Exhibit 99.1
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EXECUTION COPY
RITE AID CORPORATION
4,600,000 Shares of Mandatory Convertible Preferred Stock
Underwriting Agreement
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August 16, 2005
Citigroup Global Markets Inc.
X.X. Xxxxxx Securities Inc.
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Rite Aid Corporation, a Delaware corporation (the "Company"), proposes
to issue and sell to the several Underwriters listed in Schedule 1 hereto (the
"Underwriters"), for whom you are acting as the representatives (the
"Representatives"), an aggregate of 4,600,000 shares of Series I mandatory
convertible preferred stock, liquidation preference of $25 per share, of the
Company (the "Underwritten Shares") and, at the option of the Underwriters, up
to an additional 600,000 shares of mandatory convertible preferred stock of the
Company (the "Option Shares"). The mandatory convertible preferred stock of the
Company to be outstanding after giving effect to the sale of the Underwritten
Shares and the Option Shares are herein referred to as the "Securities". The
Securities will be convertible into shares of common stock, par value $1.00 per
share (the "Common Stock"), of the Company (such shares of Common Stock as may
be issued upon conversion of the Securities being referred to herein as the
"Underlying Securities"). The terms of the Securities will be set forth in a
certificate of designations (the "Certificate of Designations") to be filed
with the Secretary of State of the State of Delaware on or prior to the Closing
Date (as hereinafter defined).
The Company will use a portion of the net proceeds of the offering of
the Securities to redeem (the "Redemption") all of its issued and outstanding
8% Series F cumulative convertible pay-in-kind preferred stock (the "Series F
Preferred Stock").
The Company hereby confirms its agreement with the several
Underwriters concerning the purchase and sale of the Securities, as follows:
1. Registration Statement. The Company meets the requirements for use
of Form S-3 under the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (collectively, the "Securities Act") and has prepared and filed with
the Commission a registration statement (file number 333-121636) on Form S-3,
including a related basic prospectus, for registration under the Securities Act
of the offering and sale of the Securities. The Company has filed one or more
amendments thereto, including a Preliminary Final Prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (a) after the Effective Date of such
registration statement, a final prospectus supplement relating to the
Securities in accordance with Rules 430A and 424(b), (b) prior to the Effective
Date of such registration statement, an amendment to such registration
statement (including the form of final prospectus supplement) or (c) a final
prospectus in accordance with Rules 415 and 424(b). In the case of clause (a),
the Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information) required by
the Securities Act to be included in such registration statement and the Final
Prospectus. As filed, such final prospectus supplement or such amendment and
form of final prospectus supplement shall contain all Rule 430A Information,
together with all other such required information, and, except to the extent
the Representative shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Closing Date or,
to the extent not completed at the Closing Date, shall contain only such
specific additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Company has
advised you, prior to the Closing Date, will be included or made therein. The
Registration Statement, at the Closing Date, meets the requirements set forth
in Rule 415(a)(1)(x).
Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final 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 Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") on or before the Effective Date
of the Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any Preliminary
Final Prospectus or the Final 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 the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus, as the case may be,
deemed to be incorporated therein by reference. Certain terms used herein are
defined in Section 13 hereof.
2. Purchase of the Securities by the Underwriters. (a) The Company
agrees to issue and sell the Securities to the several Underwriters as provided
in this underwriting agreement (this "Agreement"), and each Underwriter, on the
basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and not jointly,
to purchase from the Company the respective number of Underwritten Shares set
forth opposite such Underwriter's name in Schedule 1 hereto at a price per
share the "Purchase Price" of $24.25.
In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as provided in this Agreement, and the Underwriters,
on the basis of the representations, warranties and agreements set forth herein
and subject to the conditions set forth herein, shall have the option to
purchase, severally and not jointly, from the Company the Option Shares at the
Purchase Price.
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased
as the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule 1 hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Securities as the Representatives
in their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares
at any time in whole, or from time to time in part, on or before the thirtieth
day following the date of this Agreement, by written notice from the
Representatives to the Company. Such notice shall set forth the aggregate
number of Option Shares as to which the option is being exercised and the date
and time when the Option Shares are to be delivered and paid for which may be
the same date and time as the Closing Date (as hereinafter defined) but shall
not be earlier than the Closing Date nor later than the tenth full business day
(as hereinafter defined) after the date of such notice (unless such time and
date are postponed in accordance with the provisions of Section 9 hereof). Any
such notice shall be given at least two business days prior to the date and
time of delivery specified therein.
(b) The Company understands that the Underwriters intend to make a
public offering of the Securities as soon after the effectiveness of this
Agreement as in the judgment of the Representatives is advisable, and initially
to offer the Securities on the terms set forth in the Final Prospectus. The
Company acknowledges and agrees that the Underwriters may offer and sell
Securities to or through any affiliate of an Underwriter and that any such
affiliate may offer and sell Securities purchased by it to or through any
Underwriter.
