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EXHIBIT 1.2
UNDERWRITING AGREEMENT
August 4, 1999
Xxxxxxx, Xxxxx & Co.,
Deutsche Bank Securities Inc.,
Xxxxxx Xxxxxxx & Co. Incorporated,
Xxxxxxx Xxxxx Barney Inc.,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Xxxxx Advertising Company, a Delaware corporation (the "Company"),
proposes to issue and sell to you and the other underwriters named in Schedule
III hereto (the "Underwriters") $250,000,000 aggregate principal amount of its
5.25% Convertible Notes due 2006, convertible into Class A common stock, par
value $0.001 per share ("Stock"), of the Company (the "Firm Securities") to be
issued pursuant to an indenture to be dated as of August 10, 1999, between the
Company and State Street Bank and Trust Company, as trustee (the "Trustee") and
a supplemental indenture thereto to be dated as of the same date, between the
Company and the Trustee (the indenture and supplemental indenture,
collectively, the "Indenture"). In addition, the Company has granted to the
Underwriters an option to purchase up to $37,500,000 additional aggregate
principal amount of Securities (the "Option Securities") to be issued pursuant
to the Indenture, as provided in Section 2. The Firm Securities, and if and to
the extent such option is exercised, the Option Securities, are collectively
called the "Securities".
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as follows:
(a) A registration statement on Form S-3 (File No. 333-50559) (the
"1998 Registration Statement") and a registration statement on Form S-3 (File
No. 333-71929) (the "1999 Registration Statement") with respect to, among other
securities, the Securities and the Stock issuable upon exercise or conversion
of the Securities (the "Underlying Securities"), have been filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act") and have become effective. On the effective
date of each such registration statement, such registration statement conformed
in all material respects with the requirements of the Act, Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission (the "Rules and Regulations"). Copies of the 1999
Registration Statement, including the prospectus contained therein but
excluding exhibits to such registration statement other than those documents
incorporated by reference in such prospectus, as finally amended and revised,
have heretofore been delivered by the Company to the Underwriters. The 1998 and
1999 Registration Statements, including any
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documents incorporated therein by reference and any exhibits, financial
statements and schedules thereto, are herein collectively referred to as the
"Registration Statements". No post-effective amendments to the Registration
Statements have been filed as of the date of this Agreement, except that the
1999 Registration Statement constitutes a post-effective amendment of the 1998
Registration Statement and that each of the Registration Statements has been
amended by means of a post-effective amendment to include the Company as a
successor registrant to the company of like name, which existed prior to a
reorganization of the Company pursuant to Section 251(g) of the Delaware
General Corporation Law, and to add Xxxxx Media Corp. and certain subsidiaries
of Xxxxx Media Corp. as co-registrants. The form of prospectus dated February
4, 1999 included in the 1999 Registration Statement, as supplemented by the
prospectus supplement to be dated August 5, 1999, and as modified by the
accompanying base prospectus dated February 12, 1999, each relating to the
offering of the Securities, and to be filed by the Company with the Commission
pursuant to Rule 424(b), is herein referred to as the "Prospectus". Any
reference herein to the Registration Statements or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein,
and, in the case of any reference herein to the Prospectus, also shall be
deemed to include any supplements relating to the Securities being issued and
sold pursuant hereto filed with the Commission under Rule 424(b), in each case,
subsequent to the date hereof and prior to the termination of the offering of
the Securities by the Underwriters.
(b) Except as otherwise disclosed in the Prospectus, subsequent to
the respective dates as of which information is given in the Prospectus: (i)
there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations, whether or
not arising from transactions in the ordinary course of business, of the Company
and its subsidiaries, considered as a whole (any such change is called a
"Material Adverse Change"); (ii) the Company and its subsidiaries, considered as
a whole, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Prospectus; the subsidiaries listed on Schedule I
hereto (the "Subsidiaries") are the only subsidiaries of the Company; each
Subsidiary has been duly organized and is validly existing as a corporation,
partnership or limited liability company in good standing under the laws of its
jurisdiction of organization, with corporate, partnership or other
organizational power and authority to own or lease its properties and conduct
its business as described in the Prospectus, except where the failure so to be
in good standing would not, individually or in the aggregate, result in a
Material Adverse Change. The Company and each Subsidiary is duly qualified to
transact business in all jurisdictions in which the conduct of its business
requires such qualification, except where the failure so to qualify would not
reasonably be expected to result in a Material Adverse Change; the outstanding
shares of capital stock or other equity interest of each Subsidiary has been
duly
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authorized and validly issued, is fully paid and non-assessable; except as
indicated on Schedule I hereto, all of the shares of capital stock of the
Subsidiaries are owned by the Company, directly or indirectly through another
Subsidiary, free and clear of all liens, encumbrances and security interests
(other than as described in the 1999 Registration Statement) other than those
which would not reasonably be expected individually or in the aggregate to
materially impair the value of such shares; and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests of
the Subsidiaries are outstanding. Except for the Subsidiaries and investments
in securities as described in the 1999 Registration Statement, the Company has
no equity or other interest in, or right to acquire an equity or other interest
in, any corporation, partnership, trust or other entity.
(d) (i) The Indenture has been duly qualified under the Trust
Indenture Act. The execution and delivery of, and the performance by the
Company of its obligations under the Indenture have been duly and validly
authorized by the Company, and the Indenture has been duly executed and
delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which the
proceedings may be brought.
(ii) The Securities have been duly authorized by the Company,
and when the Securities are executed and authenticated in accordance with the
provisions of the Indenture and delivered to the Underwriters against payment
therefor in accordance with the terms of this Agreement, the Securities will be
entitled to the benefits of the Indenture and will constitute valid and legally
binding agreements of the Company, enforceable against the Company in
accordance with their terms, except (i) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific performance and other forms of equitable relief may
be subject to certain equitable defenses and to the discretion of the court
before which the proceedings may be brought.
