DRAFT
January 16, 1996
AVONDALE INDUSTRIES, INC.
3,000,000 SHARES
COMMON STOCK
($1.00 PAR VALUE)
UNDERWRITING AGREEMENT
, New Jersey
, 1996
Salomon Brothers Inc
Xxxxxxx Xxxx & Company L.L.C.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The Avondale Industries, Inc. Employee Stock Ownership Plan (the "Selling
Stockholder"), proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters"), for whom you (the "Representatives") are acting as
representatives, 3,000,000 shares of Common Stock, $1.00 par value, ("Common
Stock"), of Avondale Industries, Inc. (the "Company"), herein called the
"Underwritten Securities". The Selling Stockholder also proposes to grant to
the Underwriters an option to purchase up to 450,000 additional shares of
Common Stock (the "Option Securities"); the Option Securities, together with
the Underwritten Securities, being hereinafter called the "Securities".
1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to, and agrees with, each Underwriter
as set forth below in this Section 1. Certain terms used in this Section 1 are
defined in paragraph (iii) hereof.
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 as amended (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number 33-65267) on such Form, including a related
preliminary prospectus, for the registration under the Act of the offering
and sale of the Securities. The Company may have filed one or more
amendments thereto, including the related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file with
the Commission one of the following: (A) prior to effectiveness of such
registration statement, a further amendment to such registration statement,
including the form of final prospectus, (B) a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4), or (C) a final prospectus
in accordance with Rules 415 and 424(b)(2) or (5). In the case of clause
(B), the Company has included in such registration statement, as amended at
the Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Prospectus with respect to the Securities and the offering thereof. As
filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together with all
other such required information, with respect to the Securities and the
offering thereof and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Securities Exchange Act of 1934 (the
"Exchange Act") and the respective rules thereunder; on the Effective Date,
the Registration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus (together
with any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement or
the Prospectus (or any supplement thereto).
(iii) The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective and each date after the date hereof on
which a document incorporated by reference in the Registration Statement is
filed. "Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Preliminary Prospectus"
shall mean any preliminary prospectus referred to in paragraph (i) above
and any preliminary prospectus included in the Registration Statement at
the Effective Date that omits Rule 430A Information. "Prospectus" shall
mean the prospectus relating to the Securities that is first filed pursuant
to Rule 424(b) after the Execution Time or, if no filing pursuant to Rule
424(b) is required, shall mean the form of final prospectus relating to the
Securities included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred to
in paragraph (i) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date
as provided by Rule 430A. "Rule 415," "Rule 424," "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act. "Rule
430A Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A. Any reference herein to
the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under
the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement, or the issue date
of any Preliminary Prospectus or the Prospectus, as the case may be, that
is incorporated therein by reference.
(b) The Selling Stockholder represents and warrants to, and agrees with, each
Underwriter that:
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(i) The Selling Stockholder is the lawful owner of the Securities to be
sold by the Selling Stockholder hereunder and upon sale and delivery of,
and payment for, such Securities, as provided herein, the Selling
Stockholder will convey good and marketable title to such Securities, free
and clear of all liens, encumbrances, equities and claims whatsoever.
(ii) The Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities and has not
effected any sales of shares of Common Stock which, if effected by the
issuer, would be required to be disclosed in response to Item 701 of
Regulation S-K.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Selling
Stockholder of the transactions contemplated herein, except such as may
have been obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other approvals
as have been obtained.
(iv) Neither the sale of the Securities being sold by the Selling
Stockholder nor the consummation of any other of the transactions herein
contemplated by the Selling Stockholder or the fulfillment of the terms
hereof by the Selling Stockholder will conflict with, result in a breach or
violation of, or constitute a default under any law or the governing
documents of the Selling Stockholder or the terms of any indenture or other
agreement or instrument to which the Selling Stockholder is a party or
bound, or any judgment, order or decree applicable to the Selling
Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Selling
Stockholder.
(v) The sale of the Securities by the Selling Stockholder to the
Underwriters will not, in whole or in part, constitute a prohibited
transaction pursuant to section 4975(c) of the Internal Revenue Code of
1986, as amended, or a party-in-interest transaction pursuant to section
406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and none of the Underwriters or any person or entity affiliated
with them is a "fiduciary" (as such term is defined in section 3(21) of
ERISA) of the Selling Stockholder or a "named fiduciary" (as such term is
defined in section 402(a)(2) of ERISA) of the Selling Stockholder.