(c) Payment for the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives in the case of the Underwritten Shares, at the offices of
Cravath, Swaine & Xxxxx LLP at 10:00 A.M. New York City time on August 22,
2005, or at such other time or place on the same or such other date, not later
than the fifth business day thereafter, as the Representatives and the Company
may agree upon in writing or, in the case of the Option Shares, on the date and
at the time and place specified by the Representatives in the written notice of
the Underwriters' election to purchase such Option Shares. The time and date of
such payment for the Underwritten Shares is referred to herein as the "Closing
Date" and the time and date for such payment for the Option Shares, if other
than the Closing Date, is herein referred to as the "Additional Closing Date".
Payment for the Securities to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Securities to be purchased on such date in definitive form registered in
such names and in such denominations as the Representatives shall request in
writing not later than two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be, with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The
certificates for the Securities will be made available for inspection and
packaging by the Representatives at the office of Citigroup Global Markets Inc.
set forth above not later than 1:00 P.M., New York City time, on the business
day prior to the Closing Date or the Additional Closing Date, as the case may
be.
3. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) No order preventing or suspending the use of any Preliminary Final
Prospectus has been issued by the Commission, and each Preliminary Final
Prospectus, at the time of filing thereof, complied in all material respects
with the Securities Act and did not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation and warranty with
respect to any statements or omissions made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use in
any Preliminary Final Prospectus.
(b) The Company meets the requirements for using Form S-3 under the
Securities Act and would have met the requirements for using Form S-3 under the
Securities Act of 1933, as in effect prior to October 21, 1992 had such
standards been in effect as of the date hereof. The Registration Statement has
been declared effective by the Commission. No order suspending the
effectiveness of the Registration Statement has been issued by the Commission
and no proceeding for that purpose is pending or, to the best knowledge of the
Company, threatened by the Commission; as of the date the Registration
Statement and any amendment thereto were last deemed effective, the
Registration Statement complied and will comply in all material respects with
the Securities Act, and did not and will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading; and as of the applicable filing date of the
Final Prospectus and any amendment or supplement thereto and as of the Closing
Date and as of the Additional Closing Date, as the case may be, the Final
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use in the Registration Statement and the
Final Prospectus and any amendment or supplement thereto.
(c) The Company is subject to and in compliance, in all material
respects, with the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act. The documents incorporated by reference in the Final Prospectus,
when they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents at the time
of such filings or effectiveness contained any untrue statement of a material
fact or omitted to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by reference in
the Final Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material respects to
the requirements of the Securities Act or the Exchange Act, as applicable, and
will not at the time of such filing or effectiveness contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Company is not, and after giving effect to the offering and
sale of the Securities, the application of the proceeds thereof as described in
the Final Prospectus will not be, an "investment company" within the meaning of
the Investment Company Act.
(e) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any Securities (except as
contemplated by this Agreement).
(f) The Company has not taken, directly or indirectly (it being
understood that the Company makes no representations as to the activities of
any Underwriter), any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(g) Each of the Company and its subsidiaries has been duly
incorporated or organized, is validly existing as a corporation or limited
liability company and is in good standing under the laws of the jurisdiction in
which it is chartered or organized with full corporate or limited liability
company power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Final Prospectus,
and is duly qualified to do business as a foreign corporation or limited
liability company and is in good standing under the laws of each jurisdiction
which requires such qualification except to the extent that failure to be so
qualified or be in good standing would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries, taken as
a whole, whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Effect").
(h) The Company's authorized equity capitalization is as set forth in
the Final Prospectus; all the outstanding shares of capital stock of the
Company are not subject to any pre-emptive or similar rights; except as
described in or expressly contemplated by the Final Prospectus, there are no
outstanding rights (including, without limitation, pre-emptive rights),
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interest in the Company or any
of its subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company or any such subsidiary, any such convertible or exchangeable securities
or any such rights, warrants or options, other than options, restricted stock
or performance units outstanding pursuant to employee stock option plans; the
capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement and the Final
Prospectus; and all the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued and are fully paid and
non-assessable, and, except for Rx USA, Inc., Rite Aid Lease Management
Company, Read's, Inc., Thrifty PayLess Health Services, L.L.P. and Rite Aid
Risk Management Corp., all outstanding shares of capital stock of the
subsidiaries of the Company are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security interest or
any other security interests, claims, liens or encumbrances.
(i) The statements in the Final Prospectus under the headings "Certain
United States Federal Tax Considerations", "Description of Mandatory
Convertible Preferred Stock", and "Description of Capital Stock" fairly
summarize the matters therein described.
(j) This Agreement has been duly authorized, executed and delivered by
the Company; the Securities have been duly authorized, and, when issued and
delivered and paid for as provided herein, will be validly issued and will be
fully paid and non-assessable and will conform to the descriptions thereof in
the Final Prospectus under the caption "Description of Mandatory Convertible
Preferred Stock" and "Description of Capital Stock--Preferred Stock"; and the
issuance of the Securities is not subject to any preemptive or similar rights;
the Underlying Securities have been duly authorized and reserved for issuance
and, when issued upon conversion of the Securities in accordance with the terms
of the Securities, will be validly issued, fully paid and non-assessable and
will conform to the description thereof in the Final Prospectus; and the
issuance of the Underlying Securities will not be subject to any preemptive or
similar rights.
