the Closing
Date for the respective accounts of the several Underwriters, against payment
by or on behalf of the Underwriters of the purchase price therefor by certified
or official bank checks drawn upon or by a New York Clearing House bank and
payable in next-day funds to the order of the Company or at the option of the
Underwriters, by wire transfer to the account of the Company in same-day funds.
Such delivery of, and payment for, the Firm Debentures shall be made at the
offices of Xxxxxx Xxxxxxx PLLC, 000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, at 9:30 A.M., Detroit time, on April ___, 1997, or at such
other place, time or date as you and the Company may agree upon or as you may
determine pursuant to Section 9 of this Agreement, such time and date of
delivery against payment being referred to in this Agreement as the "Firm
Closing Date". The Company will make such certificate or
10
11
certificates for the Firm Debentures available to you for inspection at the
offices in Detroit, Michigan of the Company's transfer agent or registrar or of
Xxxxx & Co., L.L.C. at least 24 hours prior to the Firm Closing Date.
(b) For the sole purpose of covering any over-allotments
in connection with the distribution and sale of the Firm Debentures as
contemplated by the Prospectus, the Company hereby grants to the Underwriters
options to purchase, individually and not jointly, the Option Debentures in
accordance with the provisions of this Agreement. The purchase price to be
paid for any Option Debentures shall be the same as the price for the Firm
Debentures set forth above in paragraph (a) of this Section 3, plus accrued
interest from April 1, 1997, to the Option Closing Date. The options granted
hereby may be exercised as to all or any part of the Option Debentures from
time to time (but not more than twice) within 30 days after the date of the
Prospectus (or, if such 30th day shall be a Saturday or a Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange is open
for trading). The Underwriters shall not be under any obligation to purchase
any of the Option Debentures prior to the exercise of such options. The
Underwriters may from time to time (but not more than twice) exercise the
options granted hereby by giving notice in writing or by telephone (confirmed
in writing) to the Company setting forth the aggregate principal amount of
Option Debentures as to which the Underwriters are then exercising the options
and the date and time for delivery of and payment for such Option Debentures.
Any such date of delivery shall be determined by the Underwriters but shall not
be earlier than two business days or later than seven business days after such
exercise of the options and, in any event, shall not be earlier than the Firm
Closing Date. The time and date set forth in such notice, or such other time,
date or both as the Underwriters and the Company may agree upon or as the
Underwriters may determine pursuant to Section 9 of this Agreement, are called
the "Option Closing Date" in this Agreement with respect to such Option
Debentures. Upon exercise of the options as provided in this Agreement, the
Company shall become obligated to sell to each of the Underwriters, and, on the
basis of the representations and warranties contained in this Agreement and
subject to the terms and conditions set forth in this Agreement, each of the
Underwriters, individually and not jointly, shall become obligated to purchase
from the Company, the same percentage of the total principal amount of the
Option Debentures as to which the Underwriters are then exercising the options
as such Underwriter is obligated to purchase of the aggregate number of Firm
Debentures (subject to such adjustments to provide for purchases of Debentures
in principal amounts that are even multiples of $1,000 as you may determine).
If the options are exercised as to all or any portion of the Option Debentures,
one or more certificates in definitive form for such Option Debentures, and
payment therefor, shall be delivered on the related Option Closing Date in the
manner, and upon the terms and conditions, set forth in paragraph (a) of this
Section 3, except that reference therein to the Firm Debentures and the Firm
Closing Date shall be deemed, for purposes of this paragraph (b), to refer to
such Option Debentures and Option Closing Date, respectively.
(c) You have advised the Company that each Underwriter
has authorized you to accept delivery of its Firm Debentures (and Option
Debentures, if any of the options is exercised), to make payment and to give
receipt therefor.
11
12
4. Offering by the Underwriters. Upon your authorization of the
release of the Firm Debentures, the Underwriters propose to offer their
respective portions of the Firm Debentures for sale to the public upon the
terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
registration statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as promptly as
possible. If required, the Company will file the Prospectus and any amendment
or supplement thereto with the Commission in the manner and within the time
period required by Rule 424(b) under the Act. During any time when a
prospectus relating to the Debentures is required to be delivered under the Act
(or until the Firm Closing Date and any Option Closing Date, if later), the
Company (1) will comply with all requirements imposed upon it by the Act, the
Trust Indenture Act, the Exchange Act and the respective rules and regulations
of the Commission thereunder to the extent necessary to permit the continuance
of sales of or dealings in the Debentures in accordance with the provisions of
this Agreement and of the Prospectus, as then amended or supplemented, and (2)
will not file with the Commission the Prospectus or the amendment referred to
in the third sentence of Section 2(a) of this Agreement, any amendment or
supplement to such Prospectus or any amendment to the Registration Statement of
which the Underwriters shall not previously have been advised and furnished
with a copy a reasonable period of time prior to the proposed filing or as to
which filing you shall not have given your consent (which shall not be
unreasonably withheld). The Company will prepare and file with the Commission,
in accordance with the Act and the rules and regulations of the Commission,
promptly upon request by the Underwriters or counsel for the Underwriters, any
amendments to the Registration Statement or amendments or supplements to the
Prospectus that may reasonably be necessary or advisable in connection with the
distribution of the Debentures by the Underwriters, and will use its best
efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company will
advise you, promptly after receiving, notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed or declared
effective or the Prospectus or any amendment or supplement thereto has been
filed and will provide evidence satisfactory to you of each such filing or
effectiveness.
