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L&W DRAFT
11/12/96
13,000,000 SHARES
LINENS 'N THINGS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
November __, 1996
CS FIRST BOSTON CORPORATION
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation,
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
1. Introductory. Nashua ▇▇▇▇▇▇ CVS, Inc., a New Hampshire corporation (the
"Selling Shareholder") and an indirect wholly owned subsidiary of CVS
Corporation, a Delaware corporation ("CVS"), and the corporate parent of Linens
'n Things, Inc., a Delaware corporation (the "Company"), proposes to sell
13,000,000 outstanding shares of common stock, par value $0.01 per share (the
"Securities") (such 13,000,000 shares of Securities being hereinafter referred
to as the "Firm Securities"). The Selling Shareholder also proposes to sell to
the Underwriters, at the option of the Underwriters, an aggregate of not more
than 1,950,000 additional shares of the Securities, as set forth below (such
1,950,000 additional shares being hereinafter referred to as the "Optional
Securities"). The Firm Securities and the Optional Securities are herein
collectively called the "Offered Securities." The Company, the Selling
Shareholder and CVS hereby agree with the several Underwriters named in Schedule
A hereto (the "Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Shareholder. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-12267) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission (the "Commission") and either (A) has
been declared effective under the Securities Act of 1933, as amended (the
"Act") and is not proposed to be amended or (B) is proposed to be amended
by amendment or post-effective amendment. If such registration statement
(the "initial registration statement") has been declared effective, either
(A) an additional registration statement (the "additional registration
statement") relating to the Offered Securities may have been filed with the
Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so
filed, has
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become effective upon filing pursuant to such Rule and the Offered
Securities all have been duly registered under the Act pursuant to the
initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement may
be proposed to be filed with the Commission pursuant to Rule 462(b) and, if
so filed will become effective upon filing pursuant to such Rule and upon
such filing the Offered Securities will all have been duly registered under
the Act pursuant to the initial registration statement and, if applicable,
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 (A) 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 (B) 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 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 hereinafter referred to collectively as the
"Registration Statements" and individually as a "Registration Statement."
The form of prospectus relating to the Offered Securities, as 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, 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.
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(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all respects to the requirements of the Act and the
rules and regulations of the Commission (the "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, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed or will conform, in all 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 (C) 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
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects to
the requirements of the Act and the Rules and Regulations, and neither of
such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required
to be stated therein or necessary to make the statements therein 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 respects to
the requirements of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to
make the statements therein 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
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(d).
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) 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 to the extent
that the failure to be so qualified or be in good standing would not have a
material adverse effect on the current or future financial position,
shareholders' equity, properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and
its subsidiaries taken as a whole (a "Material Adverse Effect").
(iv) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus; and
each 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
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property or the conduct of its business requires such qualification except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect; all of the issued and outstanding
capital stock of each subsidiary of the Company has been duly authorized
and validly issued and is fully paid and nonassessable; and the capital
stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects.
(v) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform, as to legal matters, in all
material respects to the description thereof contained in the Prospectus;
and the stockholders of the Company have no preemptive rights with respect
to the Securities.
(vi) 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.
(vii) Except as described 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.
(viii) The Securities have been approved for listing subject to notice
of issuance on The New York Stock Exchange.
(ix) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required to be obtained or
made by the Company or the Selling Shareholder for the consummation of the
transactions contemplated by this Agreement in connection with the sale of
the Offered Securities, except such as have been obtained and made under
the Act and such as may be required under state securities laws or Blue Sky
laws.
(x) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any other agreement, indenture
or instrument material to the conduct of the business of the Company and
its subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or their
respective property is bound, except for breaches, violations, and defaults
that could not reasonably be expected to have a Material Adverse Effect.