(iii) When the Securities are delivered and paid for pursuant to
this Agreement on the Closing Date or Option Closing Date (each as defined in
Section 2), such Securities will be convertible into the Underlying Securities
in accordance with the terms of such Securities and the Indenture; the
Underlying Securities initially issuable upon exercise or conversion of such
Securities have been duly authorized and reserved for issuance and upon such
exercise or conversion and, when issued upon such exercise or conversion, will
be validly issued, fully paid and non-assessable; the outstanding Underlying
Shares have been duly authorized and validly issued, are fully-paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and no preemptive rights of stockholders exist with respect to such
convertible Securities or the Underlying Securities.
(e) The Securities conform with the statements concerning them in the
Prospectus.
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(f) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Securities
nor instituted proceedings for that purpose. The Registration Statements
contain and the Prospectus and any amendments or supplements thereto will
contain all statements which are required to be stated therein by, and in all
material respects conform or will conform, as the case may be, to the
requirements of, the Act and the Rules and Regulations. The documents
incorporated by reference in the Prospectus, at the time they were filed or
will be filed with the Commission, conformed or will conform at the time of
filing, in all material respects to the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the Trust Indenture Act or the
Act, as applicable, and the Rules and Regulations of the Commission thereunder.
Neither of the Registration Statements, as of its effective date, nor the
Prospectus nor any supplement thereto, as of the date it is filed with the
Commission, contains or will contain, as the case may be, any untrue statement
of a material fact or omits or will omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statements or the
Prospectus, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters, for use in the
preparation thereof; and provided, further, that the Company makes no
representations or warranties as to that part of the Registration Statements
that constitute the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of the Trustee.
(g) The consolidated financial statements of the Company and its
subsidiaries, together with related notes and schedules, as incorporated by
reference in the Prospectus, present fairly the consolidated financial position
and the consolidated results of operations of the Company and its subsidiaries
at the indicated dates and for the indicated periods. All such financial
statements have been prepared in accordance with generally accepted principles
of accounting, consistently applied throughout the periods involved, except as
disclosed therein. The summary and selected financial and statistical data
included or incorporated by reference in the Prospectus present fairly in all
material respects the information shown therein and have been compiled on a
basis consistent with the financial statements presented therein. The pro forma
condensed consolidated financial statements of the Company and its subsidiaries
and the related notes thereto, included as Exhibit 99.4 to the Current Report
on Form 8-K/A dated October 1, 1998 and filed with the Commission on October
19, 1999, and as Exhibit 99.2 to the Current Report on Form 8-K dated July 6,
1999 and filed with the Commission on July 7, 1999, present fairly the
information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly presented on the bases described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(h) After due inquiry, the Company has no reason to believe that the
consolidated financial statements of each of Outdoor Communications, Inc. and
subsidiaries, OCI Corp. of Michigan and subsidiaries and Mass Communications
Corp. and subsidiary (collectively, the "OCI Financials") included as Exhibit
99.4 to the Company's Current Report on Form 8-K/A dated October 1, 1998 and
filed with the Commission on October 19, 1998, and each of Chancellor Media
Outdoor Corporation, the outdoor advertising division of Whiteco Industries,
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Inc., Xxxxxx Media L.P. and Xxxxxx XxxXxxxxxx, Inc. (collectively, the "Outdoor
Financials") included as Exhibit 99.1 to the Current Report on Form 8-K dated
July 6, 1999 and filed with the Commission on July 7, 1999, do not fairly
present the consolidated financial position, results of operations, changes in
stockholder's equity and cash flows of the entities described therein on the
basis described therein at the respective dates or for the respective periods
to which they apply or that the OCI Financials or the Outdoor Financials have
not been prepared in accordance with generally accepted accounting principles
consistently applied, except as described therein.
(i) There is no action or proceeding pending or, to the knowledge of
the Company, threatened against the Company or the Subsidiaries before any
court or administrative agency or by any regulatory authority which may
reasonably be expected to result in a Material Adverse Change.
(j) The Company and the Subsidiaries have good and marketable title
to all of the properties and assets reflected in the financial statements (or as
described in the 1999 Registration Statement) hereinabove described, subject to
no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the 1999 Registration
Statement) or which are not material in amount. The Company and the Subsidiaries
occupy their leased properties under valid and binding leases conforming to the
description thereof set forth in the 1999 Registration Statement, with such
exceptions as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Change or materially impair the value
of such leasehold estate to the Company or such Subsidiary.
(k) The Company and the Subsidiaries have filed all federal, state
and foreign income tax returns which have been required to be filed and have
paid all taxes indicated by said returns and all assessments received by them or
any of them to the extent that such taxes have become due and are not being
contested in good faith, except for such failure to file or defaults in payment
of a character which would not reasonably be expected to result in a Material
Adverse Change.
(l) Neither the Company nor any of the Subsidiaries is, nor with the
giving of notice, lapse of time or both, will be, in default under (i) its
certificate of incorporation or by-laws or (ii) any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it or any of its properties is bound and, in the case of (ii) which default
would reasonably be expected to result in a Material Adverse Change. The
consummation of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which
the Company or any of the Subsidiaries is a party, or of the charter or by-laws
of the Company or the Subsidiaries or any order, rule or regulation applicable
to the Company or any of the Subsidiaries of any court or of any regulatory
body or administrative agency or other governmental body having jurisdiction
which conflict, breach or default would reasonably be expected to result in a
Material Adverse Change.
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(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by
the Company of this Agreement and the consummation of the transactions herein
contemplated (except such steps as may be required by the National Association
of Securities Dealers, Inc. (the "NASD") or may be necessary to qualify the
Securities for public offering by the Underwriters under State securities or
Blue Sky laws) has been obtained or made and is in full force and effect.
(n) The Company and each of the Subsidiaries hold all material
licenses, consents, authorizations, approvals, orders, certificates and permits
(collectively, "Licenses") of and from, all federal, state, local, foreign and
other governmental authorities, all self-regulatory organizations in each case
as required for the conduct of the business in which it is engaged, and each
such License is in full force and effect, except to the extent that the failure
to obtain or maintain any such License would not reasonably be expected to
result in a Material Adverse Change.