(b) The Company will advise the Underwriters, promptly
after receiving notice or obtaining knowledge thereof, of (1) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration
Statement or the Prospectus or any amendment or supplement thereto or any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, (2) the suspension of the
qualification of the Debentures for offering or sale in any jurisdiction, (3)
the institution, threatening or contemplation of any proceeding for any such
purpose or (4) any request made by the Commission for amending the Registration
Statement, for amending or supplementing any Preliminary Prospectus or the
Prospectus or for additional information. The Company will use its best
efforts to prevent the issuance
12
13
of any such stop order and, if any such stop order is used, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will make all necessary filings for, and
will use its best efforts to cause, the registration or qualification of the
Debentures for offering and sale under the securities or blue sky laws of such
jurisdictions as you may reasonably designate and will continue such
registrations or qualifications in effect for as long as may be necessary to
complete the distribution of the Debentures, provided, however, that in
connection with such registration or qualification the Company shall not be
required to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction.
(d) If, at any time prior to the later of (1) the final
date when a prospectus relating to the Debentures is required to be delivered
under the Act or (2) the Firm Closing Date and any Option Closing Date, any
event occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or if
for any other reason it is necessary at any time to amend or supplement the
Prospectus to comply with the Act, the Exchange Act, the Trust Indenture Act,
the respective rules or regulations of the Commission thereunder or any other
law, the Company will promptly notify the Underwriters thereof and, subject to
Section 5(a) of this Agreement, will prepare and file with the Commission, at
the Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
(e) The Company will, without charge, provide (1) to each
of the Underwriters and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Debentures and each
amendment thereto (in each case including exhibits thereto), and a conformed
copy of such registration statement and each amendment thereto (in each case
without exhibits thereto) and (2) so long as a prospectus relating to the
Debentures is required to be delivered under the Act, as many copies of each
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
as the Underwriters, counsel for the Underwriters. or any dealer may reasonably
request.
(f) The Company, as soon as practicable and in any event
not later than 16 months after the effective date of the Registration
Statement, will make generally available to its security holders and to the
Underwriters a consolidated earnings statement of the Company and its
subsidiaries that satisfies the provisions of Section 11(a) of the Act and Rule
158 thereunder.
(g) The Company will apply the net proceeds from the sale
of the Debentures sold by the Company as set forth under "Use of Proceeds" in
the Registration Statement and the Prospectus.
(h) The Company will not, directly or indirectly, and
will cause its directors, Messrs. Xxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, Xxxx
Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxxx
Xxxxxxx, and its affiliates which are shareholders of the Company, to agree not
to, directly or indirectly, without your prior written consent, offer, sell,
offer to sell, contract to sell, grant any option
13
14
to purchase or otherwise sell or dispose of (or announce any offer, sale, offer
of sale, contract of sale, grant of any option to purchase or other sale or
other disposition of) any Common Stock or any securities convertible into, or
exchangeable or exercisable for, Common Stock for a period of 90 days after the
date of this Agreement except for (1) issuances pursuant to the exercise of
warrants outstanding on the date of this Agreement or pursuant to the exercise
of employee stock options outstanding on the date of this Agreement (including,
without limitation, the use by the holder of any such warrants or options of
Common Stock (whether outstanding or withheld by the Company from the total
amount issued) to pay the exercise price of such warrants or options, provided
that such warrants or options are described in the Registration Statement and
the Prospectus), or (2) the grant of employee stock options pursuant to the
Company's stock option plans in effect on the date of this Agreement, provided
that any employee stock options so granted after the date of this Agreement are
not exercisable prior to 90 days after the date of this Agreement and provided
further that such plans are described in the Registration Statement and the
Prospectus, or (3) issuances and sales of the Debentures to the Underwriters
pursuant to this Agreement, or (4) issuances of Common Stock upon conversion of
the Debentures, or (5) gifts of Common Stock to a donee who agrees to be bound
by such agreement, or (6) distributions of Common Stock by a partnership,
trust, limited liability company or corporation to its partners, beneficiaries,
members or shareholders, respectively, if all recipients of such distribution
agree to be bound by such agreement.
(i) The Company will not, directly or indirectly, (1)
take any action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Debentures or (2) at any time during the distribution of the
Debentures, except as disclosed to the Representative before the date of this
Agreement, (A) sell, bid for, purchase, attempt to induce any person to
purchase, or pay anyone any compensation for soliciting purchases of, the
Securities or (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(j) At all times prior to the conversion of the
Debentures, the Underlying Common Stock shall remain duly authorized and duly
reserved for issuance.
(k) For a period of three years from the effective date
of the Registration Statement, the Company shall furnish to you copies of all
public reports filed by the Company and all reports and financial statements
furnished by the Company to its shareholders, The Nasdaq Stock Market, any
stock exchange upon which the Company's securities are traded, or to the
Commission pursuant to the Act or the Exchange Act or any rule or regulation of
the Commission under the Act or the Exchange Act (except for exhibits, which,
however, need be furnished only upon request).