(xi) The execution, delivery and performance of this Agreement, and
the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, or constitute
a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
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jurisdiction over the Company or the Selling Shareholder or any subsidiary
of the Company or the Selling Shareholder or any of their properties, or
any agreement or instrument to which the Company or the Selling Shareholder
or any such subsidiary is a party or by which the Company or the Selling
Shareholder or any such subsidiary is bound or to which any of the
properties of the Company or the Selling Shareholder or any such subsidiary
is subject, or the charter or by-laws of the Company or any such
subsidiary.
(xii) This Agreement has been duly authorized, executed and delivered
by the Company and the Selling Shareholder.
(xiii) The Company and its subsidiaries hold all leased, real or
personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof by
them, except as would not have a Material Adverse Effect.
(xiv) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them, except as
would not have a Material Adverse Effect, and have not received any notice
of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(xv) The Company and each of its subsidiaries maintains reasonably
adequate insurance covering their properties, operations, personnel and
businesses in accordance with customary industry practice to protect the
Company and each of its subsidiaries and their businesses.
(xvi) 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, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(xvii) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate could reasonably be expected to have
a Material Adverse Effect; and the Company is not aware of any pending
investigation which might lead to such a claim.
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(xviii) In the ordinary course of business, the Company and its
subsidiaries conduct a periodic review of the effect of environmental laws
on their business, operations and properties, in the course of which they
identify and evaluate associated costs and liabilities (including, without
limitation, any current or anticipated capital or operating expenditures
required for clean-up, compliance with the "cluster rules," closure of
properties or compliance with environmental laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, no such
associated costs and liabilities would, individually or in the aggregate,
have a Material Adverse Effect.
(xix) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect, or could reasonably be expected to materially and adversely affect
the ability of the Company to perform its obligations under this Agreement
or to sell the Offered Securities; and no such actions, suits or
proceedings are threatened or, to the Company's knowledge, contemplated.
(xx) The financial statements included in each Registration Statement
and the Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis
and the schedules included in each Registration Statement present fairly
the information required to be stated therein; and the assumptions used in
preparing the pro forma financial information included in each Registration
Statement and the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(xxi) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or
otherwise), 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, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(xxii) The Company and its subsidiaries maintains a system of internal
auditing controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate
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action is taken with respect to any differences.
(xxiii) The Company and each of its subsidiaries have filed all tax
returns required to be filed, which returns are complete and correct, and
neither the Company nor any of its subsidiaries is in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(xxiv) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(xxv) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
(b) The Selling Shareholder represents and warrants to, and agrees with, the
several Underwriters that:
(i) The Selling Shareholder has and on each Closing Date hereinafter
mentioned will have valid and unencumbered title to the Offered Securities
to be delivered by the Selling Shareholder on such Closing Date and full
right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Offered Securities to be delivered by the
Selling Shareholder on such Closing Date hereunder in the manner provided
herein and this Agreement is a valid and binding agreement of the Selling
Shareholder, enforceable in accordance with its terms (except as rights to
indemnification and contribution may be limited by federal or state
securities laws).
(ii) The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order
of any governmental agency or body or any court having jurisdiction
over the Selling Shareholder or any subsidiary of the Selling
Shareholder or any of their properties, or any agreement or instrument
to which the Selling Shareholder or any subsidiary is a party or by
which the Selling Shareholder or any such subsidiary is bound or to
which any of the properties of the Selling Shareholder or any such
subsidiary is subject, or the charter or by-laws of the Selling
Shareholder or any such subsidiary.
(iii) Upon the delivery of and payment for the Offered Securities on
each Closing Date hereunder the several Underwriters will acquire valid and
unencumbered title to the Offered Securities to be delivered by the Selling
Shareholder on such Closing Date.
(iv) The descriptions in the Registration Statement and Prospectus
under the heading "Principal and Selling Shareholder" does not, and will
not on each Closing Date hereinafter mentioned, 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.
(c) CVS represents and warrants to, and agrees with, the several Underwriters
that:
(i) CVS has and on each Closing Date hereinafter mentioned will have
full right, power and authority to enter into this Agreement and this
Agreement is a valid and binding agreement of CVS, enforceable in
accordance with its terms (except as rights to indemnification and
contribution may be limited by federal or state securities laws).