(o) The Company and the Subsidiaries are in compliance with all
applicable federal, state, foreign and local laws and regulations relating to
(i) zoning, land use, protection of the environment, human health and safety or
hazardous or toxic substances, wastes, pollutants or contaminants and (ii)
employee or occupational safety, discrimination in hiring, promotion or pay of
employees, employee hours and wages or employee benefits, except where such
noncompliance would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Change.
(p) KPMG LLP, who have certified the financial statements of the
Company and the OCI Financials filed with the Commission as part of, or
incorporated by reference in, the Registration Statements, are independent
public accountants as required by the Act and the Rules and Regulations.
(q) The Company has never been, is not now, and immediately after the
sale or conversion of the Securities under this Agreement will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(r) The Company has reviewed its operations and that of its
Subsidiaries, and has contacted and made appropriate inquiries to any third
parties on whom the Company or any of its Subsidiaries is dependent to a
material extent in the conduct of their business or operations, to evaluate the
extent to which the business or operations of the Company or any of its
Subsidiaries will be affected by the Year 2000 Problem. As a result of such
effort, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a material adverse effect on the general affairs,
management, the current or future consolidated financial position, business
prospects, stockholders' equity or results of operations of the Company and its
Subsidiaries, taken as a whole, or result in any material loss or interference
with the Company's business or operations. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical
or electrical systems of any kind will be adversely affected by the advent of
the year
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2000 or 2001, the advent of the twenty-first century or the transition from
the twentieth century to the year 2000 and into the twenty-first century.
(s) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes;
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(a) The Firm Securities. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Company agrees to issue and sell to the
Underwriters, and the Underwriters, severally and not jointly, agree to
purchase from the Company, the Firm Securities set forth opposite the name of
such Underwriter of Schedule III hereto. The purchase price per Security shall
be 97.25% of the principal amount thereof.
(b) The Closing Date. Delivery of certificates for the Firm
Securities to be purchased by the Underwriters and payment therefor shall be
made at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, at 9:30 a.m., New York time, on August 10, 1999 (or such other
place, date or time as may be agreed to in writing by the Company and the
Underwriters) (the time and date of such closing are called the "Closing
Date").
(c) The Option Securities; the Option Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the Underwriters to purchase up to $37,500,000
aggregate additional principal amount of Option Securities from the Company at
the per Security purchase price to be paid by the Underwriters for the Firm
Securities. The option granted hereunder is for use by the Underwriters solely
in covering any over-allotments in connection with the sale and distribution of
the Firm Securities. The option granted hereunder may be exercised at any time
(but not more than once) upon notice by the Underwriters to the Company, which
notice may be given at any time within 30 days from the date of this Agreement.
Once given in writing, such notice shall be irrevocable. Such notice shall set
forth (i) the aggregate principal amount of Option Securities as to which the
Underwriters are exercising the option, (ii) the names and denominations in
which the certificate(s) for the Option Securities are to be registered and
(iii) the time, date and place at which such certificate(s) will be delivered
(which time and date may be simultaneous with, but not earlier than, the
Closing Date; and in such case the term "Closing Date" shall refer to the time
and date of delivery of certificates for the Firm Securities and the Option
Securities). Such time and date of delivery, if subsequent to the Closing Date,
is called the "Option Closing Date" and shall be determined by the Underwriters
and shall not be earlier than three nor later than five full business days
after delivery of such notice of exercise.
(d) Payment for the Securities. Payment for the Securities shall be
made at the Closing Date (and, if applicable, at the Option Closing Date) by
wire transfer of immediately available funds to the order of the Company.
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(e) Delivery of the Securities. The Company shall deliver, or cause
to be delivered for the account of the Underwriters the Firm Securities being
purchased on the Closing Date in the form of one or more permanent global
Securities in definitive form registered in the name of Cede & Co., as custodian
for The Depository Trust Company, as Depository ("DTC"), against the irrevocable
release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. The Company shall also deliver, or cause to be
delivered, for the account of the Underwriters, the Option Securities being
purchased on the Option Closing Date in the form of one or more permanent global
Securities registered in the name of DTC, against the irrevocable release of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. Interests in global Securities will be held only in book-entry
form through DTC, except in limited circumstances described in the Prospectus.
SECTION 3. PUBLIC OFFERING OF THE SECURITIES.
The Underwriters hereby advise the Company that the Underwriters
intend to offer the Securities for sale as described in the Prospectus as soon
after this Agreement has been executed as the Underwriters, in their sole
judgment, have determined is advisable and practicable.
SECTION 4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the Underwriters that:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) of the Rules and Regulations a supplementary prospectus
setting forth such other information and the terms of the offering contemplated
by Section 2 hereof, (ii) not file, prior to the termination of the offering of
the Securities by the Underwriters, any amendment to the Registration
Statements or supplement to the Prospectus or document incorporated by
reference therein of which the Underwriters shall not previously have been
advised and furnished with a copy or to which the Underwriters shall have
reasonably objected in writing or which is not in compliance with the Rules and
Regulations and (iii) file on a timely basis all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and prior to the
termination of the offering of the Securities by the Underwriters.
(b) The Company will advise the Underwriters promptly of any request
of the Commission for amendment of either Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of
either Registration Statement or the use of the Prospectus or of the
institution of any proceedings for that purpose, and the Company will use all
reasonable efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(c) The Company will deliver to, or upon the order of, the
Underwriters during the period when delivery of a Prospectus is required under
the Act, as many copies of the Prospectus in final form, or as thereafter
amended or supplemented, as the Underwriters may reasonably request; provided,
however, that if the Underwriters are required to deliver a
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prospectus in connection with sales of any shares at any time nine months or
more after the date of this Agreement, upon the Underwriters' request, but at
the expense of the Underwriters, the Company will prepare and deliver to the
Underwriters such copies of an amended and supplemented Prospectus as you may
reasonably request.
(d) If, during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with the Act, the Company promptly will, at its election,
either (i) prepare and file with the Commission an appropriate amendment to the
Registration Statements or supplement to the Prospectus or (ii) prepare and
file with the Commission an appropriate filing under the Exchange Act which
shall be incorporated by reference in the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with law.