(k) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as will be obtained under the
Securities Act, the securities laws of any jurisdiction outside the U.S. in
which the Securities are offered, from the Secretary of State of the State of
Delaware and such as may be required under the blue sky laws of any
jurisdiction and the National Association of Securities Dealers Inc. ("NASD")
in connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Final Prospectus.
(l) On the Closing Date, none of the execution and delivery of this
Agreement, the issue and sale of the Securities, the fulfillment of the terms
hereof or thereof or the Redemption will conflict with, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, (i)
the charter or by-laws of either of the Company or any subsidiary, (ii) any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, as applicable, or (iii)
any agreement or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to which any
of the properties of the Company or any of its subsidiaries is subject, except
in the case of clauses (ii) and (iii) as could not reasonably be expected to
have a Material Adverse Effect.
(m) The consolidated historical financial statements and schedules of
the Company and its consolidated subsidiaries included in or incorporated by
reference in the Final Prospectus present fairly in all material respects the
financial condition, results of operations and cash flows of the Company as of
the dates and for the periods indicated, comply as to form with the applicable
accounting requirements of the Securities Act and the Exchange Act and have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein); the summary financial data set forth under the
caption "Summary Consolidated Financial Data" in the Final Prospectus fairly
present, on the basis stated in the Final Prospectus, the information included
therein.
(n) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or its or their property is pending or, to the best
knowledge of the Company, threatened that (i) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby; or (ii) could
reasonably be expected to have a Material Adverse Effect, except as set forth
in or contemplated in the Final Prospectus (exclusive of any amendment or
supplement thereto).
(o) The Company and each of its subsidiaries own or lease all such
properties as are necessary to the conduct of their respective operations as
presently conducted, except where the failure to own or lease such property
could not reasonably be expected to have a Material Adverse Effect.
(p) Neither the Company nor any subsidiary is in violation or default
of (i) any provision of its charter or bylaws; (ii) the terms of any agreement
or instrument to which it is a party or bound or to which its property is
subject; or (iii) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their properties, as
applicable, except in the case of (ii) and (iii), such violation or default
that could not reasonably by expected to have a Material Adverse Effect.
(q) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements included
in or incorporated by reference in the Final Prospectus, are, to the knowledge
of the Company, independent public accountants with respect to the Company
within the meaning of the Securities Act.
(r) There are no stamp or other issuance or transfer taxes or duties
or other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company
of the Securities.
(s) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect, except as set forth in or contemplated in the Final Prospectus
(exclusive of any amendment or supplement thereto)) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as would not have a Material Adverse Effect, except as set forth
in or contemplated in the Final Prospectus (exclusive of any amendment or
supplement thereto).
(t) No labor problem or dispute with the employees of the Company or
any of its subsidiaries exists or is threatened or imminent, and the Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries' principal suppliers, contractors or customers that
could reasonably be expected to have a Material Adverse Effect, except as set
forth in or contemplated in the Final Prospectus (exclusive of any amendment or
supplement thereto).
(u) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they are
engaged; the Company and its subsidiaries are in compliance with the terms of
such policies and instruments in all material respects, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew or replace its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect, except as set forth in or
contemplated in the Final Prospectus (exclusive of any amendment or supplement
thereto).
(v) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such licenses,
certificates, permits and other authorizations could not reasonably be expected
to have a Material Adverse Effect, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to have a Material Adverse Effect, except as set
forth in or contemplated in the Final Prospectus (exclusive of any amendment or
supplement thereto).
(w) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"); (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals, or liability would not, individually or in the aggregate, have a
Material Adverse Effect, except as set forth in the Final Prospectus (exclusive
of any amendment or supplement thereto); except as set forth in the Final
Prospectus (exclusive of any amendment or supplement thereto), neither the
Company nor any of the subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, which, if the subject of
any unfavorable ruling, decision or finding could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(x) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations and published interpretations thereunder with
respect to each "plan" (as defined in Section 3(3) of ERISA and such
regulations and published interpretations) in which employees of the Company
and its subsidiaries are eligible to participate; the Company and its
subsidiaries have not incurred any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(y) The Company and its subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") necessary for
the conduct of the Company's business as now conducted or as proposed in the
Final Prospectus to be conducted, except as otherwise referenced in the Final
Prospectus or where the failure to own, possess, license or have other rights
to such Intellectual Property could not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries has
received any charge, complaint, claim, demand or notice alleging any
interference, infringement, misappropriation or violation of a third party's
right in Intellectual Property (including any claim that the Company or any of
its subsidiaries must license or refrain from using such Intellectual
Property), which, if the subject of any unfavorable ruling, decision or finding
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(z) The Company maintains, and has maintained during the periods
covered by the financial statements included in or incorporated by reference in
the Final Prospectus, disclosure controls and procedures (as such term is
defined in Rule 13a-14 under the Exchange Act) that are designed to provide
reasonable assurance that information required to be disclosed in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported with the time periods specified in the rules and forms
of the Commission, including, without limitation, controls and procedures
designed to ensure that information required to be so described is accumulated
and communicated to the Company's management, including its principal executive
officer or officers, and its principal financial officer or officers, as
appropriate to allow timely decisions regarding required disclosure.
