EXHIBIT 1.1
7,000,000 EQUITY SECURITY UNITS
EQUITY SECURITY UNITS
TOYS "R" US, INC.
UNDERWRITING AGREEMENT
May 21, 2002
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx Xxxxxx Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. INTRODUCTORY. Toys "R" Us Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell 7,000,000 of the Company's Equity
Security Units stated value $50 per unit (the "FIRM UNITS") to the several
underwriters named in Schedule A hereto (the "UNDERWRITERS"). In addition, the
Company proposes to sell to the Underwriters, at the option of the Underwriters,
up to an additional 1,050,000 Units (the "OPTION UNITS") on the terms set forth
in Section 3. The Firm Units and the Option Units, if purchased, are hereinafter
collectively called the "UNITS."
Each Unit initially will consist of (a) a stock purchase contract (the
"PURCHASE CONTRACT") under which the holder will agree to purchase from the
Company and the Company will agree to sell to the holder, on August 16, 2005
(the "PURCHASE CONTRACT DATE"), for $50, a number of shares (the "SHARES") of
common stock, $0.10 par value per share, of the Company (the "COMMON STOCK")
equal to the settlement rate then in effect pursuant to, and subject to
adjustment as set forth in, the Purchase Contract Agreement (as defined below)
and (b) a Senior Note due 2007 of the Company (the "SENIOR NOTE"), having a
principal amount of $50.
1
In accordance with the Purchase Contract Agreement, to be dated as of
May 28, 2002 (the "PURCHASE CONTRACT AGREEMENT"), between the Company and The
Bank of New York, as purchase contract agent (the "PURCHASE CONTRACT AGENT"),
the Senior Note or Treasury security, as the case may be, constituting a part of
each Unit will be pledged by the Purchase Contract Agent, on behalf of the
holders of each Unit, to XX Xxxxxx Chase Bank, as collateral agent (the
"COLLATERAL AGENT"), and as the custodial agent (the "CUSTODIAL AGENT") pursuant
to the Pledge Agreement, to be dated as of May 28, 2002 (the "PLEDGE
AGREEMENT"), among the Company, the Purchase Contract Agent, the Collateral
Agent, the Custodial Agent and XX Xxxxxx Xxxxx Bank, as securities intermediary
(the "SECURITIES INTERMEDIARY"), to secure the holders' obligations to purchase
Common Stock under the Purchase Contracts. The rights and obligations of a
holder of Units in respect of the Senior Note, subject to the pledge thereof,
and Purchase Contracts will be evidenced by security certificates (the "SECURITY
CERTIFICATES") to be issued pursuant to the Purchase Contract Agreement.
The Senior Notes will be issued under an Indenture (the "BASE
INDENTURE") to be dated as of May 28, 2002 between the Company and The Bank of
New York, as Trustee (the "TRUSTEE") as supplemented by the First Supplemental
Indenture, to be dated as of May 28, 2002 between the Company and the Trustee
(the "SUPPLEMENTAL INDENTURE" and, together with the Base Indenture, the
"INDENTURE").
As used in this Agreement, the term "TRANSACTION AGREEMENTS" means this
Agreement, the Purchase Contract Agreement (including the Purchase Contracts),
the Pledge Agreement, the Senior Notes, the Indenture and the Supplemental
Indenture.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (No. 333-84254) relating to the
Units, the Senior Notes, the Purchase Contracts and the Shares
(including rights to purchase Common Stock as set forth therein)
(collectively, the "SECURITIES") including a form of prospectus, has
been filed with the Securities and Exchange Commission ("COMMISSION")
and either (i) has been declared effective under the Securities Act of
1933, as amended ("ACT"), and is not proposed to be amended or (ii) is
proposed to be amended by amendment or post-effective amendment. If
such registration statement ("INITIAL REGISTRATION STATEMENT") has been
declared effective, either (i) an additional registration statement
("ADDITIONAL REGISTRATION STATEMENT") relating to the Securities may
have been filed with the Commission pursuant to Rule 462(b) ("RULE
462(b)") under the Act and, if so filed, has become effective upon
filing pursuant to such Rule and the Securities all have been duly
registered under the Act pursuant
2
to the initial registration statement and, if applicable, the
additional registration statement or (ii) such an additional
registration statement is proposed to be filed with the Commission
pursuant to Rule 462(b) and will become effective upon filing pursuant
to such Rule and upon such filing the Securities will all have been
duly registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the Company
does not propose to amend the initial registration statement or if an
additional registration statement has been filed and the Company does
not propose to amend it, and if any post-effective amendment to either
such registration statement has been filed with the Commission prior to
the execution and delivery of this Agreement, the most recent amendment
(if any) to each such registration statement has been declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c) ("RULE 462(c)") under the Act or, in the case
of the additional registration statement, Rule 462(b). For purposes of
this Agreement, "EFFECTIVE TIME" with respect to the initial
registration statement or, if filed prior to the execution and delivery
of this Agreement, the additional registration statement means (i) if
the Company has advised the Representatives that it does not propose to
amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (ii) if the Company
has advised the Representatives that it proposes to file an amendment
or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement
has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it
proposes to file one, "EFFECTIVE TIME" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "EFFECTIVE DATE" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration statement,
as amended at its Effective Time, including all material incorporated
by reference therein, including all information contained in the
additional registration statement (if any) and deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the Act,
is hereinafter referred to as the "Initial Registration Statement." The
additional registration statement, as amended at its Effective Time,
including the contents of the initial registration statement