(e) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the 1999 Registration Statement, an
earnings statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the 1999 Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(f) The Company will, for a period of five years from the Closing
Date, deliver to the Underwriters copies of annual reports and copies of all
other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Exchange Act.
(g) No offering, sale or other disposition of any Class A Common
Stock of the Company or any other securities convertible or exchangeable or
exercisable for Class A Common Stock or derivatives of Class A Common Stock,
will be made for a period of 90 days after the date of this Agreement, directly
or indirectly, by the Company otherwise than hereunder or with the prior written
consent of the Underwriters except that the Company may, without such consent,
(i) issue shares of Class A Common Stock in connection with the pending
acquisitions or otherwise as consideration for the acquisition of additional
outdoor advertising or logo sign assets, provided that the persons receiving
such shares agree not to distribute such shares during the period of 90 days
following the date of this Agreement and (ii) issue shares upon the exercise of
options outstanding on the date of this Agreement or otherwise pursuant to the
Company's 1996 Equity Incentive Plan or any substitute plan.
SECTION 5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting
fees of the Company; the fees and disbursements of
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counsel for the Company; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the 1999 Registration Statement, the
Prospectus, the Securities and this Agreement; the filing fees of the
Commission; and the filing fees and expenses incident to securing any required
review by the NASD of the terms of the sale of the Securities. The Company
shall not, however, be required to pay for any of the Underwriters' expenses
except that, if this Agreement shall not be consummated because the conditions
in Section 6 hereof are not satisfied, or because this Agreement is terminated
by the Underwriters pursuant to Section 11(a)(iv) or 11(a)(vi) hereof, or by
reason of any failure, refusal or inability on the part of the Company to
deliver the Securities (unless such failure to is due to the default or
omission of the Underwriters), then the Company shall reimburse the
Underwriters for reasonable out-of-pocket expenses, including reasonable fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Securities or in
contemplation of performing its obligations hereunder; but the Company shall in
no event be liable to the Underwriters for damages on account of loss of
anticipated profits from, or related to, the sale by it of the Securities.
SECTION 6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the Underwriters to purchase the Firm Securities on
the Closing Date and the Option Securities, if any, on the Option Closing Date
are subject to the accuracy, as of the Closing Date or the Option Closing Date,
as the case may be, of the representations and warranties of the Company
contained herein, and to the performance by the Company in all material
respects, of its covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statements and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule
424, and any request of the Commission for additional information (to be
included in the Registration Statements or otherwise) shall have been disclosed
to the Underwriters and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of either Registration Statement shall have
been issued and no proceedings for that purpose shall have been taken or, to
the knowledge of the Company, shall be contemplated by the Commission.
(b) (i) The Underwriters shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Xxxxxx & Dodge LLP,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters to the effect that:
(A) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of its
incorporation, with corporate power and authority to own, and hold
under lease, its properties and conduct its business as described in
the Prospectus.
(B) The Securities conform in all material respects to the
description thereof contained in the Prospectus; and the certificates
for the Securities are in due and proper form.
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(C) The Securities delivered on the Closing Date or the Option
Closing Date, as the case may be, are convertible into the Underlying
Shares of the Company in accordance with the terms of the Indenture;
the Underlying Shares issuable upon conversion of such Securities have
been duly authorized and reserved for issuance upon such conversion
and, when issued upon such conversion, will be validly issued, fully
paid and non-assessable; any outstanding Underlying Shares have been
authorized and validly issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect to
the Securities or the Underlying Shares.
(D) The Registration Statements have become effective under the Act
and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened
under the Act.
(E) The Registration Statements, the Prospectus and each amendment or
supplement thereto filed with the Commission on or prior to the date
of such opinion comply as to form in all material respects with the
requirements of the Act and the applicable rules and regulations
thereunder in effect as of the time of such filing (except that such
counsel need express no opinion as to the financial statements,
schedules and other financial information included therein).
(F) Each document incorporated by reference in the Registration
Statements, the Prospectus and each amendment or supplement thereto
filed with the Commission on or prior to the date of such opinion
complied as to form at the time of such filing in all material
respects with the applicable requirements (if any) of the Exchange Act
and the applicable rules and regulations thereunder in effect as of
the date of such filing (except that such counsel need express no
opinion as to the financial statements, schedules and other financial
information included therein).
(G) The execution and delivery of this Agreement and the consummation
of the transactions herein contemplated, do not and will not violate
the Certificate of Incorporation or By-Laws of the Company, or result
in a breach of any of the terms or provisions of, or constitute a
default under, any material agreement or instrument of which such
counsel has knowledge to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries may be
bound, and which conflict, breach or default could reasonably be
expected to result in a Material Adverse Change.
(H) This Agreement has been duly authorized, executed and delivered
by the Company.
(I) Except for approvals, consents, orders, authorizations,
designations, declarations or filings which have been validly waived,
or which have been obtained or made, no approval, consent, order,
authorization, designation, declaration or filing by or with any
regulatory, administrative or other governmental body is necessary in
connection with the execution and delivery by the Company of this
Agreement and the Indenture and the consummation by the Company of the
transactions herein or therein contemplated (other
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than as may be required by the NASD or as required by State securities
and Blue Sky laws as to which such counsel need express no opinion).
(J) The Company is not, and will not become as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, and has not been an "investment company" at any
time since 1989.
(K) (1) The Indenture has been duly qualified under the Trust
Indenture Act; (2) the Company has the corporate power and authority
to enter into the Indenture and to issue and sell the Securities; (3)
the Indenture has been duly authorized, executed and delivered by the
Company; (4) the Securities have been duly authorized and when issued
and executed and authenticated in accordance with the provisions of
the Indenture and delivered to the Underwriters in accordance with the
terms of this Agreement, will be entitled to the benefits of the
Indenture; and (5) the Indenture and the Securities constitute valid
and legally binding obligations of the Company, enforceable against
the Company in accordance with its terms except that (I) the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (II) the remedy of
specific performance and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the
court before which the proceedings may be brought.