(aa) The Company maintains a system of internal control over financial
reporting sufficient to provide reasonable assurance that (i) the Company's
financial records, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (iii) regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company's assets that could have a material effect on the Company's
financial statements. Except as described in, or incorporated by reference
into, the Prospectus, since the most recent audit of the effectiveness of the
Company's internal control over financial reporting, there has been (i) no
material weakness in the Company's internal control over financial reporting
(whether or not remediated) and (ii) no change in the Company's internal
control over financial reporting that has materially adversely affected, or is
reasonably likely to materially adversely affect, the Company's internal
control over financial reporting.
(bb) Other than the declaration and payment of dividends on the Series
D, Series E, Series F, Series G and Series H preferred stock, the Company has
not declared or paid a dividend on any class of capital stock of the Company
since the third quarter of the Company's 2000 fiscal year.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
4. Further Agreements of the Company. The Company covenants and agrees
with each Underwriter that:
(a) Effectiveness of the Registration Statement. The Company will file
the Final Prospectus with the Commission within the time periods specified by
Rule 415, Rule 424(b) and Rule 430A, as applicable, under the Securities Act
and file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Final Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Securities; and the
Company will furnish copies of the Final Prospectus to the Underwriters in New
York City prior to 10:00 A.M., New York City time, on the business day next
succeeding the date of this Agreement in such quantities as the Representatives
may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, to
each Underwriter (A) a conformed copy of the Registration Statement as
originally filed and each amendment thereto (without exhibits) and (B) during
the Prospectus Delivery Period, as many copies of the Final Prospectus
(including all amendments and supplements thereto and documents incorporated by
reference therein) as the Representatives may reasonably request. As used
herein, the term "Prospectus Delivery Period" means such period of time after
the first date of the public offering of the Securities as in the opinion of
counsel for the Underwriters a prospectus relating to the Securities is
required by law to be delivered in connection with sales of the Securities by
any Underwriter or dealer.
(c) Amendments or Supplements. During the Prospectus Delivery Period,
the Company will, before filing any amendment or supplement to the Registration
Statement or the Final Prospectus, whether before or after the time that the
Registration Statement becomes effective, furnish to the Representatives and
counsel for the Underwriters a copy of the proposed amendment or supplement for
review and will not file any such proposed amendment or supplement to which the
Representatives reasonably objects.
(d) Notice to the Representatives. During the Prospectus Delivery
Period, the Company will advise the Representatives promptly, and confirm such
advice in writing, (i) when the Registration Statement has become effective;
(ii) when any amendment to the Registration Statement has been filed or becomes
effective; (iii) when any supplement to the Final Prospectus or any amendment
to the Final Prospectus has been filed; (iv) of any request by the Commission
for any amendment to the Registration Statement or any amendment or supplement
to the Final Prospectus or the receipt of any comments from the Commission
relating to the Registration Statement or any other request by the Commission
for any additional information; (v) of the issuance by the Commission of any
order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of any Preliminary Final Prospectus or the Final
Prospectus or the initiation or threatening of any proceeding for that purpose;
(vi) of the occurrence of any event within the Prospectus Delivery Period as a
result of which the Final Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing when the Final Prospectus is delivered to a purchaser,
not misleading; and (vii) of the receipt by the Company of any notice with
respect to any suspension of the qualification of the Securities or the
Underlying Securities for offer and sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and the Company will use its
reasonable best efforts to prevent the issuance of any such order suspending
the effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Final Prospectus or the Final Prospectus or suspending
any such qualification of the Securities or the Underlying Securities and, if
any such order is issued, will use its reasonable best efforts to obtain as
soon as possible the withdrawal thereof.
(e) Ongoing Compliance of the Final Prospectus. If during the
Prospectus Delivery Period (i) any event shall occur or condition shall exist
as a result of which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances existing when the Final Prospectus
is delivered to a purchaser, not misleading or (ii) it is necessary to amend or
supplement the Final Prospectus or to file under the Exchange Act any document
incorporated by reference in the Final Prospectus to comply with law, the
Company will immediately notify the Underwriters thereof and forthwith prepare
and, subject to paragraph (c) above, file with the Commission and furnish to
the Underwriters and to such dealers as the Representatives may designate, such
amendments or supplements to the Final Prospectus as may be necessary so that
the statements in the Final Prospectus as so amended or supplemented will not,
in the light of the circumstances existing when the Final Prospectus is
delivered to a purchaser, be misleading or so that the Final Prospectus will
comply with law.
(f) Blue Sky Compliance. The Company will qualify the Securities and
the Underlying Securities for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Representatives shall reasonably request and
will continue such qualifications in effect so long as required for
distribution of the Securities and the Underlying Securities; provided that the
Company shall not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify or where it is not now so qualified, (ii)
file any general consent to service of process in any such jurisdiction or
(iii) take any action that would subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
(g) Earning Statement. The Company will make generally available to
its security holders and the Representatives as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder covering a period of at
least twelve months beginning with the first fiscal quarter of the Company
occurring after the "effective date" (as defined in Rule 158) of the
Registration Statement.