6. Expenses.
(a) The Company will pay all costs, expenses, fees and
taxes incident to the performance of its obligations under this Agreement,
whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated pursuant to Section 11 of this Agreement,
including all costs, expenses, fees and taxes incident to (1) the preparing,
printing or other
14
15
production and filing of documents with respect to the transactions, including
any costs of printing the registration statement originally filed with respect
to the Debentures and any amendment thereto (including, without limitation, the
Registration Statement), any Preliminary Prospectus and the Prospectus and any
amendment or supplement thereto, this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Underwriters' Questionnaire
and Power of Attorney, any blue sky memoranda and all other agreements,
memoranda, correspondence and other documents printed and delivered in
connection with the offering of the Debentures, (2) all arrangements relating
to the delivery to the Underwriters of copies of the foregoing documents, (3)
the fees and disbursements of the counsel, the accountants and any other
experts or advisors retained by the Company, (4) preparation, issuance and
delivery to the Underwriters of any certificates evidencing the Debentures,
including transfer agent's and registrar's fees, (5) the registration or
qualification of the Debentures under state securities and blue sky laws,
including filing fees and the reasonable legal fees and disbursements of
counsel for the Underwriters relating thereto or to the "Blue Sky" survey, (6)
the filing fees of the Commission and the National Association of Securities
Dealers, Inc. relating to the Debentures and any listing fees relating to the
Securities, (7) the fees and expenses of the Trustee, (8) advertising approved
by the Company (which approval shall not be unreasonably withheld) relating to
the offering of the Debentures (other than as shall have been specifically
approved by the Underwriters to be paid for by the Underwriters), and (9) its
out-of-pocket expenses, including transportation, meals and lodging with
respect to the road shows and other selling efforts. If the sale of the Firm
Debentures provided for in this Agreement is not consummated because any
condition to the obligations of the Underwriters set forth in Section 7 of this
Agreement is not satisfied, because this Agreement is terminated pursuant to
Section 11 of this Agreement, because of any failure, refusal or inability on
the part of the Company to perform all obligations and satisfy all conditions
on its or their part to be performed or satisfied under this Agreement (other
than by reason of a default by any of the Underwriters) or for any other reason
(other than because of the Underwriters' refusal (except for bona fide reasons
related to the Company, its officers, directors, employees or agents or market
conditions) or inability to perform), the Underwriters will account for their
reasonable reimbursable expenses and, subject to Section 6(b), the Company will
reimburse the Underwriters individually upon demand for all of their reasonable
reimbursable out-of-pocket expenses (including counsel fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Debentures; provided that if the Offering is
not completed due to a termination of this Agreement pursuant to Section
11(a)(2), (3), (4), (5), or (6) ("Market Conditions"), the maximum
reimbursement obligation of the Company shall be [$_________]. The Company
shall not in any event be liable to any of the Underwriters for the loss of
anticipated profits from the transactions covered by this Agreement.
(b) The provisions of paragraph 10 of the letter of
intent dated February 11, 1997 between the Company and you (the "Letter of
Intent"), which provisions provide for payments of fees and reimbursement of
expenses incurred in connection with the Underwriters' engagement by the
Company, shall continue as provided therein.
7. Conditions of the Underwriters' Obligations. The several
obligations of each of the Underwriters to purchase and pay for the Firm
Debentures shall be subject, in the Underwriters' sole discretion, to the
accuracy of the representations and warranties of the Company contained in this
15
16
Agreement as of the date of this Agreement and as of the Firm Closing Date, as
if made on and as of the Firm Closing Date, to the accuracy of the statements
of the Company's officers made pursuant to the provisions of this Agreement, to
the performance by the Company of its covenants and agreements under this
Agreement and to the following additional conditions:
(a) If the registration statement or any amendment to the
registration statement filed prior to the Firm Closing Date has not been
declared effective as of the time of execution of this Agreement, the
registration statement or such amendment shall have been declared effective not
later than 11:00 A.M., New York City time, on the date on which an amendment to
the registration statement originally filed with respect to the Debentures or
to the Registration Statement, as the case may be, containing information
regarding the initial public offering price of the Debentures has been filed
with the Commission, or such later time and date as shall have been consented
to by you. If required, the Prospectus and any amendment or supplement thereto
shall have been filed with the Commission in the manner and within the time
period required by Rule 424(b) under the Act. No stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment to
the Registration Statement and no order directed at any document incorporated
by reference in the Registration Statement or the Prospectus or any amendment
or supplement thereto shall have been issued and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of the
Company or the Underwriters, shall be contemplated by the Commission. The
Company shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) You shall have received on the Firm Closing Date an
opinion addressed to the Underwriters (reasonably satisfactory to you and
counsel for the Underwriters), dated the Firm Closing Date, of Xxxxxxxx Xxxxxx
Xxxxxxxx and Xxxx, counsel for the Company, to the effect that:
(1) the Company and each of its Subsidiaries have
been duly organized and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation and are duly qualified to transact business as foreign
corporations and are in good standing under the laws of all other
jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the Company's business;
(2) the Company and each of the Subsidiaries have
corporate power to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus, and the Company has corporate power to
enter into this Agreement and to carry out all the terms and
provisions of this Agreement to be carried out by it;
(3) the issued and outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid (based on a certificate of the
applicably Subsidiary's Treasurer) and nonassessable and are owned
beneficially by the
16
17
Company, to the actual knowledge of such counsel after reviewing the
applicable stock certificates, free and clear of any adverse claim, as
defined in the applicable Uniform Commercial Code, or, to the best
knowledge of such counsel, any other Liens;
(4) the Indenture (A) has been duly and validly
authorized, executed and delivered by the Company, (B) is duly
qualified under the Trust Indenture Act or such qualification is not
required under the provisions of the Trust Indenture Act and (C)
constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
as (i) enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization or other similar laws affecting
enforcement of creditors' rights generally and (ii) enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law);
(5) the Debentures (A) are in the form
contemplated by the Indenture, (B) have been duly and validly
authorized for issuance and sale by all necessary corporate action,