In respect of any statements in or omissions from the Registration Statement
or the Prospectus or any supplement thereto made in reliance upon and in
conformity with information furnished in writing to the Company by the Selling
Stockholder specifically for use in connection with the preparation thereof,
the Selling Stockholder hereby makes the same representations and warranties to
each Underwriter as the Company makes to such Underwriter under paragraph
(a)(ii) of this Section.
2. PURCHASE AND SALE.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling Stockholder
agrees, to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Selling Stockholder, at a purchase price of
$ per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto. [The amount of Underwritten
Securities to be purchased by each Underwriter from the Selling Stockholder
shall be as nearly as practicable in the same proportion to the total amount of
Underwritten Securities to be purchased by such Underwriter as the total amount
of Underwritten Securities to be sold by the Selling Stockholder bears to the
total amount of Underwritten Securities to be sold pursuant hereto.]
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling Stockholder hereby
grants an option to the several Underwriters to purchase, severally and not
jointly, up to 450,000 shares of Option Securities at the same purchase price
per share as the Underwriters shall pay for the Underwritten Securities. Said
option may be exercised only to cover over-
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allotments in the sale of the Underwritten Securities by the Underwriters. Said
option may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the Prospectus upon written
or telegraphic notice by the Representatives to the Selling Shareholder and the
Company setting forth the number of the Option Securities as to which the
several Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. [The number of shares
of the Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.]
3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwritten
Securities and the Option Securities ( if the option provided for in Section
2(b) hereof shall have been exercised on or before the third business day prior
to the Closing Date) shall be made at 10:00 AM, New York City time, on ,
1996, or such later date (not later than , 1996) as the Representatives
shall designate, which date and time may be postponed by agreement among the
Representatives and the Selling Stockholder or as provided in Section 9 hereof
(such date and time of delivery and payment for the Securities being herein
called the "Closing Date"). Delivery of the Securities shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the
aggregate purchase prices of the Securities being sold by the Selling
Stockholder to or upon the order of the Selling Stockholder by certified or
official bank check or checks drawn on or by a New York Clearing House bank and
payable in next day funds. Delivery of the Securities shall be made at such
location as the Representatives shall reasonably designate at least one
business day in advance of the Closing Date and payment for such Securities
shall be made at the office of Salomon Brothers Inc, , New Jersey.
Certificates for the Securities shall be registered in such names and in such
denominations as the Representatives may request not less than three full
business days in advance of the Closing Date.
The Selling Stockholder agrees to have the Securities available for
inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 PM on the business day prior to the Closing Date.
The Selling Stockholder will pay all applicable state transfer taxes, if any,
involved in the transfer to the several Underwriters of the Securities to be
purchased by them from the Selling Stockholder and the respective Underwriters
will pay any additional stock transfer taxes involved in further transfers.
4. OFFERING BY UNDERWRITERS. It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the
Prospectus.
5. AGREEMENTS.
(a) The Company agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Company has furnished
you a copy for your review prior to filing and, except as set forth in
subparagraph (ii) hereof, will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required
under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of
such timely filing. The Company will promptly advise the Representatives
(A) when the Registration Statement, if not effective at the Execution
Time, and any amendment thereto, shall have become effective, (B) when the
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Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b), (C) when, prior to termination
of the offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (D) of any request by
the Commission for any amendment of the Registration Statement or
supplement to the Prospectus or for any additional information, (E) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceeding for that purpose and (F) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the Exchange Act or the respective rules thereunder, the Company
promptly will (i) prepare and file with the Commission, subject to the
second sentence of subparagraph (a)(i) of this Section 5, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance and (ii) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(iv) The Company will furnish to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act, as
many copies of each Preliminary Prospectus and the Prospectus and any
supplement thereto as the Representatives may reasonably request. The
Selling Stockholder will pay the expenses of printing or other production
of all documents relating to the offering.
(v) The Company will arrange for the qualification of the Securities for
sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as
required for the distribution of the Securities. The Selling Stockholder
will pay the fee of the National Association of Securities Dealers, Inc.,
in connection with its review of the offering.
(vi) The Company will not, for a period of 120 days following the
Execution Time, without the prior written consent of the Representatives,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of Common Stock
or any securities convertible into, or exchangeable for, shares of Common
Stock; provided, however, that the Company may issue and sell Common Stock
pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company in effect at the Execution Time
and the Company may issue Common Stock issuable upon the conversion of
securities of the exercise of options outstanding at the Execution Time.