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(ii) The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over CVS or any subsidiary of
CVS or any of their properties, or any agreement or instrument to which CVS or
any subsidiary is a party or by which CVS or any such subsidiary is bound or to
which any of the properties of CVS or any such subsidiary is subject, or the
charter or by-laws of CVS or any such subsidiary.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Selling Shareholder agrees to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Selling Shareholder, at a purchase price of $___ per share,
the number of Firm Securities set forth opposite the name of such Underwriter in
Schedule A hereto.
The Selling Shareholder will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price therefor in federal or other funds immediately available in New
York City by wire transfer to the account of the Selling Shareholder, at the
office of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m.,
New York time, on November __, 1996, or at such other time not later than seven
full business days thereafter as CS First Boston Corporation ("CS First Boston")
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 Offered Securities sold pursuant to the offering. The
certificates for the Firm Securities so to be delivered will be in definitive
form, in such denominations and registered in such names as CS First Boston
requests and will be made available for checking and packaging at the office of
CS First Boston, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at least 24 hours prior
to the First Closing Date.
In addition, upon written notice from CS First Boston given to the Company
and the Selling Shareholder from time to time not more than 30 days subsequent
to the date of the Prospectus, the Underwriters may purchase all or less than
all of the Optional Securities at the purchase price per Security to be paid for
the Firm Securities. The Selling Shareholder agrees to sell to the Underwriters
the number of shares of Optional Securities specified in such notice and the
Underwriters agree, severally and not jointly, to purchase such Optional
Securities. Such Optional Securities shall be purchased for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CS First Boston 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 Securities. No Optional Securities
shall be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities 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 CS First Boston to the Company and the Selling Shareholder.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each
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Optional Closing Date, if any, being sometimes referred to as a "Closing Date"),
shall be determined by CS First Boston but shall be not later than five full
business days after written notice of election to purchase Optional Securities
is given. The Selling Shareholder will deliver the Optional Securities 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 or other funds immediately available in New York City by wire transfer
to the account of the Selling Shareholder, at the above office of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇. The certificates for the Optional Securities being purchased on each
Optional Closing Date will be in definitive form, in such denominations and
registered in such names as CS First Boston requests upon reasonable notice
prior to such Optional Closing Date and will be made available for checking and
packaging at the above office of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 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 Offered Securities for sale to the public as set forth in
the Prospectus.
5. Certain Agreements of the Company and the Selling Shareholder. The
Company agrees with the several Underwriters and the Selling Shareholder 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
subparagraph (1) (or, if applicable and if consented to by CS First Boston,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise CS First Boston 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
Offered Securities under the Act but the 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 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 CS First Boston, which consent
shall not be unreasonably withheld.
(b) The Company will advise CS First Boston promptly of any proposal
to amend or supplement the initial registration statement 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 CS First Boston's consent, which consent shall not be unreasonably
withheld; and the Company will also advise CS First Boston 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 best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible
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its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, 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 to
amend the Prospectus to comply with the Act, the Company will promptly
notify CS First Boston of such event and will promptly prepare and file
with the Commission, at its own expense, an amendment or supplement which
will correct such statement or omission or will effect such compliance.
Neither CS First Boston'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.
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 be signed and will include all
exhibits), each related preliminary prospectus, and, so long as delivery of
a prospectus relating to the Offered 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 CS First Boston requests. The Prospectus shall
be so furnished on or prior to 3:00 p.m., New York 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 such
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 arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CS First Boston
designates and will continue such qualifications in effect so long as
required for the distribution.
(g) During the period of five 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 (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CS First Boston may reasonably request.