and (C) constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as (i) enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization or other similar laws affecting
enforcement of creditors' rights generally and (ii) enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law);
(6) the Debentures and the Indenture conform in
all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus and the form of certificate
used to evidence the Debentures is in the form required by law and by
the Indenture;
(7) the authorized and, to the actual knowledge
of such counsel based upon a certificate of the transfer agent of the
Company, issued and outstanding capital stock of the Company is, as of
the date set forth in the Prospectus, as set forth in the Prospectus
under the caption "Capitalization"; all of the issued and outstanding
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid (based on a certificate of the
Company's Treasurer) and nonassessable and, to the actual knowledge of
such counsel after reviewing the Company's Articles of Incorporation,
Bylaws, and minute books and the documents listed as exhibits to the
Registration Statement, were not issued in violation of, or subject
to, any preemptive rights or other rights to subscribe for or purchase
securities; the certificates for such outstanding capital stock are
valid and in proper legal form; the Underlying Common Stock has been
duly authorized and duly reserved for issuance by all necessary
corporate action of the Company and, when issued and delivered in
accordance with the terms of the Debentures and the Indenture, will be
validly issued, fully paid and nonassessable; no holders of
outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the
Securities; and no holders of securities of the Company are entitled
to have such securities registered under the Registration Statement;
17
18
(8) the statements set forth under the headings
"Description of Debentures" and "Description of Capital Stock" in the
Prospectus, insofar as such statements purport to summarize certain
provisions of the Debentures and capital stock of the Company, provide
a fair and accurate summary of such provisions;
(9) the execution and delivery of this Agreement
have been duly authorized by all necessary corporate action of the
Company and this Agreement has been duly executed and delivered by the
Company;
(10) to the actual knowledge of such counsel, (A)
no legal or governmental proceedings are pending or threatened to
which the Company or any of the Subsidiaries is a party or to which
the property of the Company or any of the Subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and that are not described therein, and (B) no contract or
other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required;
(11) the issuance, offering and sale of the
Debentures to the Underwriters by the Company pursuant to this
Agreement, the execution and delivery of this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the performance and consummation of the other transactions
contemplated by this Agreement do not (A) require the consent,
approval, authorization, registration or qualification of or with any
court or governmental authority, except such as have been obtained and
such as may be required under state securities or blue sky laws, (B)
contravene or violate the Company's Organic Documents"), (C)
contravene or violate any of the Subsidiaries' Organic Documents, (D)
contravene or violate any indenture, mortgage, deed of trust, lease,
instrument or other agreement or contractual restriction, law or
governmental rule or regulation or decree or order of any court or
other governmental authority or arbitrator binding or affecting the
Company or any of its Subsidiaries or any of their respective
properties, except as described in or contemplated by the Registration
Statement and the Prospectus and except for such contravention or
violation which, in the aggregate, could not reasonably be expected to
result in a Material Adverse Change, or (E) result in, or require the
creation of imposition of, any Lien, except as described in or
contemplated by the Registration Statement and the Prospectus and
except for any such Lien which could not reasonably be expected to
have a Material Adverse Change;
(12) the Registration Statement has become
effective under the Act; any required filing of the Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the
actual knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment to the Registration Statement and no order directed at any
document incorporated by reference in the Registration Statement or
the Prospectus or any amendment or supplement thereto has been issued,
and no proceedings for that purpose have been instituted or threatened
or are contemplated by the Commission;
18
19
(13) the registration statement originally filed
with respect to the Debentures and each amendment thereto (including,
without limitation, the Registration Statement) and the Prospectus and
any supplement or amendment thereto (in each case, including the
documents incorporated by reference therein but not including the
financial statements and other financial data contained therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act, the
Exchange Act, the Trust Indenture Act and the respective rules and
regulations of the Commission thereunder and the Indenture and the
Statement of Eligibility and Qualification of the Trustee on Form T-1
comply as to form in all material respects to the requirements of the
Trust Indenture Act and the rules and regulations of the Commission
thereunder; provided that such counsel in opining on the form of the
Registration Statement, Prospectus and any supplement or amendment
thereto and the Form T-1 may assume the correctness and completeness
of the statements made or included therein.
(14) the Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal or state regulatory authorities necessary to conduct their
respective businesses; and
(15) this transaction will not cause the Company
to become an investment company subject to registration under the
Investment Company Act.
Such counsel shall also state that, (y) in the course of preparation of the
Registration Statement and any amendment to the Registration Statement and the
Prospectus and any amendment or supplement thereto, such counsel had
conferences with officials of the Company and its independent auditors, and
with representatives of the Underwriters and their counsel at which the content
of the Registration Statement and any amendment to the Registration Statement
and the Prospectus and any amendment or supplement thereto and related matters
were discussed, and also had discussions with such officials of the Company
with a view toward a clear understanding on their part of the requirements of
the Act with reference to the preparation of registration statements and
prospectuses, although such counsel did not verify independently the accuracy
or completeness of the statements contained in the Registration Statement and
any amendment to the Registration Statement and the Prospectus and any
amendment or supplement thereto, and (z) based on such counsel's examination of
the Registration Statement and any amendment to the Registration Statement and
the Prospectus and any amendment or supplement thereto and on its participation
in the above-mentioned conferences, nothing has come to its attention that
gives it reason to believe that the Registration Statement or any amendment to
the Registration Statement, or the Prospectus or any amendment or supplement
thereto, at the time the Registration Statement became effective, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto, as of
the date of such opinion, contained any untrue statement of a material fact or
omitted or omits 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 such counsel need not express any belief as
to financial statements and notes, any related schedules and other financial
data contained in the Registration Statement or Prospectus).