incorporated by reference therein and including all information (if
any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to
as the "ADDITIONAL REGISTRATION STATEMENT." The Initial Registration
Statement and the Additional Registration Statement are herein referred
to collectively as the "REGISTRATION STATEMENTS" and individually as a
"REGISTRATION STATEMENT." The form of prospectus relating to the
Securities, as
3
first filed with the Commission pursuant to and in accordance with Rule
424(b) ("RULE 424(b)") under the Act or (if no such filing is required)
as included in a Registration Statement, including all documents
incorporated by reference in such prospectus, is hereinafter referred
to as the "PROSPECTUS." No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (i)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all material respects to
the requirements of the Act and the rules and regulations of the
Commission ("RULES AND REGULATIONS") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement conformed,
or will conform, in all material respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading; and (iii)
on the date of this Agreement, the Initial Registration Statement and,
if the Effective Time of the Additional Registration Statement is prior
to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required)
at the Effective Date of the Registration Statement in which the
Prospectus is included, each Registration Statement and the Prospectus
will conform, in all material respects to the requirements of the Act
and the Rules and Regulations, and the Registration Statement when it
became effective did not contain, any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Prospectus, as of its issue date and as of the Closing Date, 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
light of the circumstances under which they were made, not misleading.
If the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement: on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the Rules and Regulations,
the Initial Registration Statement will not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and the Prospectus 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 light of the circumstances
under which they were made, not misleading, and no Additional
Registration Statement has been or will be filed. The two preceding
sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by any
4
Underwriter through the Representatives specifically for use therein,
it being understood and agreed that the only such information is that
described as such in Section 7(b) hereof.
(c) The documents incorporated or deemed to be incorporated by
reference in the Registration Statements and the Prospectus, at the
time they were or hereafter are filed with the Commission, complied or
will comply, as the case may be, as to form in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the rules and regulations of the
Commission thereunder.
(d) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except where
the failure to be in good standing or to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
financial condition, business, properties and results of operations of
the Company and its subsidiaries taken as a whole ("MATERIAL ADVERSE
EFFECT").
(e) Each subsidiary of the Company listed on Schedule C hereto
(that purports to identify each subsidiary of the Company that
constitutes a "significant subsidiary" as such term is defined in Rule
1-02 of Regulation S-X) ("SIGNIFICANT SUBSIDIARY") has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate power and
authority to own its properties and conduct its business as described
in the Prospectus; and each Significant Subsidiary of the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, except
where the failure to be in good standing or to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect;
all of the issued and outstanding capital stock of each Significant
Subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable; and the capital stock of each
Significant Subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and security
interests, except as would not, individually or in the aggregate, have
a Material Adverse Effect.
(f) The Company has the authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the dates set forth
therein; all of the issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued, are fully
paid and nonassessable and conform in all material respects to the
description thereof contained in the Prospectus; none of the
5
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any security
holder of the Company.
(g) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(h) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(i) The Units are listed on The New York Stock Exchange,
subject to official notice of issuance.
(j) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation by the Company of the transactions contemplated by
this Agreement in connection with the issuance and sale of the Units by
the Company, except such as have been obtained or made under the
Exchange Act, the Trust Indenture Act of 1939, as amended (the "TIA")
and such as may be required under state or foreign securities or Blue
Sky laws or where the failure to obtain such consent, approval,
authorization or filing would not, individually or in the aggregate,
have a Material Adverse Effect.
(k) The execution, delivery and performance of this Agreement,
and the issuance and sale of the Units will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, (a) any statute, any rule, regulation or order of any
governmental authority, agency or body or any court (domestic or
foreign) having jurisdiction over the Company or any Significant
Subsidiary of the Company or any of their properties, or (b) any
agreement or instrument to which the Company or any such Significant
Subsidiary is a party or by which the Company or any such Significant
Subsidiary is bound or to which any of the properties of the Company or
any such Significant Subsidiary is subject, or (c) the charter or
by-laws of the Company, except, in the case of clauses (a) and (b)
only, for such breaches, violations or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect.
(l) This Agreement has been duly authorized, executed and
delivered by the Company.