(h) Clear Market. For a period of 90 days after the date of the
initial public offering of the Securities, the Company will not (i) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or preferred stock of the
Company or any securities convertible into or exercisable or exchangeable for
Common Stock or preferred stock of the Company or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock or preferred stock of the
Company, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or preferred stock of the Company or
such other securities, in cash or otherwise, without the prior written consent
of the Representatives, other than the Securities to be sold hereunder; the
Underlying Securities; any shares of Common Stock or other securities issued
pursuant to existing employee benefit plans or any shares of Common Stock
issued upon the exercise of options granted under existing employee stock
option plans or upon conversion of its Series E Preferred Stock, the Series F
Preferred Stock, its Series G Preferred Stock or its Series H Preferred Stock,
issuances of Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock as payments of dividends in accordance with the respective
terms of the Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock and issuances of Common Stock as payment of dividends on its
Series E Preferred Stock or the Securities; provided, however, that this clause
(h) shall not prohibit the Company from (i) consummating an exchange of its
Series E Preferred Stock for a new series of preferred stock with an aggregate
liquidation preference equal to the Series E Preferred Stock, (ii) filing a
registration statement on Form S-8 under the Securities Act, with respect to
securities to be offered pursuant to the Company's employee benefit plans
existing as of the date hereof or on Form S-3 for the resale of shares of
Common Stock issued as dividends in compliance with this paragraph or (iii)
consummating the Redemption.
The Company may permit sales of up to 360,000 shares of Common Stock
or preferred stock of the Company covered by the individuals listed in Schedule
2, subject to the restriction that no more than a total of 200,000 shares of
Common Stock or preferred stock may be sold by any one individual listed on
Schedule 2.
(i) Use of Proceeds. The Company will apply the net proceeds from the
sale of the Securities as described in the Final Prospectus under the heading
"Use of Proceeds".
(j) No Stabilization. The Company will not take, directly or
indirectly (it being understood that the Company makes no covenant or agreement
as to the activities of any Underwriter) , any action designed to or that could
reasonably be expected to cause or result in any stabilization or manipulation
of the price of the Securities or the Common Stock.
(k) Underlying Securities. The Company has reserved and will keep
available at all times, free of preemptive rights, sufficient shares of Common
Stock for the purpose of enabling the Company to satisfy any obligations to
issue shares of Common Stock upon conversion of the Securities.
(l) Exchange Listing. The Company will use its best efforts to list,
subject to notice of issuance, the Underlying Securities on the New York Stock
Exchange (the "Exchange").
5. Conditions of Underwriters' Obligations. The obligation of each
Underwriter to purchase the Underwritten Shares on the Closing Date or the
Option Shares on the Additional Closing Date, as the case may be as provided
herein is subject to the performance by the Company of its covenants and other
obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. The Registration Statement
(or if a post-effective amendment thereto is required to be filed under the
Securities Act, such post-effective amendment) shall have become effective, and
the Representatives shall have received notice thereof, not later than 5:00
P.M., New York City time, on the date hereof; no order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose shall be pending before or threatened by the
Commission; the Final Prospectus shall have been timely filed with the
Commission under the Securities Act and in accordance with Section 4(a) hereof;
and all requests by the Commission for additional information shall have been
complied with to the reasonable satisfaction of the Representatives.
(b) The Representatives shall have received an opinion, dated the
Closing Date, of Xxxxxx Sari, Esq., general counsel for the Company, in form
and substance satisfactory to the Representatives, substantially in the form
set forth in Exhibit 1 or as otherwise agreed to by the parties hereto.
(c) The Representatives shall have received three opinions, dated the
Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Company, in form and substance satisfactory to the Representatives,
substantially in the forms set forth in Exhibits 2, 3 and 4 hereto or as
otherwise agreed to by the parties hereto.
(d) The Representatives shall have received from Cravath, Swaine &
Xxxxx LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the issuance
and sale of the Securities, the Final Prospectus (as amended or supplemented at
the Closing Date) and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably 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 Final Prospectus, any amendment or supplement to the
Final Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct 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 hereunder at or prior to the
Closing Date; and
(ii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus
(exclusive of any amendment or supplement thereto), there has been no
material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated by the Final Prospectus (exclusive of any amendment
or supplement thereto).