19
20
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems reasonable, on certificates of
responsible officers of the Company, its transfer agent and public officials
and, as to matters involving the application of laws of any jurisdiction other
than the State of Michigan or the United States, to the extent satisfactory in
form and scope to counsel for the Underwriters, upon the opinion of local
counsel reasonably satisfactory to counsel for the Underwriters, and copies of
such opinion shall be delivered to the Underwriters and counsel for the
Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) You shall have received on the Firm Closing Date an
opinion addressed to the Underwriters, dated the Firm Closing Date, of Xxxxxx
Xxxxxxx PLLC, counsel for the Underwriters, with respect to the issuance and
sale of the Firm Debentures, the Registration Statement and the Prospectus, and
such other related matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
In rendering such opinion, such counsel may rely as to all matters involving
the application of laws of any jurisdiction other than the State of Michigan or
the United States upon the opinion of Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
referred to in paragraph (b) above.
(d) You shall have received letters, on and as of the
date of this Agreement and on and as of the Firm Closing Date, from Coopers &
Xxxxxxx L.L.P., certified public accountants for the Company, in form and
substance satisfactory to the Underwriters, to the effect that:
(1) they are independent public accountants with
respect to the Company and its consolidated subsidiaries within the
meaning of the Act, the Exchange Act and the applicable rules and
regulations thereunder;
(2) in their opinion, the consolidated financial
statements and schedules of the Company and its consolidated
subsidiaries audited by them and included or incorporated by reference
in the Registration Statement and the Prospectus comply as to form in
all material respects with the applicable accounting requirements of
the Act, the Exchange Act, the related published rules and regulations
thereunder and Staff Accounting Bulletins with respect to registration
statements on Form S-2 and the Exchange Act documents and filings
incorporated by reference therein;
(3) on the basis of a reading of the December 13,
1996 unaudited condensed consolidated balance sheet, and the unaudited
condensed consolidated statements of income, stockholders' equity and
cash flows for the twenty-eight week periods ended December 13, 1996
and December 8, 1995, included or incorporated by reference in the
Registration Statement and the Prospectus, and performance of the
procedures (completed on ____________, 1997) specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on such December 13, 1996
unaudited condensed consolidated financial statements,
20
21
a reading of the latest interim unaudited consolidated financial
statements of the Company and its consolidated Subsidiaries, a reading
of the minutes of the meetings of the shareholders, the board of
directors and any committees thereof of the Company and each of its
consolidated Subsidiaries, inquiries of certain officials of the
Company and its consolidated Subsidiaries who have responsibility for
financial and accounting matters, such limited review and auditing
procedures and inquiries as may be in accordance with standards for
such reviews promulgated by the American Institute of Certified Public
Accountants and other specific procedures and inquiries, nothing came
to their attention that caused them to believe that:
(A) the unaudited condensed consolidated
financial statements of the Company and its consolidated
Subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act, the Exchange Act and the related
published rules and regulations thereunder and Staff
Accounting Bulletins with respect to registration statements
on Form S-2 and the Exchange Act documents and filings
incorporated by reference therein or such unaudited
consolidated financial statements are not fairly presented in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited consolidated financial statements included or
incorporated by reference in the Registration Statement and
the Prospectus;
(B) at the date of the latest balance
sheet read by them and at a subsequent specific date not more
than five business days prior to the date of such letter,
there were any changes in the capital stock or long-term debt
of the Company and its consolidated Subsidiaries or any
decreases in net current assets or shareholders' equity of the
Company and its consolidated Subsidiaries, in each case
compared with amounts shown on the December 13, 1996 unaudited
consolidated balance sheet included or incorporated by
reference in the Registration Statement and the Prospectus,
except for changes which the Registration Statement and the
Prospectus discloses have occurred or may occur or which are
described in the letter;
(C) at the date of the latest
consolidated balance sheet read by them and at a subsequent
specific date not more than five business days prior to the
date of such letter there were any decreases, as compared with
amounts shown in the unaudited consolidated balance sheet as
of December 13, 1996, included or incorporated by reference in
the Registration Statement and the Prospectus, in consolidated
total assets, working capital, long-term debt or shareholders'
equity of the Company and its consolidated Subsidiaries,
except for decreases which the Registration Statement and the
Prospectus discloses have occurred or may occur or which are
described in such letter;
(D) for the period from December 13,
1996, to the date of the latest consolidated income statement
read by them, and for the period from December 13, 1996, to a
subsequent specified date not more than five business days
prior to the date of such
21
22
letter, there were any decreases, as compared with the
corresponding period of the preceding year in consolidated
revenues, gross profit, operating income, earnings before
income taxes or the total or per share amounts of income
before extraordinary items or of net income or of the Company
and its consolidated Subsidiaries, except for decreases which
the Registration Statement and the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(4) on the basis of their audits referred to in
their report contained or incorporated by reference in the Prospectus,
the limited procedures referred to in (3) above and the carrying out
of certain other specified procedures agreed between the
Representative and Coopers & Xxxxxxx L.L.P., not constituting an
audit, they have compared certain specified amounts, percentages and
financial information included in the Registration Statement and the
Prospectus[, in Exhibits 11 and 12 to the Registration Statement] or
in the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 20, 1996, and December 13, 1996, incorporated
by reference in the Registration Statement and Prospectus with the
underlying accounting records of the Company and its consolidated
Subsidiaries and with information derived from such records and have
found them to be in agreement, excluding any questions of legal
interpretation.
(e) If the letters referred to in paragraph (d) above set
forth any such changes, decreases or increases, it shall be a further condition
to the obligations of the Underwriters that (1) such letters shall be
accompanied by a written explanation of the Company as to the significance
thereof, unless the Underwriters deem such explanation unnecessary, and (2)
such changes, decreases or increases do not, in the reasonable judgment of the
Underwriters, make it impractical or inadvisable to proceed with the purchase
and delivery of the Debentures as contemplated by the Registration Statement.
References to the Registration Statement and the Prospectus in paragraph (d)
and this paragraph (e) with respect to the letters referred to above shall
include any amendment or supplement thereto at the date of such letter.