6
(m) Except as disclosed in the Prospectus, the Company and its
Significant Subsidiaries have good and marketable title to all real
properties and all personal property owned by them, in each case free
from liens, encumbrances and defects that would materially affect the
value thereof or materially interfere with the use made or to be made
thereof by them; and except as disclosed in the Prospectus, the Company
and its Significant Subsidiaries hold any leased real property or
buildings under valid and enforceable leases with no material
exceptions that would materially interfere with the use made or to be
made thereof by them.
(n) The Company and its Significant Subsidiaries possess or
have obtained all licenses, certificates, authorizations or permits
issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any
such license, certificate, authorization or permit that, would,
individually or in the aggregate, have a Material Adverse Effect.
(o) No labor dispute with the employees of the Company or any
of its Significant Subsidiaries exists or, to the knowledge of the
Company, is threatened that would, individually or in the aggregate,
have a Material Adverse Effect.
(p) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"INTELLECTUAL PROPERTY RIGHTS") necessary to conduct the business now
operated by them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that would,
individually or in the aggregate, have a Material Adverse Effect.
(q) Except as disclosed in the Prospectus, there are no legal
or government actions, suits or proceedings pending against or
affecting the Company, any of its Significant Subsidiaries or any of
their respective properties that, would, individually or in the
aggregate, have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement; and to the Company's knowledge, no such actions,
suits or proceedings are threatened or, contemplated by governmental
authorities or threatened by others.
(r) Ernst & Young LLP, who have certified the audited
financial statements of the Company and its subsidiaries incorporated
by reference in each Registration Statement and the Prospectus are
independent public accountants as required by the Act and the Rules and
Regulations.
(s) The financial statements incorporated by reference in each
Registration Statement and the Prospectus present fairly in all
material respects
7
the financial position of the Company and its consolidated subsidiaries
as of the dates shown and their consolidated results of operations and
changes in consolidated cash flows, for the periods shown, and, except
as otherwise disclosed in the Prospectus, such financial statements
have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis.
(t) Except as disclosed in the Prospectus, since February 2,
2002, there has been no material adverse change, nor any development or
event involving a prospective material adverse change in the financial
condition, business, properties or results of operations of the Company
and its subsidiaries taken as a whole, and, except as disclosed in or
contemplated by the Prospectus, since February 2, 2002, there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(u) The Company is not and, after giving effect to the
offering and sale of the Units and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in, and subject to regulation under, the Investment
Company Act of 1940.
(v) The Company and its Significant Subsidiaries have filed
all federal, state, local and foreign tax returns that have been
required to be filed or has duly requested extensions thereof, except
to the extent that any failure to file or request for extension, or any
incorrectness, would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and its Significant Subsidiaries
have paid all taxes shown as due on such filed tax returns (including
any related assessments), except to the extent that any such taxes or
assessments are being contested in good faith and by appropriate
proceedings, or to the extent that any failure to pay would not,
individually or in the aggregate, have a Material Adverse Effect.
(w) The Units initially consisting of a Purchase Contract and
a Senior Note have been duly authorized by the Company and, when duly
executed and delivered by the Company, assuming due authorization,
execution and delivery thereof by the Purchase Contract Agent as
attorney-in-fact for the holders thereof, due authentication thereof by
the Purchase Contract Agent, due authentication of the Senior Notes by
the Trustee and upon payment therefor as set forth herein, will
constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Purchase Contract Agreement subject to
(i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, (ii) general equitable
principles (whether considered in a proceeding in equity or law) and
(iii) an implied covenant of good faith and faith dealing, respects.
The Units, when
8
issued, will conform in all material respects to the description
thereof in the Prospectus.
(x) The Purchase Contract Agreement has been duly authorized
by the Company and, when executed and delivered by the Company,
assuming due authorization, execution and delivery thereof by the
Purchase Contact Agent, will constitute the valid and binding
obligation of the Company enforceable in accordance with its terms,
subject, to (i) the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, (ii) general equitable
principles (whether considered in a proceeding in equity or law) and
(iii) an implied covenant of good faith and faith dealing. The Purchase
Contract Agreement will conform, when executed and delivered, in all
material respects to the descriptions thereof in the Prospectus.
(y) The Senior Notes have been duly authorized by the Company,
and, when the Senior Notes are duly executed and delivered by the
Company against payment therefor as set forth herein and upon due
authentication thereof by the Trustee, will constitute valid and
legally binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of
the Indenture, subject to (i) the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or
law) and (iii) an implied covenant of good faith and faith dealing. The
Senior Notes will conform, when issued, in all material respects to the
description thereof contained in the Prospectus.