(f) On the date of this Agreement and on the Closing Date, the Company
shall have requested and caused Deloitte & Touche LLP to furnish to the
Representatives letters, dated respectively as of the date of this Agreement
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 Securities Act and the Exchange Act and the respective
applicable rules and regulations adopted by the Commission thereunder, and
stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and the Final Prospectus and reported on by
them 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;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review, in accordance with the standards established under
Statement on Auditing Standards No. 100, of the unaudited interim
financial information for the thirteen week period ended May 28, 2005,
and as at May 28, 2005; 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 meetings of the stockholders, directors and audit,
executive and compensation 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 May 28, 2005, nothing came to their attention which caused them to
believe that:
(1) with respect to the period subsequent to May 28, 2005,
there were any changes, at a specified date not more than five
days prior to the date of the letter, in the long-term debt less
current maturities of the Company and its subsidiaries or common
stock of the Company or increases in the stockholders' deficit of
the Company as compared with the amounts shown on the May 28,
2005 consolidated balance sheet included or incorporated in the
Final Prospectus, or for the period from May 29, 2005 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year, in revenues,
increases in net loss or loss from continuing operations before
income taxes and cumulative effect of accounting change or in net
loss per share of the Company and its subsidiaries, except in all
instances for changes, increases 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;
or
(2) the information included in response to Regulation S-K,
Item 301 (Selected Financial Data), Item 302 (Supplementary
Financial Information), Item 402 (Executive Compensation) and
Item 503(d) (Ratio of Earnings to Fixed Charges) is not in
conformity with the disclosure requirements of Regulation S-K;
and
(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 to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Final Prospectus, including the information set forth
under the captions "Summary", "Risk Factors", "Use of Proceeds",
"Capitalization", "Summary Consolidated Financial Data", "Description
of Mandatory Convertible Preferred Stock" and "Description of Capital
Stock", and set forth in the Company's annual report on Form 10-K for
the fiscal year ended February 26, 2005 (the "Annual Report"),
including the information set forth under the captions "Management's
Discussion and Analysis of Financial Condition and Results of
Operations", "Business", "Selected Financial Data" and "Market for
Registrant's Common Equity and Related Stockholder Matters and Issuer
Purchases of Equity Securities", in the Final Prospectus and the
Annual Report agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation.
References to the Final Prospectus in this Section 5(f) include any
amendment or supplement thereto at the date of the applicable letter.
(g) Subsequent to the date of this Agreement or, if earlier, the dates
as of which information is given in the Final Prospectus (exclusive of any
amendment or supplement thereto), there shall not have been, other than any
repurchase of indebtedness, (i) any change or decrease specified in the letter
or letters referred to in paragraph (f) of this Section 5; or (ii) any change,
or any development involving a prospective change, in or affecting the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or
contemplated in the Final Prospectus (exclusive of any amendment or supplement
thereto) the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and adverse
as to make it impractical or inadvisable to market the Securities as
contemplated by the Final Prospectus (exclusive of any amendment or supplement
thereto).
(h) The Securities shall be eligible for clearance and settlement
through The Depository Trust Company.
(i) Subsequent to the date of this Agreement, there shall not have
been any decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act), any notice given of any
intended or potential decrease in any such rating (including notice of an
adverse change in the outlook for such rating) or of a possible change in any
such rating that does not indicate the direction of the possible change.
(j) The "lock-up" agreements, each substantially in the form of
Exhibit 5 hereto, between you and the individuals and entities set forth on
Schedule 2 hereto relating to sales and certain other dispositions of shares of
Common Stock or certain other securities of the Company, delivered to you on or
before the date hereof, shall be in full force and effect on the Closing Date
or Additional Closing Date, as the case may be.
(k) The Underlying Securities shall have been approved for listing on
the Exchange, subject to official notice of issuance.
(l) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any federal, state or
foreign governmental or regulatory authority that would, as of the Closing Date
or the Additional Closing Date, as the case may be, prevent the issuance or
sale of the Securities; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing Date or the
Additional Closing Date, as the case may be, prevent the issuance or sale of
the Securities.
(m) The Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, satisfactory evidence
of the good standing of the Company in its jurisdiction of organization in
writing or any standard form of telecommunication from the appropriate
governmental authorities of such jurisdiction.
(n) Prior to the Closing Date, the Company 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 5 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 in writing or by telephone or
facsimile confirmed in writing.
6. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities
(including, without limitation, legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Final Prospectus (or any
amendment or supplement thereto) or any Preliminary Final Prospectus, or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with any information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use
therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
subsection (b) below.
(b) Indemnification of the Company. Each Underwriter agrees, severally
and not jointly, to indemnify and hold harmless the Company, each of its
directors, its officers who signed the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
indemnity set forth in paragraph (a) above, but only with respect to any
losses, claims, damages or liabilities that arise out of, or are based upon,
any untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with any information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement and the Final
Prospectus (or any amendment or supplement thereto) or any Preliminary Final
Prospectus, it being understood and agreed upon that the only such information
furnished by any Underwriter consists of the following information in the Final
Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the third paragraph under the caption
"Underwriting", the information contained in the tenth, eleventh and twelfth
paragraphs under the caption "Underwriting", and the information contained in
the thirteenth paragraph under the caption "Underwriting".