(vii) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba, and the Company further
agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Securities
and Exchange Commission or with the Florida Department of Banking and
Finance (the "Department"), whichever date is later, or if the information
reported in the Prospectus, if any, concerning the Company's business with
Cuba or with any person or affiliate located
5
in Cuba changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
(b) The Selling Stockholder agrees with the several Underwriters that it will
not during the period of 120 days following the Execution Time, without the
prior written consent of the Representatives, offer, sell or contract to sell,
or otherwise dispose of, directly or indirectly, or announce the offering of,
any other shares of Common Stock beneficially owned by such person, or any
securities convertible into, or exchangeable for, shares of Common Stock,
provided, however, that the Company may issue and sell shares of Common Stock
pursuant to its existing benefit plans or existing stock option (including
restricted stock) plans, the conversion of existing securities pursuant to the
Company's Stockholder Protection Rights Agreement and provided further, that
the Selling Stockholder may sell shares if the Selling Stockholder
Administrative Committee in good faith determines that its fiduciary duties
require it to sell shares.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
Underwriters to purchase the Underwritten Securities and the Option Securities,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholder contained
herein as of the Execution Time and the Closing Date, to the accuracy of the
statements of the Company and the Selling Stockholder made in any certificates
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholder of their respective obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 p.m., New York City time, on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 p.m.,
New York City time, on such date or (ii) 12:00 Noon on the business day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 p.m., New York City time, on such
date; if filing of the Prospectus, or any supplement thereto, is required
pursuant to the applicable paragraph of Rule 424(b), the Prospectus, and
any such supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives the opinion
of Jones, Walker, Waechter, Poitevent, Carrre & Xxxxxx, L.L.P., counsel for
the Company, dated the Closing Date, to the effect that:
(i) each of the Company and its subsidiaries (individually a
"Subsidiary" and collectively the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or conducts
material business;
(ii) all the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus,
all outstanding shares of capital stock of the Subsidiaries are owned
by the Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest and, to the knowledge
of such counsel, after due inquiry, any other security interests,
claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus; the outstanding shares
of Common Stock (including the Securities being sold hereunder by the
Selling Stockholder) have been duly and validly authorized and issued
and are fully paid and nonassessable;
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and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the
Securities being sold by the Selling Stockholder are duly listed and
admitted for trading on the National Association of Securities Dealers
Automated Quotation National Market; the certificates for the
Securities are in valid and sufficient form; and the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities;
(iv) to the knowledge of such counsel after due inquiry, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit,
which is not described or filed as required;
(v) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel after
due inquiry, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that purpose
have been instituted or threatened and the Registration Statement and
the Prospectus (other than the financial statements and other financial
and statistical information contained therein as to which such counsel
need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the Exchange Act and
the respective rules thereunder; and such counsel has no reason to
believe that at the Effective Date the Registration Statement includes
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus includes any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed and delivered
by the Company;
(vii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters and such other approvals (specified
in such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under the charter or
by-laws of the Company or the terms of any indenture or other agreement
or instrument known to such counsel and to which the Company or any of
its subsidiaries is a party or bound or any judgment, order or decree
known to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or
any of its subsidiaries or to the knowledge of such counsel after due
inquiry, any law; and
(ix) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Louisiana or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date.
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(c) The Selling Stockholder shall have furnished to the Representatives
the opinion of Sonnenschein, Nath & Xxxxxxxxx, counsel for the Selling
Stockholder, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and delivered
by the Selling Stockholder and the Selling Stockholder has full legal
right and authority to sell, transfer and deliver in the manner
provided in this Agreement the Securities being sold by the Selling
Stockholder hereunder;
(ii) the delivery by the Selling Stockholder to the several
Underwriters of certificates for the Securities being sold hereunder by
the Selling Stockholder against payment therefor as provided herein,
will pass good and valid title to such Securities to the several
Underwriters, free and clear of all liens, encumbrances, equities and
claims whatsoever;
(iii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Selling Stockholder of the transactions contemplated herein, except
such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters and
such other approvals (specified in such opinion) as have been obtained;
and
(iv) neither the sale of the Securities being sold by the Selling
Stockholder nor the consummation of any other of the transactions
herein contemplated by the Selling Stockholder or the fulfillment of
the terms hereof by the Selling Stockholder will conflict with, result
in a breach or violation of, or constitute a default under any law or
the charter or By-laws of the Selling Stockholder or the terms of any
indenture or other agreement or instrument known to such counsel and to
which the Selling Stockholder or any of its subsidiaries is a party or
bound, or any judgment, order or decree known to such counsel to be
applicable to the Selling Stockholder or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Selling Stockholder or any of
its subsidiaries.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters, and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Selling
Stockholder and public officials.