(f) You shall have received on the Firm Closing Date a
certificate, dated the Firm Closing Date, of the Chief Executive Officer and
the Chief Financial Officer of the Company to the effect that:
(1) the representations and warranties of the
Company in this Agreement are true and correct as if made on and as of
the Firm Closing Date; the Registration Statement, as amended as of
the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented as of the Firm Closing
Date, does not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Firm Closing Date;
22
23
(2) no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto and
no order directed at any document incorporated by reference in the
Registration Statement or the Prospectus or any amendment or
supplement thereto has been issued, and no proceedings for that
purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(3) subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, (A) neither the Company nor any of its Subsidiaries has
sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding which has resulted in
a Material Adverse Change, and (B) there has not been any Material
Adverse Change, or any development involving a prospective Material
Adverse Change, except in each case as described in or contemplated by
the Registration Statement and Prospectus, and (C) there has not been
any change in the capital stock or a material increase in the
long-term debt of the Company or any of its Subsidiaries, taken as a
whole, except in each case as described in or contemplated by the
Registration Statement and the Prospectus and except pursuant to the
exercise of warrants or employee stock options outstanding on the date
as of which information about such warrants or employee stock options
is given in the Registration Statement and the Prospectus, and (D) the
Company has not incurred any change in liability or obligation, direct
or contingent, which is material to the Company or any of its
Subsidiaries, except in each case as described in or contemplated by
the Registration Statement and the Prospectus, and except for changes
in accounts payable incurred in the ordinary course of business.
(g) On or before the Firm Closing Date, the Underwriters
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company, as to the accuracy of the representations and warranties of the
Company in this Agreement, including, without limitation, as to the performance
by the Company of its obligations under this Agreement, as to the other
conditions concurrent and precedent to the obligations of the Underwriters
hereunder and as to any other matter relating to the Company, the Debentures,
the Registration Statement, the Prospectus or the offering of the Debentures.
(h) The Debentures shall have been designated for
inclusion on The Nasdaq National Market, subject only to notice of issuance at
the time of purchase.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions of this Agreement only if
they are reasonably satisfactory in all material respects to the Underwriters
and counsel for the Underwriters. The Company shall furnish to the
Underwriters such conformed copies of such opinions, certificates, letters and
documents in such quantities as the Underwriters and counsel for the
Underwriters shall reasonably request.
The several obligations of each of the Underwriters to purchase and
pay for any Option Debentures shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm
23
24
Debentures, except that all references to the Firm Debentures and the Firm
Closing Date shall be deemed to refer to such Option Debentures and the related
Option Closing Date, respectively.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter, their respective directors, officers, partners, agents and
employees and each other person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(collectively, "Indemnitees") against any losses, claims, damages or
liabilities, joint or several, to which such Indemnitee may become subject
under the Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of, relate to, or are
caused by or based upon,
(1) any untrue statement or alleged untrue
statement made by the Company in this Agreement,
(2) any untrue statement or alleged untrue
statement of any material fact contained in (A) the Registration
Statement or any amendment thereto or any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or (B) any
application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to
register or qualify the Debentures under the securities or blue sky
laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"),
(3) any omission or alleged omission to state in
the Registration Statement or any amendment thereto a material fact
required to be stated therein or necessary to make the statements
therein not misleading or any omission or alleged omission to state in
any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, or
(4) any untrue statement or alleged untrue
statement of any material fact contained in any audio or visual
materials used in connection with the marketing of the Debentures,
including, without limitation, slides, videos, films, and tape
recordings, except to the extent such materials were prepared by the
Underwriters,
and will reimburse, as incurred, each Indemnitee for any legal or other
expenses reasonably incurred by such Indemnitee in connection with
investigating, defending against, or appearing as a third-party witness in
connection with, any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of, is related to, or
is caused by or based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or any Application in
24
25
reliance upon, and in conformity with, written information furnished to the
Company by any Underwriter expressly for use therein; and provided, further,
that the Company will not be liable to any Indemnitee with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Debentures
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented), other than the documents incorporated by reference
therein, at or prior to the written confirmation of the sale of such Debentures
to such person in any case where such delivery of the Prospectus (as amended or
supplemented) is required by the Act and where delivery of such Prospectus (as
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability, unless such failure to deliver the Prospectus (as
amended or supplemented) was a result of noncompliance by the Company with
Section 5(d) or 5(e) of this Agreement. This indemnity agreement will be in
addition to any liability which the Company may otherwise have. The Company
will not, without the prior written consent of the Underwriters (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Indemnitee is a party to such claim, action, suit or
proceeding), unless (1) such settlement, compromise or consent includes an
unconditional release of all of the Indemnitees from all liability arising out
of such claim, action, suit or proceeding and (2) the entire settlement amount
and all costs of settlement and all related costs are borne by the Company or
another third party other than any of the Indemnitees.
(b) Each Underwriter, individually and not jointly, will
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to which
the Company, any such director or officer of the Company, or any such
controlling person of the Company may become subject under the Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of, relate to, or are caused by or are
based upon,
(1) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application, or
(2) any omission or alleged omission to state in
the Registration Statement or any amendment thereto a material fact
required to be stated therein or necessary to make the statements
therein not misleading or any omission or alleged omission to state in
any Preliminary Prospectus or any amendment or supplement thereto, or
any Application a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading,
in each case of (1) and (2) above to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission has been made in reliance upon, and in conformity
25
26
with, written information furnished to the Company by such Underwriter
expressly for use therein; and, subject to the limitation set forth immediately
preceding this clause, will reimburse, as incurred, any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending against any such loss,
claim, damage, liability or action. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
Notwithstanding any other provision of this paragraph (b), no Underwriter shall
be obligated to provide indemnification under this paragraph (b) that in the
aggregate exceeds the total public offering price of the securities purchased
by such Underwriter under this Agreement, less the aggregate amount of any
damages that such Underwriter has otherwise been required to pay in respect of
such untrue or alleged untrue statement or omission or alleged omission, and no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to indemnification under this paragraph
(b).