(L) The statements set forth in the Prospectus under the captions
"Description of Notes We Are Offering", "Description of Capital Stock
of Xxxxx Advertising Company", insofar as they purport to constitute a
summary of the terms of the Securities and the Stock, respectively,
under the caption "Material United States Federal Income Tax
Considerations", and under the captions "Description of Other
Indebtedness of Xxxxx" and "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair in all material respects.
(M) Neither the issuance, sale or delivery of the Securities, nor the
execution, delivery or performance of the Indenture, or compliance by
the Company with all provisions of the Indenture, nor consummation by
the Company of the transactions contemplated hereby or thereby
constitutes or will constitute a violation or breach of, or a default
under, the certificate of incorporation or bylaws or other
organizational documents of the Company or any of the Subsidiaries or
any agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties is bound and that is an exhibit
to the 1999 Registration Statement, or will result in the creation or
imposition of any lien, charge or encumbrance pursuant to any such
agreement, indenture, lease or other instrument upon any property or
assets of the Company or any of the Subsidiaries, nor will any such
action result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky
laws), judgment, injunction, order or decree known to such counsel, to
be applicable to the Company, the Subsidiaries or any of their
respective properties.
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In rendering such opinion, Xxxxxx & Dodge LLP may rely as to
matters governed by laws other than the Delaware General Corporate Law or
Federal laws on local counsel in the relevant jurisdictions provided that in
each case Xxxxxx & Dodge LLP shall state that they believe that they and the
Underwriters are justified in relying on such other counsel and such other
counsel's opinion is also delivered to the Underwriters. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which causes them
to believe that (A) either of the Registration Statements, as of the time it
became effective under the Act and as of the Closing Date or the Option Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) the Prospectus or any
supplement thereto, on the date it was filed pursuant to Rules and Regulations
and as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading (except
that such counsel need express no view as to financial statements and the notes
thereto, schedules and other financial information included or incorporated by
reference therein or the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of the Trustee). Xxxxxx & Dodge LLP shall also state that they do
not know of any amendment to the Registration Statements required to be filed
or any contracts or other documents of a character required to be filed as an
exhibit to the Registration Statements or required to be incorporated by
reference into the Prospectus as amended or supplemented or required to be
described in the Registration Statements or the Prospectus as amended or
supplemented which are not filed or incorporated by reference or described as
required.
(ii) The Underwriters shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Kean, Miller,
Hawthorne, X'Xxxxxx, XxXxxxx & Xxxxxx, L.L.P., counsel for the Company, dated
the Closing Date or the Option Closing Date, as the case may be, addressed to
the Underwriters to the effect that:
(A) Based upon appropriate certificates of public officials (which
shall be furnished to the Underwriters with the opinion), each of the
Subsidiaries incorporated or organized as a corporation or partnership
has been duly incorporated or organized and is validly existing and in
good standing under the laws of the jurisdiction of its incorporation
or organization with corporate, partnership or other organizational
power and authority, as the case may be, to own, and hold under lease,
its properties and conduct its business as described in the
Prospectus.
(B) Based upon appropriate certificates of public officials (which
shall be furnished to the Underwriters with the opinion), the Company
is duly qualified to transact business as a foreign corporation,
partnership or limited liability company, as the case may be, and is
in good standing under the laws of each of the jurisdictions in which
the conduct of its business requires such qualification, except to the
extent that the failure to qualify would not, in the aggregate,
reasonably be expected to result in a Material Adverse Change.
(C) The outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable. To the best
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knowledge of such counsel, the shares of capital stock of the
Subsidiaries are owned by the Company or one of the other Subsidiaries
free and clear of all liens, encumbrances and security interests, and
except as disclosed in the Registration Statement, no options,
warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligations into shares of
capital stock or ownership interests of the Subsidiaries are
outstanding.
(D) The Company's Class A and Class B Common Stock have been duly
authorized; the outstanding shares of its Class A Common Stock have
been duly authorized and validly issued and are fully paid and
non-assessable.
(E) Such counsel does not know of any material contract or document
that should have been filed as exhibits to or incorporated by
reference or described in the Prospectus which was not so filed,
incorporated by reference or described.
(F) Such counsel knows of no material legal proceedings or regulatory
or other claims pending or threatened against the Company or the
Subsidiaries of a character required to be reflected in the Prospectus
that are not set forth in the Prospectus.
In addition to the matters set forth above, such opinion shall
also include a statement to the effect that nothing has come to the attention
of such counsel which causes them to believe that (A) either of the
Registration Statements, as of the time it became effective under the Act and
as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (B) the Prospectus or any supplement thereto, on the date
it was filed pursuant to Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made not misleading (except that such counsel need express no
view as to financial statements and the notes thereto, schedules and other
financial information included or incorporated by reference therein).
(iii) The Underwriters shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Xxxxx X. XxXxxxxx,
Esquire, general counsel of the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters to the effect
that: The statements in the Prospectus under the caption "Risk Factors -- Our
operations are impacted by the regulation of outdoor advertising", and
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 under the caption "Business -- Regulation" insofar as such
statements constitute a summary of regulatory matters relating to the outdoor
advertising industry, fairly describe the regulatory matters relating to such
industry.
In addition to the matters set forth above, such opinion shall
also include a statement to the effect that nothing has come to the attention
of such counsel which causes him to believe that (A) either of the Registration
Statements, as of the time it became effective under the Act and as of the
Closing Date or the Option Closing Date, as the case may be, contained
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an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (B) the Prospectus or any supplement thereto, on the date it
was filed pursuant to Rules and Regulations and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made not misleading (except that such
counsel need express no view as to financial statements, and the notes thereto,
schedules and other financial information included or incorporated by reference
therein).
