______________________________________________________________________________
______________________________________________________________________________
SHOPKO STORES, INC.
(a Wisconsin corporation)
3,500,000 Shares of Common Stock
PURCHASE AGREEMENT
------------------
Dated: July , 1999
----
______________________________________________________________________________
______________________________________________________________________________
Table of Contents
Page
----
SECTION 1. REPRESENTATIONS AND WARRANTIES............................... 3
(a) Representations and Warranties by the Company................... 3
(i) Compliance with Registration Requirements................ 3
(ii) Incorporated Documents................................... 4
(iii) Independent Accountants.................................. 4
(iv) Financial Statements..................................... 4
(v) No Material Adverse Change in Business................... 4
(vi) Good Standing of the Company............................. 5
(vii) Good Standing of Subsidiaries............................ 5
(viii) Capitalization........................................... 5
(ix) Authorization of Agreement............................... 6
(x) Authorization and Description of Securities.............. 6
(xi) Absence of Defaults and Conflicts........................ 6
(xii) Absence of Labor Dispute................................. 7
(xiii) Absence of Proceedings................................... 7
(xiv) Accuracy of Exhibits..................................... 7
(xv) Possession of Intellectual Property...................... 7
(xvi) Absence of Further Requirements.......................... 8
(xvii) Possession of Licenses and Permits....................... 8
(xviii) Title to Property........................................ 8
(xix) Compliance with Cuba Act................................. 9
(xx) Investment Company Act................................... 9
(xxi) Environmental Laws....................................... 9
(xxii) Registration Rights...................................... 9
(b) Officer's Certificates........................................... 10
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING................... 10
------------------------------------------
(a) Initial Securities............................................... 10
(b) Option Securities................................................ 10
(c) Payment.......................................................... 10
(d) Denominations; Registration...................................... 11
SECTION 3. COVENANTS.................................................... 11
---------
(a) Compliance with Securities Regulations and Commission Requests... 11
(b) Filing of Amendments............................................. 12
(c) Delivery of Registration Statements.............................. 12
(d) Delivery of Prospectuses......................................... 12
(e) Continued Compliance with Securities Laws........................ 12
(f) Blue Sky Qualifications.......................................... 13
(g) Rule 158......................................................... 13
(h) Use of Proceeds.................................................. 13
-i-
(i) Listing.. The Company will use its best efforts to maintain the
listing of the Common Stock (including the Securities) on the New York
Stock Exchange........................................................ 13
(j) Restriction on Sale of Securities................................ 13
(k) Reporting Requirements........................................... 14
SECTION 4. PAYMENT OF EXPENSES.......................................... 14
-------------------
(a) Expenses......................................................... 14
(b) Termination of Agreement......................................... 14
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS...................... 15
---------------------------------------
(a) Effectiveness of Registration Statement.......................... 15
(b) Opinions of Counsel for Company.................................. 15
(c) Opinion of Counsel for Underwriters.............................. 15
(d) Officers' Certificates........................................... 16
(e) Accountant's Comfort Letter...................................... 16
(f) Bring-down Comfort Letter........................................ 16
(g) Approval of Listing.............................................. 16
(h) Conditions to Purchase of Option Securities...................... 16
(i) Officers' Certificates..................................... 16
(ii) Opinions of Counsel for Company............................ 17
(iii) Opinion of Counsel for Underwriters........................ 17
(iv) Bring-down Comfort Letter.................................. 17
(i) Additional Documents............................................. 17
(j) Termination of Agreement......................................... 17
SECTION 6. INDEMNIFICATION.............................................. 17
---------------
(a) Indemnification of Underwriters.................................. 17
(b) Indemnification of Company, Directors and Officers............... 18
(c) Actions against Parties; Notification............................ 19
(d) Settlement without Consent if Failure to Reimburse............... 19
SECTION 7. CONTRIBUTION................................................. 19
------------
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY 21
--------------------------------------------------------------
SECTION 9. TERMINATION OF AGREEMENT..................................... 22
------------------------
(a) Termination; General............................................. 22
(b) Liabilities...................................................... 22
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.................. 22
------------------------------------------
SECTION 11. NOTICES..................................................... 23
-------
SECTION 12. PARTIES..................................................... 23
-------
SECTION 13. GOVERNING LAW AND TIME...................................... 23
----------------------
-ii-
SECTION 14. EFFECT OF HEADINGS.......................................... 23
------------------
SCHEDULES
Schedule A - List of Underwriters......................... Sch A-1
Schedule B - Pricing Information.......................... Sch B-1
EXHIBITS
Exhibit A-1 Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C..... A-1
Exhibit A-2 Form of Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇....... A-5
Exhibit B Form of Comfort Letter..................... C-1
-iii-
SHOPKO STORES, INC.