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(h) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company and CVS, together with
their subsidiaries, will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any additional shares of its
Securities or securities convertible into or exchangeable or exercisable
for any shares of its Securities, without the prior written consent of CS
First Boston, except (i) for private sales so long as the purchaser thereof
enters into a corresponding lockup agreement with CS First Boston, (ii) for
grants of employee stock options pursuant to the terms of a plan in effect
on the date hereof, issuances of Securities pursuant to the exercise of
such options or the exercise of any other employee stock options
outstanding on the date hereof and (iii) for preparation of a registration
statement or preparation for an offering so as to be in a position to file
a registration statement and proceed with an offering immediately after
expiration of such 180-day period.
(i) The Company will apply the net proceeds from the initial public
offering of the Securities as described in the Prospectus under the caption
"Use of Proceeds."
The Company agrees with the several Underwriters, the Selling Shareholder
and CVS that CVS will pay all expenses incident to the performance of the
obligations of the Company, the Selling Shareholder and CVS under this
Agreement, and will reimburse the Underwriters (if and to the extent incurred by
them) for any filing fees and other expenses (including fees and disbursements
of counsel) incurred by them in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as CS First Boston
designates and the printing of memoranda relating thereto, for the filing fee of
the National Association of Securities Dealers, Inc. relating to the Offered
Securities, for any travel expenses of the Company's or CVS's officers and
employees and any other expenses of the Company, the Selling Shareholder and CVS
in connection with attending or hosting meetings with prospective purchasers of
the Offered Securities, for any transfer taxes on the sale by the Selling
Shareholder of the Offered Securities to the Underwriters and for expenses
incurred in distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters.
The Selling Shareholder agrees to deliver to CS First Boston, attention:
Transactions Advisory Group, on or prior to the First Closing Date, a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
The Selling Shareholder agrees, for a period of 180 days after the date of
the initial public offering of the Offered Securities, not to offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
additional shares of the Securities of the Company or securities convertible
into or exchangeable or exercisable for any shares of Securities, without the
prior written consent of CS First Boston; provided that the foregoing will not
restrict, during such 180-day period, preparation of a registration statement or
preparation for an offering so as to be in a position to file a registration
statement and proceed with an offering immediately after expiration of such
period.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be
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purchased on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholder herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Shareholder of their obligations hereunder and to the following
additional conditions precedent:
(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 KPMG Peat Marwick LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements, schedules and
summary of earnings 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) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included in the Registration Statements;
(iii) the assumptions used in preparing the pro forma financial
information included in the Registration Statements provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the
related pro forma adjustments give appropriate effect to those
assumptions and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts;
(iv) on the basis of the review referred to in clause (ii) above,
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) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than five days prior to
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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
(C) 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 accountants
there were any decreases, as compared with the corresponding
period of the previous year, in consolidated net sales or net
operating income in the total or per share amounts of
consolidated net income;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(v) 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 Statements 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 Statements is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration Statement
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.
(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 time, on the date
of this Agreement or such later date as shall have been consented to by CS
First Boston. 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 time, on the date of this Agreement or, if
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earlier, the 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 CS First Boston. 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 Selling Shareholder, 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 condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of CS First Boston, 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 Offered
Securities; (ii) any suspension or 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; (iii) any banking moratorium declared by U.S. Federal or New York
authorities; or (iv) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of CS First Boston, the effect of any such outbreak,
escalation, 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 Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, to the
effect that:
(i) The Company 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 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 so qualified or be
in good standing would not have a Material Adverse Effect;
(ii) The Offered Securities delivered on such Closing Date and
all other outstanding shares of the Common Stock of the Company have
been duly authorized and validly issued, are fully paid and
nonassessable and conform, as to legal matters in all material
respects, to the description thereof contained in the Prospectus; and