(c) The Underwriters shall have received from Xxxxxxxx & Xxxxxxxx,
counsel for the Underwriters, such written opinion or opinions dated the
Closing Date or the Option Closing Date, as the case may be, with respect to
the incorporation of the Company, the validity of the Securities delivered on
such date, the Registration Statements, the Prospectus as well as such other
related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(d) On the date of the Prospectus at a time prior to the execution of
this Agreement, and on the Closing Date or the Option Closing Date, as the case
may be, KPMG LLP, who have certified the financial statements of the Company
and its Subsidiaries, and PricewaterhouseCoopers LLP, Xxxxxx Xxxxxxxx, LLP,
Barbich, Longcrier, Xxxxxx & King and BDO Xxxxxxx LLP, who have certified the
Outdoor Financials (as set forth in the Current Report on Form 8-K/A dated
October 1, 1998 and filed with the Commission on October 19, 1999), in each
case included or incorporated by reference in the Prospectus, shall have
furnished to the Underwriters letters, dated the date of the Prospectus, and
letters dated the Closing Date or the Option Closing Date, as the case may be,
to the effect set forth in Schedule IV hereto (only with respect to paragraphs
(i), (ii) and (iii) in the case of PricewaterhouseCoopers LLP, and only with
respect to paragraphs (i) and (ii) (first sentence) in the case of Xxxxxx
Xxxxxxxx LLP, Barbich, Longcrier, Xxxxxx & King and BDO Xxxxxxx LLP), and with
respect to the letters to be dated the Closing Date or the Option Closing Date,
as the case may be, as to such other matters as you may reasonably request and
in form and substance satisfactory to you.
(e) The Underwriters shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents in such capacity as follows:
(i) The representations and warranties of the Company are true and
correct as of such date as though made on and as of the Closing Date or the
Option Closing Date, as the case may be;
(ii) The Company has performed all obligations in all material
respects and satisfied all conditions on its part to be performed or satisfied
pursuant to this Agreement at or prior to such date;
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(iii) The Registration Statements have become effective under the Act;
the Prospectus has been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the Rules and
Regulations in accordance with Section 5(a) of the Act; and no stop order
suspending the effectiveness of either Registration Statement has been issued,
and no proceedings for such purpose have been initiated or are, to his
knowledge, contemplated by the Commission; and all requests for additional
information on the part of Commission have been complied with;
(iv) He does not know of any litigation instituted or threatened
against the Company or any of the Subsidiaries of a character required to be
disclosed in the Prospectus which is not so disclosed; he does not know of any
material contract required to be filed as an exhibit to the 1999 Registration
Statement which is not so filed;
(v) He has carefully examined the Registration Statements and the
Prospectus and, in his opinion, as of the effective date of the Registration
Statements, the statements contained in the Registration Statements, including
any documents incorporated by reference therein, were true and correct in all
material respects, and such Registration Statements and Prospectus or any
document incorporated by reference therein did not omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein in light of the circumstances in which they were made, not misleading
and, in his opinion, since the date of the Prospectus, no event has occurred
which should have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement or amendment; and
(vi) (A) Neither the Company nor any of its Subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus and
(B) since the respective dates as of which information is given in the
Prospectus there has not been any change in the capital stock or long-term debt
of the Company or any of its Subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations
of the Company and its Subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described
in clause (A) or (B), is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Prospectus.
(f) The Company shall have furnished to the Underwriters such further
certificates and documents confirming the representations and warranties
contained herein and related matters as the Underwriters may reasonably have
requested.
(h) The Underwriters shall have received from each executive officer
(except for one executive officer with respect to 25,000 shares of Stock),
director and stockholder of the Company listed on Schedule IIA a letter or
letters, to the effect set forth in Schedule IIB hereto.
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If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Underwriters by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be. In such event, the Company and the Underwriters shall not be under
any obligation to each other (except to the extent provided in Sections 5, 8
and 10).
SECTION 7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Securities required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statements shall have been issued and in effect or proceedings
therefor initiated or threatened.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls the Underwriter within the meaning of the Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which the Underwriters or such controlling person may become
subject, under the Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statements, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434 under
the Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and to
reimburse the Underwriter and each such controlling person for any and all
reasonably expenses (including the reasonable fees and disbursements of counsel
chosen by the Underwriter) as such expenses are reasonably incurred by the
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Underwriters for use in the Registration Statements, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto; and provided, further, that the Company shall not be liable to any
Underwriter under the indemnity agreement in this subsection (a) with respect
to any preliminary prospectus amending or supplementing the form of prospectus
dated February 4, 1999 included in the 1999 Registration Statement to the
extent that any such loss,
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claim, damage, liability or expense of such Underwriter results from the fact
that such Underwriter sold Securities to a person as to whom it shall be
established that, at or prior to the written confirmation of such sale, a copy
of the Prospectus or of the Prospectus as then amended or supplemented had not
been given or sent, in any case where such delivery is required by the Act , if
(A) the Company had previously furnished copies thereof in sufficient quantity
to such Underwriter and (B) the loss, claim, damage, liability or expense of
such Underwriter results from an untrue statement or omission of a material
fact contained in such preliminary prospectus which was identified in writing
at such time to such Underwriter and corrected in the Prospectus or in the
Prospectus as then amended or supplemented, and such correction would have
cured the defect giving rise to such loss, claim, damage, liability or expense.
The indemnity agreement set forth in this Section 8(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. The
Underwriters agree to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statements and each
person, if any, who controls the Company within the meaning of the Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer or controlling
person may become subject, under the Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Underwriters), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statements, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statements, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Underwriters expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The indemnity agreement set forth in this Section 8(b) shall be in
addition to any liabilities that the Underwriters may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties
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similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party's
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in which case the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel
(together with local counsel) approved by the indemnifying party and
representing the indemnified parties who are parties to such action).
(d) Settlements. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies
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in the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriters, on the other hand, in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Company, and the total underwriting compensation actually received by
the Underwriters. The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact or any such
inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any reasonable
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth
in Section 8(c) with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 9, provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 9.