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action (including any
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party of the commencement of such action; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8 and will not relieve it from any liability under this Section 8
except to the extent the indemnifying party is actually prejudiced by the
failure to give such notice. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the parties
to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party or any officers, directors or
controlling persons of such indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action in
accordance with the foregoing, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (1) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than (i) one separate counsel for all such actions, and (ii)
one local counsel in each jurisdiction in which such actions are pending or
threatened, all of which counsel shall be designated by you in the case of
indemnification under paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions) or (2) the indemnifying party does not promptly retain counsel
reasonably satisfactory to the indemnified party or (3) the indemnifying
26
27
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party or indemnified party
shall, without the prior written consent of the other indemnifying or
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such person is a
party to such claim, action, suit or proceeding), unless (A) such settlement,
compromise or consent includes an unconditional release of all of the
non-consenting parties from all liability arising out of such claim, action,
suit or proceeding and (B) the entire settlement amount and all costs of
settlement and all related costs are borne by persons other than the
non-consenting persons; provided that with respect to indemnification under
paragraph (a) of this Section 8, such consent will not be required if (i) in
the indemnified party's reasonable judgment the indemnifying party does not
have the financial ability and the intent to satisfy its indemnification
obligations described in this Section 8, and (ii) the indemnified party
notifies the indemnifying party in writing at least 10 business days before it
settles, compromises or consents to the entry of any judgment in any such
pending or threatened claim, action, suit or proceeding.
(d) If the indemnity agreement provided for in the
preceding paragraphs of this Section 8 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each indemnifying
party, in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect (1) the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Debentures or (2) if
the allocation provided by the foregoing clause (1) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties, on the one hand, and the indemnified party,
on the other hand, in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the one hand, and the Underwriters, on the other hand, shall be deemed to be in
the same proportion as the total 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 on the
cover page of the Prospectus. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters (but only if, in the case of the Underwriters, such statements or
omissions were made in reliance upon, and in conformity with, written
information furnished to the Company by such Underwriters expressly for use
therein), the parties' relative intents, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), no Underwriter shall be obligated to
make
27
28
contributions under this paragraph (d) that in the aggregate exceed the total
public offering price of the securities purchased by such Underwriter under
this Agreement, less the aggregate amount of any damages that such Underwriter
has otherwise been required to pay in respect of such untrue or alleged untrue
statement or omission or alleged omission, and 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 under this
paragraph (d) are individual in proportion to their respective underwriting
obligations and not joint. For purposes of this paragraph (d), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the Company.
9. Default of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase the Firm Debentures which it or
they have agreed to purchase under this Agreement and the aggregate principal
amount of Firm Debentures which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
total principal amount of Firm Debentures, each non- defaulting Underwriter
shall be obligated severally, in the proportion which the principal amount of
Firm Debentures set forth opposite its name in Schedule 2 bears to the total
principal amount of Firm Debentures which all non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Debentures which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase; provided that in no event shall the
principal amount of Firm Debentures which any Underwriter has agreed to
purchase pursuant to Section 3 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such principal amount of Firm Debentures
without the written consent of such Underwriter. If any one or more of the
Underwriters shall fail or refuse to purchase Firm Debentures or Option
Debentures under this Agreement and the principal amount of Firm Debentures
with respect to which such default occurs is more than one- tenth of the total
amount of Firm Debentures, and if arrangements satisfactory to you are not made
within 36 hours after such default for the purchase by other persons (who may
include the non-defaulting Underwriters) of the Debentures with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any nondefaulting Underwriters or the Company other than as
provided in Section 10 of this Agreement. In any such case which does not
result in the termination of this Agreement, you shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 of this Agreement for not more than seven
business days in order that any necessary changes may be made in the
Registration Statement, the Prospectus, the other documents and the
arrangements for the purchase and delivery of the Firm Debentures or Option
Debentures, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities, contribution agreements and other
statements of the Company and the several Underwriters set forth in
28
29
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Underwriter or any controlling person referred to in Section 8
of this Agreement and (b) delivery of and payment for the Debentures. The
respective agreements, covenants, indemnities, limitations on liability and
other statements set forth in Sections 6, 8, 9 and 11 of this Agreement shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
11. Termination.
(a) This Agreement may be terminated with respect to the
Firm Debentures or any Option Debentures in your sole discretion by notice to
the Company given prior to the Firm Closing Date or the related Option Closing
Date, respectively, in the event that the Company shall have failed, refused or
been unable to perform all obligations on its part to be performed under this
Agreement on or before the Firm Closing Date or the Option Closing Date, as
applicable, or if any of the conditions in Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled at or prior to
the Firm Closing Date or such Option Closing Date, respectively:
(1) the Company and the Subsidiaries, taken as a
whole, shall have, in your reasonable judgment, sustained any Material
Adverse Change, including any loss or interference with their
respective businesses or properties from fire, flood, hurricane,
accident or other calamity, or from any labor dispute or any legal or
governmental proceeding, to the extent resulting, in your reasonable
judgment, in a Material Adverse Change, or any adverse change, or any
development involving a prospective adverse change (including without
limitation a change in management or control of the Company), in the
condition (financial or otherwise), management, business, net worth,
cash flows or results of operations of the Company and the
Subsidiaries, taken as a whole, to the extent resulting, in your
reasonable judgment, in a Material Adverse Change, except in each case
as described in or contemplated by the Registration Statement and the
Prospectus (exclusive of any amendment or supplement thereto);
(2) trading in the Common Stock shall have been
suspended by the Commission or The Nasdaq National Market or trading
in securities generally on the New York Stock Exchange or The Nasdaq
National Market shall have been suspended or minimum or maximum prices
shall have been established on such exchange or market system;
(3) a banking moratorium shall have been declared
by Michigan, New York or United States authorities;
(4) there shall have been (A) an outbreak or
major extension of hostilities between the United States and any
foreign power, (B) an outbreak or major extension of any other
insurrection or armed conflict involving the United States or (C) any
other calamity or crisis or material adverse change in the general
economic, political or financial conditions so disrupting the U.S.