(c) Notice and Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnification may be sought (the "Indemnifying Person") in writing of the
commencement of such suit, action, claim or demand; provided that the failure
to notify the Indemnifying Person shall not relieve it from any liability that
it may have under this Section 6 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that the failure to notify
the Indemnifying Person shall not relieve it from any liability that it may
have to an Indemnified Person otherwise than under this Section 6. If any such
proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 6 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the use
of counsel chosen by the Indemnifying Person to represent the Indemnified
Person 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 Person and the Indemnifying Person and the Indemnified Person shall
have reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Persons which are different from or additional to
those available to the Indemnifying Person; (iii) the Indemnifying Person shall
not have employed counsel satisfactory to the Indemnified Person to represent
the Indemnified Person within a reasonable time after notice of the institution
of such action; or (iv) the Indemnifying Person shall authorize the Indemnified
Person to employ separate counsel at the expense of the Indemnifying Person. It
is understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and expenses
shall be paid or reimbursed as they are incurred. Any such separate firm for
any Underwriter, its affiliates, directors and officers and any control persons
of such Underwriter shall be designated in writing by Citigroup Global Markets
Inc. and X.X. Xxxxxx Securities Inc. and any such separate firm for the
Company, its directors, its officers who signed the Registration Statement and
any control persons of the Company shall be designated in writing by the
Company. The Indemnifying Person 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
Person agrees to indemnify each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement (x)
includes an unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (y) does
not include any statement as to or any admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs
(a) and (b) above is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received
by the Company from the sale of the Securities and the total underwriting
discounts and commissions received by the Underwriters in connection therewith,
in each case as set forth in the table on the cover of the Final Prospectus,
bear to the aggregate offering price of the Securities. The relative fault of
the Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the provisions of
this Section 6, in no event shall an Underwriter be required to contribute any
amount in excess of the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the offering of the
Securities exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 6 are several in proportion to their respective
purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity.
7. Effectiveness of Agreement. This Agreement shall become effective
upon the later of (i) the execution and delivery hereof by the parties hereto
and (ii) receipt by the Company and the Representatives of notice of the
effectiveness of the Registration Statement (or, if applicable, any
post-effective amendment thereto).
8. Termination. This Agreement may be terminated in the absolute
discretion of the Representatives, by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing Date or, in
the case of the Option Shares, prior to the Additional Closing Date (i) trading
generally shall have been suspended or materially limited on or by the New York
Stock Exchange; (ii) trading of any securities issued or guaranteed by the
Company shall have been suspended on any exchange or in any over-the-counter
market; (iii) a general moratorium on commercial banking activities shall have
been declared by federal or New York State authorities; or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis, either within or outside the
United States, that, in the judgment of the Representatives, is material and
adverse and makes it impracticable or inadvisable to proceed with the offering,
sale or delivery of the Securities on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated
by this Agreement and the Final Prospectus.
9. Defaulting Underwriter. (a) If, on the Closing Date or the
Additional Closing Date, as the case may be, any Underwriter defaults on its
obligation to purchase the Securities that it has agreed to purchase hereunder
on such date, the non-defaulting Underwriters may in their discretion arrange
for the purchase of such Securities by other persons satisfactory to the
Company on the terms contained in this Agreement. If, within 36 hours after any
such default by any Underwriter, the non-defaulting Underwriters do not arrange
for the purchase of such Securities, then the Company shall be entitled to a
further period of 36 hours within which to procure other persons satisfactory
to the non-defaulting Underwriters to purchase such Securities on such terms.
If other persons become obligated or agree to purchase the Securities of a
defaulting Underwriter, either the non-defaulting Underwriters or the Company
may postpone the Closing Date or the Additional Closing Date, as the case may
be, for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statement and the Final Prospectus or in any
other document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Registration Statement and the Final Prospectus
that effects any such changes. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
otherwise requires, any person not listed in Schedule 1 hereto that, pursuant
to this Section 9, purchases Securities that a defaulting Underwriter agreed
but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters and the Company as provided in paragraph (a) above,
the aggregate number of Securities that remain unpurchased on the Closing Date
or the Additional Closing Date, as the case may be does not exceed one-tenth of
the aggregate number of Securities to be purchased on such date, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Securities that such Underwriter agreed to purchase
hereunder on such date plus such Underwriter's pro rata share (based on the
number of Securities that such Underwriter agreed to purchase on such date) of
the Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters and the Company as provided in paragraph (a) above,
the aggregate number of Securities that remain unpurchased on the Closing Date
or the Additional Closing Date, as the case may be, exceeds one-tenth of the
aggregate amount of Securities to be purchased on such date, or if the Company
shall not exercise the right described in paragraph (b) above, then this
Agreement or, with respect to any Additional Closing Date, the obligation of
the Underwriters to purchase Securities on the Additional Closing Date, as the
case may be, shall terminate without liability on the part of the
non-defaulting Underwriters. Any termination of this Agreement pursuant to this
Section 9 shall be without liability on the part of the Company, except that
the Company will continue to be liable for the payment of expenses as set forth
in Section 10 hereof and except that the provisions of Section 6 hereof shall
not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company or any non-defaulting Underwriter for
damages caused by its default.
10. Payment of Expenses. (a) Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
the Company will pay or cause to be paid all costs and expenses incident to the
performance of its obligations hereunder, including without limitation, (i) the
costs incident to the authorization, issuance, sale, preparation and delivery
of the Securities and the Underlying Securities and any taxes payable in that
connection; (ii) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement, the Preliminary Final
Prospectus and the Final Prospectus (including all exhibits, amendments and
supplements thereto) and the distribution thereof; (iii) the fees and expenses
of the Company's counsel and independent accountants; (iv) the fees and
expenses incurred in connection with the registration or qualification and
determination of eligibility for investment of the Securities and the
Underlying Securities under the laws of such jurisdictions as the
Representatives may designate and the preparation, printing and distribution of
a Blue Sky Memorandum (including the related fees and expenses of counsel for
the Underwriters); (v) the cost of preparing stock certificates; (vi) the costs
and charges of any transfer agent and any registrar; (vii) all expenses and
application fees incurred in connection with any filing with, and clearance of
the offering by, the NASD; (viii) all expenses incurred by the Company in
connection with any "road show" presentation to potential investors; and (ix)
all expenses and application fees related to the listing of the Underlying
Securities on the Exchange.