SECTION 10. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the
Securities which such Underwriter has agreed to purchase and pay for on such
date (otherwise than by reason of any default on the part of the Company), you,
as representatives of the Underwriters, shall use your best efforts to procure
within 24 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and
upon the terms set forth herein, the Securities which the defaulting
Underwriter or Underwriters failed to purchase. If during such 24 hours you, as
such representatives, shall not have procured such other Underwriters, or any
others, to purchase the Securities agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of Securities
with respect to which such default shall occur does not exceed 10% of the Firm
Securities or Option Securities, as the case may be, covered hereby, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Firm Securities or Option Securities, as the case may be, which they
are obligated to purchase hereunder, to purchase the Securities which such
defaulting Underwriter or Underwriters failed to purchase, or (b) if the
aggregate number of shares of Firm Securities or Option Securities, as the case
may be, with respect to which such default shall
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21
occur exceeds 10% of the Firm Securities or Option Securities, as the case may
be, covered hereby, the Company or you as the Representatives of the
Underwriters will have the right, by written notice given within the next
24-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company except to the extent provided in Section 8 hereof. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 10,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as you, as Representatives, may
determine in order that the required changes in the Registration Statement or
in the Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. NOTICES.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Underwriters:
Xxxxxxx, Xxxxx & Co.,
Deutsche Bank Securities Inc.,
Xxxxxx Xxxxxxx & Co. Incorporated,
Xxxxxxx Xxxxx Barney Inc.,
c/o Goldman, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Attention: Registration Department
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
If to the Company:
Xxxxx Advertising Company
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxx, 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Xx., President
-21-
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with a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 12. TERMINATION.
This Agreement may be terminated by you by notice to the Company as
follows:
(a) at any time after the date hereof and prior to the Closing Date if
any of the following has occurred: (i) any outbreak or escalation of
hostilities or declaration of war or national emergency after the date hereof
or other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in your judgment, make the offering or delivery of the Securities
on the terms and in the manner contemplated in the Prospectus impracticable,
(ii) trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited (other than limitations on hours or numbers of days of
trading or the application of "circuit breakers") or minimum prices shall have
been established for securities on any such Exchange, (iii) trading in the
Company's securities on the Nasdaq National Market shall have been suspended or
materially limited, (iv) declaration of a general moratorium on commercial
banking activities by either federal or New York State authorities, (v) any
downgrading in the rating of the Company's debt securities or preferred stock
by any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g)(2) under the Exchange Act), or any public announcement
by any such organization that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities or preferred stock; (vi) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States or elsewhere; or (vii) any litigation or
proceeding is pending or threatened against the Underwriters which seeks to
enjoin or otherwise restrain, or seeks damages in connection with, or questions
the legality or validity of this Agreement or the transactions contemplated
hereby; or
(b) as provided in Section 6 and Section 10 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company as to
any obligation of the Underwriters to purchase the Option Securities, upon the
occurrence at any time prior to the Option Closing Date of any of the events
described in subparagraph (a) above or as provided in Section 6 and Section 10
of this Agreement.
-22-
23
SECTION 13. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8, and in each case their respective
successors, and personal representatives, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Securities as such from the Underwriters merely by reason of
such purchase.
SECTION 14. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 15. GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 16. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition
herein (express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit. The Table of Contents and the
Section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
-23-
24
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
Xxxxx Advertising Company
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: CFO
Accepted as of the date hereof
in New York, New York
Xxxxxxx, Sachs & Co.
Deutsche Bank Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
By: /s/ Xxxxxxx, Xxxxx & Co.
----------------------------------------
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Underwriters
-24-
25
SCHEDULE I
Subsidiaries of Xxxxx Advertising Company*
State of Other Jurisdiction of
Name Incorporation or Organization
---- -------------------------------
Xxxxx Media Corp. Delaware
The Lamar Corporation Louisiana
Interstate Logos, Inc. Delaware
Xxxxx Advertising of Colorado Springs, Inc. Colorado
Xxxxx Advertising of Xxxxxxx, Inc. Mississippi
Xxxxx Advertising of Mobile, Inc. Alabama
Xxxxx Advertising of Xxxxxx, Inc. Tennessee
Xxxxx Advertising of South Georgia, Inc. Xxxxxxx
Xxxxx Advertising of South Mississippi, Inc. Mississippi
Xxxxx Advertising of Youngstown, Inc. Delaware
Xxxxx Xxxxxxxx, Inc. Missouri
TLC Properties, Inc. Louisiana
Missouri Logos, Inc. Missouri
Missouri Logos, a Partnership Missouri
Nebraska Logos, Inc. Nebraska
Oklahoma Logo Signs, Inc. Oklahoma
Utah Logos, Inc. Utah
Ohio Logos, Inc. Ohio
Georgia Logos, Inc. Georgia
Kansas Logos, Inc. Kansas
Lamar Air, LLC Louisiana
Lamar Pensacola Transit, Inc. Florida
Lamar Tennessee, L.L.C. Tennessee
Lamar Texas General Partner, Inc. Louisiana
Lamar Texas Limited Partnership Louisiana
Colorado Logos, Inc. Colorado
Michigan Logos, Inc. Michigan
Minnesota Logos, Inc. Minnesota
Mississippi Logos, Inc. Mississippi
New Jersey Logos, Inc. New Jersey
New Mexico Logos, Inc. New Mexico
South Carolina Logos, Inc. South Carolina
South Dakota Advertising, Inc. South Dakota
South Outdoor Advertising, Inc. Missouri
Tennessee Logos, Inc. Tennessee
Texas Logos, Inc. Texas
TLC Properties II, Inc. Texas
Virginia Logos, Inc. Xxxxxxxx
Xxxxx Advertising of Huntington-Bridgeport, Inc. Xxxx Xxxxxxxx
-00-
00
Xxxxx xx Xxxxx Jurisdiction of
Name Incorporation or Organization
---- -------------------------------
Xxxxx Advertising of Kentucky, Inc. Kentucky
Xxxxx Advertising of Penn, Inc. Delaware
Xxxxx Advertising of Michigan, Inc. Michigan
Xxxxx Advertising of Missouri, Inc. Missouri
Canadian TODS Limited Nova Scotia, Canada
Nevada Logos, Inc. Nevada
Kentucky Logos, Inc. Kentucky
Florida Logos, Inc. Florida
Lamar Electrical, Inc. Louisiana
Xxxxx Advertising of South Dakota, Inc. South Dakota
TLC Properties, L.L.C. Louisiana
Lamar OCI South Corporation Mississippi
Lamar OCI North Corporation Delaware
Xxxxx Advertising of Greenville, Inc. Mississippi
Xxxxx Advertising of West Virginia, Inc. West Virginia
Lamar Advertising of Ashland, Inc. Kentucky
American Signs, Inc. Washington
* All subsidiaries are 100% owned by Xxxxx Advertising Company, except for
Missouri Logos, a Partnership, in which Xxxxx Advertising Company holds a
66 2/3% partnership interest.