(z) The Base Indenture and Supplemental Indenture have been
duly authorized by the Base Company and, when duly executed and
delivered by the Company, assuming due authorization, execution and
delivery thereof by the Trustee, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to (i) the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, (ii)
general equitable principles (whether considered in a proceeding in
equity or law) and (iii) an implied covenant of good faith and faith
dealing. The Base Indenture and Supplemental Indenture will conform
when executed and delivered, in all material respects to the
description thereof contained in the Prospectus.
(aa) The Pledge Agreement has been duly authorized by the
Company and, when duly executed and delivered by the Company, assuming
due authorization, execution and delivery thereof by the Purchase
Contract Agent, Collateral Agent, Custodial Agent and Securities
Intermediary, will constitute a
9
valid and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, (ii) general equitable principles (whether considered
in a proceeding in equity or law) and (iii) an implied covenant of good
faith and faith dealing.
(bb) The Shares initially issuable by the Company pursuant to
the Purchase Contract Agreement (but without giving effect to the
anti-dilution provisions contained in the Purchase Contract Agreement)
have been duly authorized for issuance by the Company and, when issued
and delivered in accordance with the provisions of the Purchase
Contract Agreement, will be validly issued, fully paid and
non-assessable; will conform in all material aspects to the description
thereof contained in the Prospectus; and the issuance of such Shares is
not subject to preemptive or other similar rights.
3. PURCHASE, SALE AND DELIVERY OF FIRM UNITS, OPTION UNITS. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of $48.50 per Unit, the
respective numbers of Firm Units set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the Firm Units to the Representatives for the
accounts of the Underwriters, against payment of the purchase price in Federal
(same day) funds by wire transfer to an account at a bank reasonably acceptable
to Credit Suisse First Boston Corporation ("CSFBC") and Xxxxxxx Xxxxx Xxxxxx
Inc. ("SSB") drawn to the order of the Company at the office of Shearman &
Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, X.X. 00000, at 9:00 A.M., New York
City time, on May 28, 2002, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "FIRST CLOSING DATE." For purposes of Rule 15c6-1
under the Securities Exchange Act of 1934, the First Closing Date (if later than
the otherwise applicable settlement date) shall be the settlement date for
payment of funds and delivery of securities for all the Units sold pursuant to
the offering. The certificates for the Firm Units so to be delivered will be in
definitive form, in such denominations and registered in such names as CSFBC and
SSB request and will be made available for checking and packaging at the above
office of Shearman & Sterling at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC and SSB given to the
Company from time to time not more than 13 days subsequent to the First Closing
Date, the Underwriters may purchase all or less than all of the Option Units at
the purchase price per Security to be paid for the Firm Units, provided that the
Optional Closing Date (as defined below) is within thirteen calendar days of the
First Closing Date. The Company agrees to sell to the Underwriters the number of
shares of Option Units specified in such
10
notice and the Underwriters agree, severally and not jointly, to purchase such
Option Units. Such Option Units shall be purchased for the account of each
Underwriter in the same proportion as number of shares of Firm Units set forth
opposite such Underwriter's name bears to the total number of shares of Firm
Units (subject to adjustment by CSFBC and SSB to eliminate fractions) and may be
purchased by the Underwriters only for the purpose of covering over-allotments
made in connection with the sale of the Firm Units. No Option Units shall be
sold or delivered unless the Firm Units previously have been, or simultaneously
are, sold and delivered. The right to purchase the Option Units or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by CSFBC and
SSB to the Company.
Each time for the delivery of and payment for the Option Units, being
herein referred to as an "OPTIONAL CLOSING DATE," which may be the First Closing
Date (the First Closing Date and each Optional Closing Date, if any, being
sometimes referred to as a "CLOSING DATE"), shall be determined by CSFBC and SSB
but shall be not later than five full business days after written notice of
election to purchase Option Units is given and in no event more than thirteen
calendar days after the First Closing Date. The Company will deliver the Option
Units being purchased on each Optional Closing Date to the Representatives for
the accounts of the several Underwriters, against payment of the purchase price
therefor in Federal (same day) funds by wire transfer to an account at a bank
reasonably acceptable to CSFBC and SSB drawn to the order of the Company, at the
above office of Shearman & Sterling. The certificates for the Option Units being
purchased on each Optional Closing Date will be in definitive form, in such
denominations and registered in such names as CSFBC and SSB request upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at the above office of Shearman & Sterling at a
reasonable time in advance of such Optional Closing Date.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Units for sale to the public as set forth in
the Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with the applicable subparagraph (as consented to by CSFBC
and SSB, which such consent shall not be unreasonably withheld) of Rule
424(b) not later than the second business day following the execution
and delivery of this Agreement). The Company will advise CSFBC and SSB
promptly of any such filing pursuant to Rule 424(b). If the Effective
Time of the Initial Registration Statement is prior to the execution
and delivery of this Agreement and an additional registration statement
is necessary to register a portion of the Units under the Act but the
11
Effective Time thereof has not occurred as of such execution and
delivery, the Company will file the additional registration statement
or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior
to 10:00 P.M., New York City time, on the date of this Agreement or, if
earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later
date as shall have been consented to by CSFBC and SSB.