(a Wisconsin corporation)
3,500,000 Shares of Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
July ____, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Banc of America Securities LLC
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
as Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
ShopKo Stores, Inc., a Wisconsin corporation (the "Company"), confirms its
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Banc of America Securities LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
& Co. Incorporated and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C. are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
par value $.01 per share, of the Company ("Common Stock") set forth in said
Schedule A, and with respect to the grant by the Company to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof
to purchase all or any part of 525,000 additional shares of Common Stock to
cover over-allotments, if any. The aforesaid 3,500,000 shares of Common Stock
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the 525,000 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities".
-1-
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-79763) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses and
the related preliminary prospectus supplement or supplements. Promptly after
execution and delivery of this Agreement, the Company will either (i) prepare
and file a prospectus supplement and prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations, (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule
434 and Rule 424(b), or (iii) if the Company has elected to rely upon Rule 415
("Rule 415") of the 1933 Act Regulations, prepare and file a prospectus
supplement and prospectus in accordance with the provisions of Rule 415 and
424(b). The information included in the prospectus supplement and prospectus or
in such Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each
prospectus, together with any related prospectus supplement, used before such
registration statement became effective, and any prospectus, together with any
related prospectus supplement, that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information or that was captioned "Subject to
Completion," that was used after such effectiveness and prior to the execution
and delivery of this Agreement, is herein called, together with the documents
incorporated or deemed to be incorporated by reference therein, a "preliminary
prospectus." Such registration statement, as amended (if applicable), including
the exhibits thereto, schedules thereto, if any, the documents incorporated by
reference therein, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus and
final prospectus supplement relating to the Securities, including the documents
incorporated or deemed to be incorporated by reference therein, in the form
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called, collectively, the "Prospectus." For purposes
of this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "described," "disclosed," "included" or
"stated" in the
-2-
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
or deemed to be incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement,
any preliminary prospectus or the Prospectus shall be deemed to mean and include
the filing of any document under the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), which is incorporated or deemed to be
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company meets
-----------------------------------------
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information has
been complied with.
At the respective times the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rules and regulations of the Commission under the
1939 Act (the "1939 Act Regulations"), and did not and will not contain
an 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. Neither the Prospectus nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date
of Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company
will comply with the requirements of Rule 434 and the Prospectus shall
not be "materially different", as such term is used in Rule 434, from
the prospectus included in the Registration Statement at the time it
became effective. The representations and warranties in this subsection
shall
-3-
not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter
through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration Statement or
Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated
----------------------
or deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1933 Act, the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations") as
applicable, and, when read together with the other information in the
Prospectus, at the time the Registration Statement became effective, at
the time the Prospectus was issued, at the Closing Time and at each Date
of Delivery, if any, did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(iii) Independent Accountants. The accountants who certified
-----------------------
the financial statements and supporting schedules included in the
Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements
--------------------
included and incorporated by reference in the Registration Statement and
the Prospectus, together with the related schedules and notes, present
fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of earnings,
shareholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have
been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules included in the Registration
Statement and the Prospectus present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
included and incorporated by reference in the Prospectus present fairly
the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included and
incorporated by reference in the Registration Statement and the
Prospectus.