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SCHEDULE IIA
The Xxxxxx Family Limited Partnership
Xxxxx X. Xxxxxx, Xx.
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, III.
Xxxxxx X. Xxxxxxxx
T. Xxxxxxx Xxxxxxx, Xx.
Xxxx X. Rome, Jr.
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
28
SCHEDULE IIB
XXXXX ADVERTISING COMPANY
LOCK-UP AGREEMENT
AUGUST , 1999
Xxxxxxx, Xxxxx & Co.
Deutsche Bank Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Xxxxx Barney Inc.
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Xxxxx Advertising Company - Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into an Underwriting Agreement on behalf
of the several Underwriters named in Schedule III to such agreement
(collectively, the "Underwriters"), with Xxxxx Advertising Company, a Delaware
corporation (the "Company"), providing for a public offering of up to
$287,500,000 (including the exercise of the Underwriters' over-allotment
option) aggregate principal amount of the Company's 5 1/4% Convertible Notes due
2006 (the "Securities"), convertible into shares of Class A common stock, par
value $0.001 per share, of the Company (the "Shares"), pursuant to the
Registration Statements and the Prospectus (each as defined in the Underwriting
Agreement).
In consideration of the agreement by the Underwriters to offer and
sell the Securities, and of other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the undersigned agrees that,
during the period beginning from the date of the final Prospectus covering the
public offering of the Securities and continuing to and including the date 90
days after the date of such final Prospectus, the undersigned will not offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any Shares, or any options or warrants to purchase
any Shares, or any securities convertible into, exchangeable for or that
represent the right to receive Shares, whether now owned or hereinafter
acquired, owned directly by the undersigned or with respect to which the
undersigned has beneficial ownership within the rules and regulations of the
Securities and Exchange Commission (collectively the "Undersigned's Shares").
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Undersigned's Shares even if such Shares would be
29
disposed of by someone other than the undersigned. Such prohibited hedging or
other transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to any of the Undersigned's Shares or with respect to
any security that includes, relates to, or derives any significant part of its
value from such Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (iii) but only if and to the extent that such shares have been acquired
by the undersigned in the open market after completion of the public offering
of the Securities, (iv) if such transfer occurs by operation of law, such as
rules of intestate succession or statutes governing the effects of a merger,
provided that the transferee executes an agreement stating that the transferee
is receiving and holding the shares subject to the provisions of the this
agreement, or (v) with the prior written consent of Xxxxxxx, Xxxxx & Co. on
behalf of the Underwriters. For purposes of this Lock-Up Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. In addition, notwithstanding the foregoing, (i) if
the undersigned is a corporation, the corporation may transfer the capital
stock of the Company to any wholly-owned subsidiary of such corporation, or
(ii) if the undersigned is a partnership, the partnership may transfer the
Undersigned's Shares to its partners; provided, however, that in any such case,
it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding such capital
stock or shares, as the case may be, subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock or
shares, as the case may be, except in accordance with this Agreement, and
provided further that, in the case of clause (i), any such transfer shall not
involve a disposition for value. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Undersigned's Shares except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
Very truly yours,
------------------------------------
Exact Name of Shareholder
------------------------------------
Authorized Signature
------------------------------------
Title
30
SCHEDULE III
Underwriters
Option
Firm Securities Securities
--------------- ----------
Xxxxxxx, Sachs & Co. $100,000,000 $ 15,000,000
Deutsche Bank Securities Inc. 100,000,000 15,000,000
Xxxxxx Xxxxxxx & Co. Incorporated 25,000,000 3,750,000
Xxxxxxx Xxxxx Barney Inc. 25,000,000 3,750,000
------------ ------------
$250,000,000 $ 37,500,000
============ ============
31
SCHEDULE IV
Pursuant to Section 6(d) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its Subsidiaries within the meaning of the Act and the
applicable rules and regulations adopted by the Commission;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and included
or incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the related
rules and regulations; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the representative or
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or
included in the Company's quarterly report on Form 10-Q incorporated by
reference into the Prospectus as indicated in their reports thereon copies of
which have been separately furnished to the Representatives; and on the basis
of specified procedures including inquiries of officials of the Company who
have responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related rules
and regulations, nothing came to their attention that caused them to believe
that the unaudited condensed consolidated financial statements do not comply as
to form in all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related rules and regulations adopted by
the Commission;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for
the five most recent fiscal years included in the Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the most recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial statements
for five such fiscal years included or incorporated by reference in the
Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that
32
caused them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by reference in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the published rules
and regulations adopted by the Commission, or (ii) any material modifications
should be made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows included
in the Prospectus or included in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding items in
the unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the corresponding amounts in
the audited consolidated financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed financial
statements referred to in clause (A) and any unaudited income statement data
and balance sheet items included in the Prospectus and referred to in clause
(B) were not determined on a basis substantially consistent with the basis for
the audited financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the rules and regulations adopted by the Commission
thereunder or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital
33
stock upon exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet included or
incorporated by reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity or other items specified
by the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the latest
balance sheet included or incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to the
specified date referred to in clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per share amounts
of consolidated net income or other items specified by the Representatives, or
any increases in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and with any other
period of corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s) included
or incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear in the
Prospectus (excluding documents incorporated by reference), or in Part II of,
or in exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the Prospectus
specified by the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