the stockholders of the Company have no preemptive rights with respect
to the Securities;
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration
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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 the
Registration Statement or in any securities being registered pursuant
to any other registration statement filed by the Company under the
Act;
(iv) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company or the Selling Shareholder for the
consummation of the transactions contemplated by this Agreement in
connection with the sale of the Offered Securities, except such as
have been obtained and made under the Act and such as may be required
under state securities laws or Blue Sky laws;
(v) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws and, to the best of
such counsel's knowledge after due inquiry, neither the Company nor
any of its subsidiaries is in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the Company
or any of its subsidiaries is a party or by which it or any of its
subsidiaries or their respective property is bound;
(vi) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein or therein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or
any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, except with respect to the
consent of any landlord that may be required pursuant to any store
lease, or 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 such
subsidiary is subject, or the charter or by-laws of the Company or any
such subsidiary (except as rights to indemnification and contribution
may be limited by federal or state securities laws), except for
violations and defaults that could not reasonably be expected to
result in a Material Adverse Effect;
(vii) The authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description thereof
contained in the Prospectus;
(viii) The Prospectus, insofar as statements therein constitute a
summary of legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings;
(ix) The Initial Registration Statement and the Additional
Registration Statement (if any) are effective under the Act, any
required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period
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required by Rule 424(b) to the best of the knowledge of such counsel,
no stop order suspending the effectiveness of a Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act, and each
Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the requirements of
the Act and the Rules and Regulations; such counsel have no reason to
believe that any part of a Registration Statement or any amendment
thereto, as of its effective date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading; or that the Prospectus or any
amendment or supplement thereto, as of its issue date or as of such
Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; it being understood that such counsel need
express no opinion as to the financial statements and schedules or
other financial data contained in, or omitted from, the Registration
Statements or the Prospectus;
(x) The descriptions in the Registration Statements and
Prospectus under the headings "Relationship with CVS and Related Party
Transactions," "Shares Eligible for Future Sale," "Underwriting,"
"Certain U.S. Federal Tax Considerations for Non-U.S. Holders of
Common Stock," "Risk Factors -- Control of the Company by CVS;
Possible Conflicts of Interest," "Risk Factors -- Shares Eligible for
Future Sale" and "Description of Capital Stock" of statutes, legal and
governmental proceedings and contracts and other documents are
accurate and fairly present the information required to be shown;
(xi) This Agreement has been duly authorized, executed and
delivered by the Company;
(xii) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended; and
(xiii) The Revolving Credit Facility (as defined in the
Prospectus) has been duly authorized, executed and delivered by the
Company and, when duly executed and delivered by the Company, will be
the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇, General Attorney to the Company, to the
effect that:
(i) Each of the Company's subsidiaries 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 of the Company's subsidiaries
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is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which respective ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in
good standing would not have a Material Adverse Effect;
(ii) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature;
(f) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for CVS and the Selling
Shareholder, to the effect that:
(i) Immediately prior to the date hereof, the Selling Shareholder
was the sole registered owner of the Securities and had valid and
unencumbered title to the Securities and (b) the Selling Shareholder
has the corporate power and authority to enter into the Underwriting
Agreement and to sell, transfer and deliver the Securities to be sold
by the Selling Stockholder thereunder; and
(ii) Upon registration of the Securities in the names of the
Underwriters in the stock records of the Company and the issuance of
new certificates registered in the names of the Underwriters
representing such Securities, assuming the Underwriters purchased the
Securities in good faith and without notice of any adverse claim
within the meaning of Section 8-302 of the Uniform Commercial Code of
the State of New York, the Underwriters will have acquired all rights
of the Selling Shareholder in the Securities free of any adverse claim
(as defined in such Section) and the owner of the Securities, if other
than the Selling Shareholder, will be precluded from asserting against
the Underwriters the ineffectiveness of any unauthorized endorsement;
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Selling Shareholder for the consummation of
the transactions contemplated by this Agreement in connection with the
sale of the Offered Securities sold by the Selling Shareholder, except
such as may be required under the Act and under state securities laws;
(iv) The execution, delivery and performance of this Agreement
and the consummation of the transactions therein and herein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, of the
charter or by-laws of CVS or the Selling Shareholder or any
subsidiary of CVS or the Selling
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Shareholder; and
(v) This Agreement has been duly authorized, executed and
delivered by each of CVS and the Selling Shareholder.