(b) If (i) this Agreement is terminated pursuant to Section 8, (ii)
the Company for any reason fails to tender the Securities for delivery to the
Underwriters or (iii) the Underwriters decline to purchase the Securities for
any reason permitted under this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in
connection with this Agreement and the offering contemplated hereby.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and any controlling
persons referred to in Section 6 hereof. Nothing in this Agreement is intended
or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein. No purchaser of Securities from any Underwriter shall be
deemed to be a successor merely by reason of such purchase.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of the Company or the
Underwriters pursuant to this Agreement or any certificate delivered pursuant
hereto shall survive the delivery of and payment for the Securities and shall
remain in full force and effect, regardless of any termination of this
Agreement or any investigation made by or on behalf of the Company or the
Underwriters.
13. Certain Defined Terms. For purposes of this Agreement, the
following terms shall have the following meanings:
"affiliate" has the meaning set forth in Rule 405 under the
Securities Act, except where otherwise expressly provided.
"Basic Prospectus" shall mean the prospectus referred to in
Section 1 contained in the Registration Statement at the Effective Date
including any Preliminary Final Prospectus.
"business day" means any day other than a day on which banks are
permitted or required to be closed in New York City.
"Effective Date" with respect to (i) the Registration Statement
shall mean the date it became effective or the last date it was deemed amended,
(ii) any post-effective amendment thereto shall mean the date it was declared
effective and (iii) any Rule 462(b) Registration Statement shall mean the date
it was declared effective.
"Final Prospectus" shall mean the prospectus supplement relating
to the Securities that was first filed pursuant to Rule 424(b) after the
Execution Time, together with the Basic Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Basic Prospectus which describes the Securities
and the offering thereof and is used prior to filing of the Final Prospectus,
together with the Basic Prospectus.
"Registration Statement" shall mean the registration statement
referred to in Section 1, including exhibits, financial statements and
documents incorporated by reference therein, as amended at the Closing Date
(or, if not effective at the Closing Date, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing Date,
shall also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any Rule
430A Information deemed to be included therein at the Closing Date as provided
by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refer to such
rules under the Securities Act.
"Rule 430A Information" shall mean 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.
"Rule 462(b) Registration Statement" shall mean a
registration statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred to in
Section 1 hereof.
"subsidiary" has the meaning set forth in Rule 405 under the
Securities Act.
14. Miscellaneous. (a) Authority of the Representatives. Any action by
the Underwriters hereunder may be taken by Citigroup Global Markets Inc. and
X.X. Xxxxxx Securities Inc. on behalf of the Underwriters, and any such action
taken by Citigroup Global Markets Inc. and X.X. Xxxxxx Securities Inc. shall be
binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
and confirmed by any standard form of telecommunication. Notices to the
Underwriters shall be given to the Representatives c/o Citigroup Global Markets
Inc. General Counsel, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax:
(000) 000-0000); Attention: General Counsel and to X.X. Xxxxxx Securities Inc.,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: (000) 000-0000); Attention:
Xxxxx X. Xxxxxx. Notices to the Company shall be given to it at Rite Aid
Corporation, 00 Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000, (fax: (717)
000-0000); Attention: Xxxxxx Sari, Esq.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which
may include counterparts delivered by any standard form of telecommunication),
each of which shall be an original and all of which together shall constitute
one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
15. Absence of Fiduciary Relationships. The Company acknowledges and
agrees that the Underwriters are acting solely in the capacity of an arm's
length contractual counterparty to the Company with respect to the offering of
Securities contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor or a fiduciary to, or an
agent of, the Company. Additionally, neither the Representatives nor any other
Underwriter (solely in their capacity as such) is advising the Company as to
any legal, tax, investment, accounting or regulatory matters in any
jurisdiction in connection with the offering of Securities contemplated hereby.
In connection with the offering of Securities contemplated hereby, the Company
shall consult with its own advisors concerning such matters and shall be
responsible for making their own independent investigation and appraisal of the
transactions contemplated hereby, and the Underwriters shall have no
responsibility or liability to the Company with respect thereto, except as
otherwise set forth herein. Any review by the Underwriters of the Company, the
transactions contemplated hereby or other matters relating to such transactions
will be performed solely for the benefit of the Underwriters and shall not be
on behalf of the Company.
If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
RITE AID CORPORATION,
by /s/ Xxxxxx X. Sari
---------------------------------
Name: Xxxxxx X. Sari
Title: Senior Vice President,
General Counsel and
Secretary
Accepted: August 16, 2005
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
by Citigroup Global Markets Inc.
By
---------------------------------
Name:
Title:
X.X. Xxxxxx Securities Inc.
by X.X. Xxxxxx Securities Inc.
By
---------------------------------
Name:
Title:
For itself and on behalf of the several
Underwriters listed in Schedule 1.