(d) The Representatives shall have received from Xxxxxx & Xxxxxx L.L.P.,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the
Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Representatives may reasonably
require, and the Company and the Selling Stockholder shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a certificate
of the Company, signed by the Chairman of the Board or the President and
the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Prospectus (exclusive of any supplement thereto), there has been
no material adverse change in the condition (financial or
8
other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(f) The Selling Stockholder shall have furnished to the Representatives a
certificate, signed by one or more of its trustees, dated the Closing Date,
to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that the representations and warranties
of the Selling Stockholder in this Agreement are true and correct in all
material respects on and as of the Closing Date to the same effect as if
made on the Closing Date.
(g) At the Execution Time and at the Closing Date, Deloitte & Touche LLP
shall have furnished to the Representatives a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act
and the respective applicable published rules and regulations thereunder
and stating in effect that:
(i) in their opinion the audited financial statements and financial
statement schedules included or incorporated in the Registration
Statement and the Prospectus and reported on by them comply in form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; carrying
out certain specified procedures (but not an examination in accordance
with generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meeting of the
stockholders, directors and committees of the Company and the
Subsidiaries; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the Company
and its subsidiaries as to transactions and events subsequent to
December 31, 1995, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements included or incorporated in
the Registration Statement and the Prospectus do not comply in form
in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with
respect to financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included or
incorporated in the Registration Statement and the Prospectus; and
(2) with respect to the period subsequent to December 31, 1995,
audited or unaudited, in or incorporated in the Prospectus, there
were any changes, at a specified date not more than five business
days prior to the date of the letter, in the long-term debt of the
Company and its subsidiaries or capital stock of the Company or
decreases in the stockholders' equity of the Company or decreases in
working capital of the Company and its subsidiaries as compared with
the amounts shown on the December 31, 1995, consolidated balance
sheet included or incorporated in the Registration Statement and the
Prospectus, or for the period from January 1, 1996 to such specified
date there were any decreases, as compared with the preceding year;
in net revenues or income before income taxes or in total or per
share amounts of net income of the Company and its subsidiaries,
except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Representatives;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited
9
to accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
References to the Prospectus in this paragraph (g) include any supplement
thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (g) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its subsidiaries
the effect of which, in any case referred to in clause (i) or (ii) above,
is, in the judgment of the Representatives, so material and adverse as to
make it impractical or inadvisable to proceed with the offering or delivery
of the Securities as contemplated by the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(i) On or prior to the Execution Time, the National Association of
Securities Dealers, Inc. shall have approved the Underwriters'
participation in the distribution of the Securities to be sold by the
Selling Stockholder.
(j) At the Execution Time, the Representatives shall have received a
letter substantially in the form of Exhibit A hereto from the Company, the
Selling Stockholder and the President and Chief Financial Officer of the
Company addressed to the Representatives, in which each such person agrees
not to offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce an offering of, any shares of Common Stock
beneficially owned by such person or any securities convertible into, or
exchangeable for, shares of Common Stock for a period of 120 days following
the Execution Time without the prior written consent of the
Representatives, other than shares of Common Stock disposed of as bona fide
gifts.
(k) Prior to the Closing Date, the Company and the Selling Stockholder
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company and the Selling Stockholder in
writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of counsel for the Company on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company or the Selling Stockholder to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities. If
the Company is required to make any payments to the Underwriters under this
Section 7 because of the Selling Stockholder's refusal, inability or failure to
satisfy any condition
10
to the obligations of the Underwriters set forth in Section 6, except to the
extent that such refusal, inability or failure on the part of the Selling
Stockholder to perform any agreement herein or comply with any provision hereof
is as a result of the exercise in good faith by the trustees of the Selling
Stockholder of their fiduciary duties, the Selling Stockholder shall reimburse
the Company on demand for all amounts so paid.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) The Selling Stockholder agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, each Underwriter, the directors, officers, employees and agents of
each Underwriter and each person who controls the Company or any Underwriter
within the meaning of either the Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only with
reference to written information furnished to the Company by or on behalf of
the Selling Stockholder specifically for use in the preparation of the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which the Selling Stockholder may otherwise
have.