financial markets that, in your reasonable judgment, makes it
impractical or inadvisable
29
30
to proceed with the public offering or the delivery of the Debentures
as contemplated by the Registration Statement, as amended as of the
date of this Agreement;
(5) there shall have been enacted, published,
decreed or promulgated any federal, state or local statute,
regulation, rule or order of any court or other governmental authority
which in your reasonable judgment materially and adversely affects or
is reasonably likely to materially and adversely affect the business
or operations of the Company; or
(6) any actions shall have been taken by any
federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your reasonable judgment has a
material adverse effect on the securities markets in the United States
that, in your reasonable judgment, makes it impractical or inadvisable
to proceed with the public offering or the delivery of the Debentures
as contemplated by the Registration Statement, as amended as of the
date of this Agreement.
(b) Termination of this Agreement pursuant to this
Section 11 shall be without liability of any party to any other party except as
provided in Section 6 (including the provisions of the Letter of Intent which
are incorporated in this Agreement) and Section 8 of this Agreement.
12. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by any Underwriter to the Company for the purposes of Section 2(b)
and Section 8 of this Agreement. The Underwriters confirm that such statements
(to such extent) are correct.
13. Notices. All notices and communications under this Agreement
shall be in writing and, if sent to you or the Underwriters, shall be delivered
or sent by mail, telex or facsimile transmission and confirmed in writing to
Xxxxx & Co., L.L.C., One Griswold, Detroit, Michigan 48226, Attention: Xxxx X.
Xxxxxxxx (with a copy to Xxxxxx Xxxxxxx PLLC, 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxxx, Esq.); and if sent to the
Company, shall be delivered or sent by mail, telex or facsimile transmission
and confirmed in writing to the Company at 00000 Xxxxxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Chief Executive Officer (with a copy to
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, 2290 First National Building, Detroit,
Michigan 48226, Attention: Xxxxxx X. Xxxx, Esq.).
14. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the Underwriters and the Company, and their respective
successors. assigns and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions contained in this Agreement, this Agreement
and all conditions and provisions of this Agreement being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (a) the indemnities of the Company contained in
Section 8 of this Agreement shall also be for the benefit of the Indemnitees,
including, without limitation, any person or
30
31
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and (b) the indemnities of the Underwriters
contained in Section 8 of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Debentures from any Underwriter shall be deemed a successor
because of such purchase.
15. Applicable Law. The validity and interpretation of this
Agreement, and the terms and conditions set forth in this Agreement, shall be
governed by and construed in accordance with the laws of the State of Michigan,
without giving effect to any provisions relating to conflicts of laws.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Entire Agreement. This Agreement and the Letter of Intent
provisions which are incorporated in this Agreement are the parties' entire
agreement concerning its subject matter, and supersede all prior undertakings
and agreements.
31
32
If the foregoing correctly sets forth our understanding, please
indicate your acceptance of this Agreement in the space provided below for that
purpose, whereupon this letter shall constitute an agreement binding the
Company and each of the Underwriters.
Very truly yours,
THORN APPLE VALLEY, INC.
By:
---------------------------------
Xxxx Xxxxxxx,
President and Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
XXXXX & CO., L.L.C.
By:
-------------------------------
Xxxx X. Xxxxxxxx,
Director of Corporate Finance
and General Partner
32
33
SCHEDULE 1
SUBSIDIARIES
State of
Name Incorporation
---- ---------------
Coast Refrigerated Trucking Co., Inc. North Carolina
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Xxxxxxxxx Lakeview Farms, Ltd. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Crown West, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Xxxxxxxxx Holdings, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Gunsberg Corned Beef Company Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Millers Transport Inc. Utah
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
National Food Express, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Ponca Holdings, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Thorn Apple Valley Foreign Sales Corporation Virgin
Authorized: ______ shares of Common Stock, ___ par value Islands (U.S.)
Outstanding: ______ shares
Thorn Apple Valley Holdings of Indiana, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
34
Xxxxxxx Holdings, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Tri-Xxxxxx Packing Co. Utah
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
Tri-Xxxxxx Transportation Company Inc. Utah
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
TAV Brands, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
TAV Swine Buying Stations, Inc. Michigan
Authorized: ______ shares of Common Stock, ___ par value
Outstanding: ______ shares
_________________
Thorn Apple Valley, Inc., a Michigan corporation, owns all of the
outstanding shares of the above-named Subsidiaries, except that Tri- Xxxxxx
Packing Co. and Millers Transport Inc. own ___ shares and ___ shares,
respectively, of Tri-Xxxxxx Transportation Company Inc.
34
35
SCHEDULE 2
Principal Amount of
Firm Debentures
Underwriter to be Purchased
----------- ---------------
XXXXX & CO., L.L.C. $__,000,000