(b) The Company will advise CSFBC and SSB promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the
Initial Registration Statement, the Additional Registration Statement
(if any) or the Prospectus and will not effect such amendment or
supplementation without CSFBC's and SSB's consent, which such consent
shall not be unreasonably withheld; and the Company will also advise
CSFBC and SSB promptly of the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of
a Registration Statement or the Prospectus and of the institution by
the Commission of any stop order proceedings in respect of a
Registration Statement and will use its reasonable best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
(c) If, at any time when a prospectus (not in excess of 12
months from the date hereof) relating to the Securities is required to
be delivered under the Act in connection with sales by any Underwriter,
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an 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 is necessary at any time when a prospectus
(not in excess of 12 months from the date hereof) relating to the Units
is required to be delivered under the Act in connection with sales by
any Underwriter to amend the Prospectus to comply with the Act, the
Company will promptly notify CSFBC and SSB of such event, and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement that will correct such statement or omission or
an amendment which will effect such compliance. Neither CSFBC's and
SSB's consent to, nor the Underwriters' delivery of, any such amendment
or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act (including, at the option of the Company, Rule
158 under
12
the Act). For the purpose of the preceding sentence, "AVAILABILITY
DATE" means the 45th day after the end of the fourth fiscal quarter
following the fiscal quarter that includes such Effective Date, except
that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "AVAILABILITY DATE" means the 90th day after the
end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of
each Registration Statement (three of which will include all exhibits),
each related preliminary prospectus, and, so long as a prospectus
relating to the Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and
all amendments and supplements to such documents, in each case in such
quantities as CSFBC and SSB reasonably request. The Prospectus shall be
so furnished on or prior to 3:00 P.M., New York City time, on the
business day following the later of the execution and delivery of this
Agreement or the Effective Time of the Initial Registration Statement.
All other documents shall be so furnished as soon as available. The
Company will pay the expenses of printing and distributing to the
Underwriters all such documents.
(f) The Company will use its reasonable best efforts to
arrange for the qualification of the Units for sale under the laws of
such jurisdictions as CSFBC and SSB reasonably designate and will
continue such qualifications in effect so long as required for the
distribution, of the Units, provided that the Company and its
subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a
general consent to service of process in any jurisdiction.
(g) During the period of three years hereafter, the Company
will furnish to the Representatives and, upon request, to each of the
other Underwriters, as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and
the Company will furnish to the Representatives as soon as available, a
copy of each report and any definitive proxy statement of the Company
filed with the Commission under the Exchange Act or mailed to
stockholders; provided, however, that this Section 5(g) shall not apply
to the extent that any such report or other document is available
through the Commission's XXXXX system.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, the fees and
expenses of the Trustee, the Purchase Contract Agent, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the
registrar and transfer agent of its Common Stock (including, in each
case, the reasonable fees and disbursement of their counsel) for any
filing fees and other expenses (including reasonable fees and
disbursements of counsel) incurred in connection with qualification of
the Units for sale under the laws of such jurisdictions as CSFBC and
SSB reasonably
13
designate and the printing of memoranda relating thereto, for the
filing fee incident to the review by the National Association of
Securities Dealers, Inc. of the Units, for any travel expenses of the
Company's officers and employees and any other expenses of the Company
in connection with attending or hosting meetings with prospective
purchasers of the Units and for expenses incurred in distributing
preliminary prospectuses and the Prospectus (including any amendments
and supplements thereto) to the Underwriters.
(i) For a period of 90 days after the date of this Agreement,
the Company will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares
of its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose
its intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of CSFBC and SSB, except for
(A) issuances of Common Stock pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, (B) grants of
employee or non-employee director stock options pursuant to the terms
of a plan in effect on the date hereof, (C) issuances of Common Stock
pursuant to the exercise of such options or the exercise of any other
employee or non-employee director stock options outstanding on the date
hereof or issuances of Common Stock pursuant to the Company's dividend
reinvestment plan, (D) transfers of Common Stock to charitable
organizations, provided the transferee(s) agree(s) to be bound by the
terms of this provision, (E) any Common Stock purchase rights issued
under the Company's stockholder rights plan, (F) the filing of any
registration statements in connection with the registration and sale of
shares of Common Stock pursuant to employee and non-employee director
benefit plans, (G) the sale of the Company's Common Stock to
underwriters in the concurrent offering and sale of such securities as
contemplated by the Prospectus, (H) the sale of the Units to the
underwriters as contemplated by this Agreement and, in connection
therewith, any issuance and sale of Common Stock pursuant to the
Purchase Contracts and the issuance of stripped units or normal units
following the recreation of such normal units (as each of such terms
are used in the Prospectus) (I) any registration statement filed with
the Commission relating to the Units or the Common Stock referred to in
clause (G) above pursuant to Rule 462(b) under the Act or in connection
with the remarketing of the Senior Notes or the early settlement of
Purchase Contracts (J) issuances of Common Stock to directors of the
Company in lieu of fees and (K) any offering or sale of Common Stock by
the Company in connection with the vesting of restricted stock awards
granted to employees, and the filing of any registration statements in
connection therewith.