(c) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of
either the Act or the Exchange Act and the Selling Stockholder, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and the Selling
Stockholder acknowledge that the statements set forth in the last paragraph of
the cover page and under the heading "Underwriting" in any Preliminary
Prospectus and the Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the Representatives,
confirm that such statements are correct.
(d) 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 the indemnifying party under
this Section 8, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a), (b) or (c) above unless and to
the extent it did not otherwise learn of such action and such failure results
in the forfeiture
11
by the indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded 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, (iii) 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 the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a), (b) or (c) of
this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Selling Stockholder and the
Underwriters agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company, the Selling Stockholder and one or more of the Underwriters
may be subject in such proportion as is appropriate to reflect the relative
fault of the Company, of the Selling Stockholder and of the Underwriters in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations; provided, however, that in
no case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company, the Selling Stockholder or the
Underwriters. The Company, the Selling Stockholder and the Underwriters agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (e), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, each officer
of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and provisions of this
paragraph (e).
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to
12
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Securities set forth opposite their names in Schedule I hereto bears
to the aggregate amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter, the Selling Stockholder or the Company. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company, the
Selling Stockholder and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement shall become
effective at such time (after notification of the effectiveness of the
Registration Statement has been released by the Commission) as the Underwriters
and the Selling Stockholder shall agree on the initial public offering price
and underwriting discount per share, unless prior to such time such of the
Underwriters as have agreed to purchase in the aggregate 50% or more of the
Securities shall have given notice to the Company that such Underwriters elect
that this Agreement shall not become effective; provided, however, that the
provisions of this Section 10 and of Section 8 hereof shall at all times be
effective. If this Agreement shall not have become effective prior to 5:00 PM,
New York City time, on the seventh full business day after the Effective Date,
this Agreement shall not thereafter become effective unless such period is
extended by agreement among the Underwriters, the Selling Stockholder and the
Company.
This Agreement shall be subject to termination in the absolute discretion of
the Representatives, by notice given to the Selling Stockholder prior to
delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's Common Stock shall have been suspended by the Commission or
the National Association of Securities Dealers Automated Quotation National
Market or trading in securities generally on the New York Stock Exchange or the
National Association of Securities Dealers Automated Quotation National Market
shall have been suspended or limited or minimum prices shall have been
established on such Exchange or National Market, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers, of the Selling Stockholder and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, the
Selling Stockholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telegraphed and confirmed to them, care of Salomon Brothers Inc, at Xxxxx
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent to the Company, will
be mailed,
13
delivered or telegraphed and confirmed to it at 0000 Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxx, 00000 attention of Xxxxxx X. Kitchen, Chief Financial Officer, or if
sent to the Selling Stockholder, will be mailed, delivered or telegraphed and
confirmed to it at the address set forth in Schedule II hereto.
13. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8 hereof, and no other
person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
14
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
AVONDALE INDUSTRIES, INC
By Xxxxxx X. Xxxxxxx, Xx.
__________________________________
Xxxxxx X. Xxxxxxx, Xx.
Chairman, President and
Chief Financial Officer
AVONDALE INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
[TRUST]
By__________________________, Trustee
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
XXXXXXX XXXX & COMPANY L.L.C.
BY: SALOMON BROTHERS INC
By
Vice President
For themselves and the other several
Underwriters named in Schedule I to
the foregoing Agreement.
15
EXHIBIT A
, 1996
Salomon Brothers Inc
Xxxxxxx Xxxx & Company L.L.C.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Avondale
Industries, Inc., a Delaware corporation (the "Company"), Avondale Industries,
Inc. Employee Stock Ownership Plan, as the Selling Stockholder named therein
and each of you as representative of a group of Underwriters named therein,
relating to an underwritten public offering of Common Stock, $1.00 par value
(the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned agrees not to offer, sell or contract
to sell, or otherwise dispose of, directly or indirectly, or announce an
offering of, any shares of Common Stock beneficially owned by the undersigned
or any securities convertible into, or exchangeable for, shares of Common Stock
for a period of 120 days following the day on which the Underwriting Agreement
is executed without your prior written consent, other than shares of Common
Stock disposed of as bona fide gifts.
If for any reason the Underwriting Agreement shall be terminated prior to the
Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Yours very truly,
16