(g) The Representatives shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of the
Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives
may require, and the Selling Shareholder and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(h) 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; the Company has complied 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 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 the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or otherwise), 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.
(i) The Representatives shall have received a letter, dated such
Closing Date, of KPMG Peat Marwick LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than five days prior to such
Closing Date for the purposes of this subsection;
(j) On or prior to the Closing Date, the Revolving Credit Facility
(the form and substance of which shall be reasonably acceptable to the
Representatives and their counsel) shall have been entered into by the
parties thereto and the Representatives shall have received counterparts,
conformed as executed, thereof and of all other documents and agreements
entered into in connection therewith. Each condition to the closing
contemplated by the Revolving Credit Facility shall have been satisfied or,
with the Representatives' specific approval, waived. There shall exist at
and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement) no condition that would constitute a
default (or an event that with notice or
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the lapse of time, or both, would constitute a default) under the Revolving
Credit Facility. The Representatives shall have received true and correct
copies of all documentation pertaining to the Revolving Credit Facility
[and evidence satisfactory to the Representatives that the Company has
borrowed thereunder]. The Revolving Credit Facility shall conform in all
material respects to the description thereof in the Prospectus.
(k) The Securities shall have been listed or approved for listing upon
official notice of issuance on The New York Stock Exchange.
The Selling Shareholder and the Company will furnish the Representatives with
such conformed copies of the foregoing opinions, certificates, letters and
documents as the Representatives reasonably request. CS First Boston may in its
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 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 will 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;
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 (c) below; provided, however, that
the foregoing indemnity agreement with respect to any untrue statement or
omission in the preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Offered Securities or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Securities to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities.
(b) CVS agrees to indemnify and hold harmless the Company, its directors,
its officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act and each Underwriter and each person, if
any, who controls any Underwriter within the meaning of either such section from
and against any and all losses, claims, damages and liabilities (including,
without
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limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased Offered Securities or
any person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities.
(c) The Selling Shareholder agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either such section from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to the
Selling Shareholder furnished in writing by or on behalf of the Selling
Shareholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto; provided,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Offered Securities or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Securities to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities.
(d) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and CVS against any losses, claims, damages or liabilities
to which the Company or CVS 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
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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 therein, and will
reimburse any legal or other expenses reasonably incurred by the Company and CVS
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 last paragraph at the bottom of the cover page concerning the
terms of the offering by the Underwriters, the legend concerning over-allotments
and stabilizing and passive market making on the inside front cover page and the
concession and reallowance figures appearing in the fourth paragraph under the
caption "Underwriting" and the information contained in the fifth paragraph
under the caption "Underwriting."
(e) 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 an indemnifying party under
subsection (a), (b), (c) or (d) 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), (b), (c) or (d) above. In case any such
action is brought against any indemnified party and it notifies an 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 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 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, 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 includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(f) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b),
(c) or (d) 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), (b), (c) or (d) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company, the Selling Shareholder and CVS, as the case may be, 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, the Selling Shareholder and CVS, as the case may be, 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, and among the Company, the
Selling Shareholder and CVS, in such proportion as is appropriate to reflect the
relative fault of the Company, the Selling Shareholder and CVS, as the case may
be, in
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each case 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, the Selling
Shareholder and CVS, as the case may be, 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 (as, if,
with respect to the Company, for purposes of this clause (e), the Company had
received all of the proceeds of each secondary offering hereunder) 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, the Selling Shareholder, CVS 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 (f) 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 (f). Notwithstanding the provisions of this subsection (f), (i) 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 (f) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(g) In making a claim for indemnification under Section 7(a), 7(b), 7(c) or