(j) The Company will use its reasonable best efforts to
arrange for the Units, when issued, to be authorized for listing on The
New York Stock Exchange.
14
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the several Underwriters to purchase and pay for the Units on the First
Closing Date and the Option Units to be purchased on each Optional Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, as of the date hereof and as of the Closing Date, to
the accuracy of the statements of Company officers made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be
prior to the filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective
Time), of Ernst & Young, LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating substantially to
the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included or incorporated by
reference in the Registration Statements comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) on the basis of a reading of the latest
available interim financial statements of the Company,
inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them
to believe that:
(A) at the date of the latest available balance
sheet read by such accountants, or at a
subsequent specified date not more than
three business days prior to the date of
this Agreement, there was any change in the
capital stock or any increase in short-term
indebtedness or long-term debt of the
Company and its consolidated subsidiaries
or, at the date of the latest available
balance sheet read by such accountants,
there was any decrease in consolidated net
current assets or net assets, as compared
with amounts shown on the latest balance
sheet included in the Prospectus; or
(B) for the period from the closing date of the
latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such
15
accountants there were any decreases, as
compared with the corresponding period of
the previous year in consolidated net sales
or net operating income or consolidated net
income,
except in all cases set forth in clauses (A) and (B)
above for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or
which are described in such letter; and
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to
be in agreement with such results, except as otherwise
specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement but
the Effective Time of the Additional Registration is subsequent to such
execution and delivery, "REGISTRATION STATEMENTS" shall mean the
Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the
post-effective amendment to be filed shortly prior to its Effective
Time, and (iii) "PROSPECTUS" shall mean the prospectus included in the
Registration Statements. All financial statements and schedules
included in material incorporated by reference into the Prospectus
shall be deemed included in the Registration Statements for purposes of
this subsection.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M., New
York City time, on the date of this Agreement or such later date as
shall have been consented to by CSFBC and SSB, which consent shall not
be unreasonably withheld. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution and
delivery of this Agreement, such Effective Time shall have occurred not
later than 10:00 P.M., New York City time, on the date of this
Agreement or, if earlier, the
16
time the Prospectus is printed and distributed to any Underwriter, or
shall have occurred at such later date as shall have been consented to
by CSFBC and SSB, which consent shall not be unreasonably withheld. If
the Effective Time of the Initial Registration Statement is prior to
the execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the financial
condition, business, prospects, properties, or results of operations of
the Company and its subsidiaries taken as a whole which, in the
judgment of a majority in interest of the Underwriters including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Units; (ii) any downgrading to below
investment grade in the rating of any debt securities of the Company by
Xxxxx'x Investors Service, Inc. or Standard and Poor's Ratings
Services, a Division of the McGraw Hill Companies, Inc.; (iii) any
material and adverse change in U.S. or international financial,
political or economic conditions as would, in the judgment of a
majority in interest of the Underwriters including the Representatives,
be likely to prejudice materially the success of the proposed issue,
sale or distribution of the Units, whether in the primary market or in
respect of dealings in the secondary market; (iv) any material
suspension or material limitation of trading in securities generally on
The New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by U.S. Federal or New York
authorities; (vi) any major disruption of settlements of securities or
clearance services in the United States or (vii) any attack on,
outbreak or escalation of hostilities or material act of terrorism
involving the United States, any declaration of war by Congress or any
other national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters including the
Representatives, the effect of any such attack, outbreak, escalation,
act, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Units.
The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Company,
substantially as set forth in Exhibit A hereto.
17
(d) The Representatives shall have received an opinion, dated
such Closing Date, of Xxxxxxxxxxx X. Xxx, Esq., Executive Vice
President-Operations and General Counsel of the Company, substantially
to the effect that:
(i) to such counsel's knowledge, the Company is duly
qualified to do business as a foreign corporation in good
standing in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material
Adverse Effect;
(ii) all outstanding shares of the Common Stock of
the Company have been duly authorized and validly issued and
are fully paid and nonassessable;
(iii) to such counsel's knowledge, there are no
contracts or agreements between the Company and any person
granting such person the right (other than rights which have
been waived or satisfied) to require the Company to include
any securities of the Company owned or to be owned by such
person in the securities registered pursuant to the
Registration Statement; and
(iv) to the knowledge of such counsel, there is no
pending or threatened 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 of a character required to be disclosed
in the Registration Statement or the Prospectus which is not
adequately described as required.