7(d) or contribution under Section 7(f) against the Company, the Selling
Shareholder or CVS, the indemnified parties may proceed against either (i) the
Company, the Selling Shareholder and CVS (ii) the Company and the Selling
Shareholder or (iii) the Company, but may not proceed (i) solely against CVS or
(ii) solely against CVS and the Selling Shareholder. In the event that the
indemnified parties are entitled to seek indemnity or contribution hereunder
against any loss, liability, claim, damage and expense incurred with respect to
a final judgment from a trial court then, as a precondition to any indemnified
party obtaining indemnification or contribution from CVS (but not the Company or
the Selling Shareholder), the indemnified parties shall first obtain a final
judgment from a trial court that such indemnified parties are entitled to
indemnity or contribution under this Agreement with respect to such loss,
liability, claim, damage or expense (the "Final Judgment") from the Company and
CVS and shall seek to satisfy such Final Judgment in full from the Company by
making a written demand upon the Company for such satisfaction. Only in the
event such Final Judgment shall remain unsatisfied in whole or in part 30 days
following the date of receipt by the Company of such demand shall any
indemnified party have the right to take action to satisfy such Final Judgment
by making demand directly on CVS (but only if and to the extent the Company and
the Selling Shareholder has not already satisfied such Final Judgment, whether
by settlement, release or otherwise). The indemnified parties may exercise this
right to first seek to obtain payment from the Company and the Selling
Shareholder and thereafter obtain payment from CVS without regard to the pursuit
by any party of its rights to the appeal of such Final Judgment. The indemnified
parties shall, however, be relieved of their respective obligation to first
obtain a Final Judgment, to seek to obtain payment, to wait such 30 days after
failure by the Company to
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immediately satisfy any such Final Judgment if (i) the Company files a petition
for relief under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii)
an order for relief is entered against the Company in an involuntary case under
the Bankruptcy Code and the continuance in effect of such order for 60
consecutive days, (iii) the Company makes an assignment for the benefit of its
creditors, or (iv) any court orders or approves the appointment of a receiver or
custodian for the Company or a substantial portion of its assets and the
continuance in effect of such order for 60 consecutive days.
(h) The obligations of the Company and CVS under this Section shall be in
addition to any liability which the Company and CVS 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 Company
who has signed a Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CS First
Boston may make arrangements satisfactory to the Company and the Selling
Shareholder for the purchase of such Offered Securities 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 Offered
Securities 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 Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to CS First Boston, the Company and the Selling
Shareholder for the purchase of such Offered Securities 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, the Company or the
Selling Shareholder, except as provided in Section 9 (provided that if such
default occurs with respect to Optional Securities after the First Closing Date,
this Agreement will not terminate as to the Firm Securities or any Optional
Securities 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
Selling Shareholder, of CVS, of the Company or their 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 Selling
Shareholder, CVS, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company, CVS and the Selling Shareholder
shall remain responsible for the expenses to be paid or
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reimbursed by them pursuant to Section 5 (except as to any defaulting
underwriter) and the respective obligations of the Company, CVS, the Selling
Shareholder, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities 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 Offered Securities 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 (ii), (iii) or (iv) of Section 6(c), the Company, CVS and the Selling
Shareholder will, jointly and severally, reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
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 CS First Boston Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Investment Banking Department Transactions Advisory
Group, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Chief Financial Officer, with a copy to ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇ Beshar, or, if
sent to CVS or the Selling Shareholder, will be mailed, delivered or telegraphed
and confirmed to CVS at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with a copy to
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; provided, however, that any notice to an Underwriter pursuant
to Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
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. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives, jointly or by
CS First Boston 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, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
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.
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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 among the Selling
Shareholder, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
LINENS 'N THINGS, INC.
By: ______________________________
Name:
Title:
CVS CORPORATION
By: ______________________________
Name:
Title:
NASHUA ▇▇▇▇▇▇ CVS, INC.
By: ______________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first
above written.
CS FIRST BOSTON CORPORATION
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ SECURITIES
CORPORATION
Acting on behalf of themselves and
as the Representatives of the several
Underwriters.
By: CS FIRST BOSTON CORPORATION
By:_______________________________
Name:
Title:
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SCHEDULE A
Number of Firm
Securities to be
Underwriter Purchased
----------- ----------------
CS First Boston Corporation
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation
TOTAL ________________