Such opinion shall be limited in all respects to matters
governed by the Delaware General Corporation Law and the
Federal laws of the United States of America. Such counsel may
rely as to certain matters of fact, to the extent he deems
proper, on certificates of officers of the Company and public
officials.
(e) The Representatives shall have received the opinion, dated
as of the Closing Date, of Xxxxx, Xxxxxx & Xxxxxx, LLP counsel to The
Bank of New York, as Purchase Contract Agent, in form and substance
satisfactory to counsel for the Underwriters, substantially to the
effect that:
(i) The Bank of New York is a New York banking
corporation duly organized, validly existing and in good
standing under the laws of the New York with all necessary
corporate power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the
Purchase Contract Agreement and the Pledge Agreement;
18
(ii) the execution, delivery and performance by the
Purchase Contract Agent of the Purchase Contract Agreement,
and the Pledge Agreement, and the authentication and delivery
of the Units have been duly authorized by all necessary action
on the part of the Purchase Contract Agent. The Purchase
Contract Agreement, the Pledge Agreement and the Indenture
have been duly executed and delivered by the Purchase Contract
Agent, and constitute the legal, valid and binding obligations
of the Purchase Contract Agent, enforceable against the
Purchase Contract Agent in accordance with their respective
terms, except as (A) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and (B) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability;
(iii) the execution, delivery and performance by The
Bank of New York, in its capacity as Purchase Contract Agent
of the Purchase Contract Agreement, the and Pledge Agreement,
do not conflict with, or constitute a breach of, The Bank of
New York's charter or by-laws; and
(iv) no consent, approval or authorization of, or
registration with or notice to, any federal banking authority
is required for the execution, delivery or performance by The
Bank of New York, in its capacity as Purchase Contract Agent,
of the Purchase Contract Agreement and the Pledge Agreement.
(f) The Representatives shall have received from Shearman &
Sterling, counsel for the Underwriters, such opinion or opinions dated
such Closing Date, with respect to the issuance and sale of the Units
delivered on such Closing Date, the Registration Statement, the
Prospectus, the Transaction Agreements and other related matters as the
Underwriters 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.
(g) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of
the Company in this Agreement are true and correct in all material
respects; the Company has complied in all material respects, with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date; no stop order
suspending the effectiveness of any Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission; the Additional Registration Statement
(if any) satisfying the requirements of subparagraphs (1) and (3) of
Rule 462(b) was filed pursuant to Rule 462(b), including payment of
19
the applicable filing fee in accordance with Rule 111(a) or (b) under
the Act, prior to the time the Prospectus was printed and distributed
to any Underwriter; and, subsequent to February 2, 2002 (the date of
the most recent audited financial statements incorporated by reference
in the Prospectus), there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the financial condition, business, properties, or results of
operations of the Company and its subsidiaries taken as a whole except
as set forth in or contemplated by the Prospectus or as described in
such certificate.
(h) Prior to or on the First Closing Date, the Units and the
maximum number of Shares issuable pursuant to the Purchase Contracts
(but without giving effect to the anti-dilution provisions contained in
the Purchase Contract Agreement) shall have been approved for listing,
subject to official notice of issuance and evidence of satisfactory
distribution, on The New York Stock Exchange, and satisfactory evidence
of such actions shall have been provided to the Underwriters.
(i) The Representatives shall have received a letter, dated
such Closing Date, of Ernst & Young, LLP which meets the requirements
of subsection (a) of this Section 6, except that the specified date
referred to in such subsection will be a date not more than three days
prior to such Closing Date for the purposes of this subsection.
(j) Prior to or on the First Closing Date, the Representatives
shall have received lock-up letters, substantially in the form set
forth in Exhibit B hereto, from each of the executive officers and
directors of the Company set forth on Schedule B hereto.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. CSFBC and SSB may in their sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act 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 any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, 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
20
will, subject to subsection (c) of this Section 7, reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; (it being understood,
however, that the Company shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in addition
to any local counsel) at any time for all such Underwriters, directors,
partners, officers and controlling persons, which firm shall be designated in
writing by CSFBC and SSB); 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 an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically 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; provided further, that with respect to any untrue statement or
alleged untrue statement or omission or alleged omission of material fact made
in any Preliminary Prospectus, the indemnity agreement contained in this Section
7(a) shall not inure to the benefit of any Underwriter (or its partners,
directors, officers or controlling persons) from whom the person asserting any
such loss, claim, damage or liability purchased the securities concerned, to the
extent that any such loss, claim, damage or liability of such Underwriter (or
its partners, directors, officers or controlling persons) occurs under the
circumstance the untrue or alleged untrue statement or omission or alleged
omission of a material fact contained in the Preliminary Prospectus was
corrected in the Prospectus and there was not sent or given to such person, at
or prior to the written confirmation of the sale of such securities to such
person, a copy of the Prospectus.
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Company, its directors and officers and each
person, if any who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, against any losses,
claims, damages or liabilities to which the Company may become subject,
under the Act 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 any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives
specifically for use
21
therein, and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in
the Prospectus furnished on behalf of each Underwriter: the concession
and reallowance figures appearing in the fourth paragraph under the
caption "Underwriting," the information contained in the tenth,
eleventh, fifteenth and sixteenth paragraphs under the caption
"Underwriting" and the penultimate paragraph on the cover page.
(c) Promptly after receipt by an indemnified party under this
Section 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 subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified
party from all liability on any claims that are the subject matter of
such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of
an indemnified party. No indemnifying party shall be liable for any
settlement of any such action effected without the indemnifying party's
written consent (which consent shall not be unreasonably withheld),
unless (i) such settlement is entered into more than 30 days after
receipt by the indemnifying party of written notice of the proposed
settlement, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 20 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior
to the date of such settlement.
22
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (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) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which 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 proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which 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 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section shall be in
addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each director of the Company, to each officer of the
23
Company who has signed a Registration Statement and to each person, if
any, who controls the Company within the meaning of the Act or the
Exchange Act.
8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default
in their obligations to purchase Units hereunder on either the First Closing
Date or any Optional Closing Date and the aggregate number of Units that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total number of Units that the Underwriters are obligated to
purchase on such Closing Date, CSFBC and SSB may make arrangements satisfactory
to the Company for the purchase of such Units by other persons, including any of
the Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Units that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
Units with respect to which such default or defaults occur exceeds 10% of the
total number of Units that the Underwriters are obligated to purchase on such
Closing Date and arrangements satisfactory to CSFBC and SSB and the Company for
the purchase of such Units by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9
(provided that if such default occurs with respect to Option Units after the
First Closing Date, this Agreement will not terminate as to the Firm Units or
any Option Units purchased prior to such termination). As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Units. If this Agreement is terminated pursuant to Section 8
or if for any reason the purchase of the Units by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company and the Underwriters pursuant to Section 7 shall remain in effect, and
if any Units have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Units by the Underwriters is not consummated for any reason
other than solely because of the termination of this Agreement pursuant to
Section 8 or the occurrence of any event specified in clause (iii), (iv), (v),
(vi) or (vii) of Section 6(c), the Company will reimburse the Underwriters for
all out-of-pocket expenses (including reasonable fees and
24
disbursements of counsel to the Underwriters) reasonably incurred by them in
connection with the offering of the Units.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory
Group, and Xxxxxxx Xxxxx Xxxxxx Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, Attention: General Counsel; or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 000 Xxxx Xxxx, Xxxxxxx,
Xxx Xxxxxx 00000, Attention: General Counsel; provided, however, that any notice
to an Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed
and confirmed to such Underwriter. The Representatives shall promptly furnish
the address of any Underwriter upon the request of the Company.
11. 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 7, and no other
person will have any right or obligation hereunder.
12. REPRESENTATION OF UNDERWRITERS. The Representatives will act for
the several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly will be binding upon all the
Underwriters.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
25
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
TOYS "R" US, INC.
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Executive Vice President-Chief
Financial Officer
26
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written
Credit Suisse First Boston Corporation
Xxxxxxx Xxxxx Barney Inc.
By: CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
By: XXXXXXX XXXXX XXXXXX INC.
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
Acting on behalf of themselves and as the
Representatives of the several Underwriters.
SCHEDULE A
Number of
Firm Units
Underwriter to be Purchased
----------- ---------------
Credit Suisse First Boston Corporation..................... 2,450,000
Xxxxxxx Xxxxx Barney Inc. ................................. 2,450,000
First Union Securities, Inc. .............................. 595,000
Banc One Capital Markets, Inc. ............................ 315,000
BNY Capital Markets, Inc. ................................. 245,000
Fleet Securities, Inc. .................................... 350,000
Mizuho International plc .................................. 315,000
XX Xxxxx Securities Corporation............................ 210,000
The Royal Bank of Scotland plc ............................ 70,000
---------
Total .......................................... 7,000,000
=========
SCHEDULE B
LIST OF DIRECTORS AND OFFICERS SUBJECT TO LOCK-UP
Xxxx Xxxxxxx
XxXxx Xxxxxx
Xxxxxxx X'Xxxxxxx
Xxxx X. Xxxxx, Xx.
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
SCHEDULE C
List of the Company's Significant Subsidiaries
Toys "R" Us-Delaware, Inc.
TRU Properties, Inc.
Toys "R" Us Holdings, plc (United Kingdom)
Baby Superstore, Inc.
Xxxxxxx.xxx, LLC