(v) No Material Adverse Change in Business. Since the
--------------------------------------
respective
-4-
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated or described therein, (A)
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which could have a Material Adverse Effect, and (C)
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been
----------------------------
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Wisconsin and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each subsidiary of the
-----------------------------
Company (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable (except
by reason of Wisconsin Statute (S) 180.0622(2)(b)) and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the Company
are the subsidiaries listed on Exhibit 21.1 to the Company's Form 10-K
for the year ended January 30, 1999.
(viii) Capitalization. The authorized, issued and
--------------
outstanding capital stock of the Company is as set forth in the
Prospectus under the heading "Description of Common Stock - General"
(except for subsequent issuances, if any, pursuant to this Agreement,
pursuant to reservations, agreements or employee benefit plans referred
to in the Prospectus (or a document incorporated by reference therein)
or pursuant to the exercise of convertible securities or options
referred to in the Prospectus). The shares of
-5-
issued and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable
(except by reason of Wisconsin Statute (S) 180.0622(2)(b)); none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
(ix) Authorization of Agreement. This Agreement has been
--------------------------
duly authorized, executed and delivered by the Company.
(x) Authorization and Description of Securities. The
-------------------------------------------
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid
and non-assessable (except by reason of Wisconsin Statute (S)
180.0622(2)(b)); the Common Stock conforms to all statements relating
thereto contained in the Prospectus and such description conforms to the
rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such
a holder (except by reason of Wisconsin Statute (S)180.0622(2)(b)); and
the issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the
---------------------------------
Company nor any of its subsidiaries is in violation of its charter
or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and in the
Registration Statement and the Prospectus (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
(except as disclosed in the Registration Statement) Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company or any subsidiary or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or
-6-
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any material note, debenture or
other evidence of material indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
(xii) Absence of Labor Dispute. No labor dispute with the
------------------------
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its or
any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to result
in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit,
----------------------
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement and the Prospectus (other than as disclosed
therein), or which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect (A) the properties or assets of the Company or any
subsidiary or (B) the consummation of the transactions contemplated by
the Company or the performance of the Company's obligations under the
Purchase Agreement; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of
which any of their respective property or assets is the subject which
are not described in the Registration Statement and the Prospectus,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or
--------------------
documents which are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein or to be filed as exhibits thereto which have not been so
described and filed as required.
(xv) Possession of Intellectual Property. The Company and
-----------------------------------
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-
how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect
the interest of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any
-7-
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations and will be obtained in a timely manner or as may be
required under state securities laws.
(xvii) Possession of Licenses and Permits. The Company and
----------------------------------
its subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them and the
absence of which, singly or in the aggregate, would result in a Material
Adverse Effect; the Company and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not, singly or in the aggregate, have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xviii) Title to Property. The Company and its subsidiaries
-----------------
have good and marketable title to all real property owned by the Company
and its subsidiaries and good title to all other properties owned by
them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Registration Statement and the
Prospectus or (b) do not, singly or in the aggregate, affect the value
of such property or interfere with the use made and proposed to be made
of such property by the Company or any of its subsidiaries in a manner
that would have a Material Adverse Effect; and all of the leases and
subleases of the Company and its subsidiaries and under which the
Company or any of its subsidiaries holds properties described in the
Prospectus are in full force and effect, and neither the Company nor any
subsidiary has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to
the continued possession of the leased or subleased premises under any
such lease or sublease except to the extent that the failure to be in
full force and effect, or any such claim, would have a Material Adverse
Effect.
-8-
(xix) Compliance with Cuba Act. The Company has complied
------------------------
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xx) Investment Company Act. The Company is not, and upon
----------------------
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxi) Environmental Laws. Except as described in the
------------------
Registration Statement and the Prospectus and except as would not,
singly or in the aggregate, result in a Material Adverse Effect, (A)
neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and its
subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
any private party or governmental body or agency, against or affecting
the Company or any of its subsidiaries relating to Hazardous Materials
or any Environmental Laws.
(xxii) Registration Rights. Except as disclosed in the
-------------------
Registration Statement, there are no persons with registration rights
or other similar rights to have any securities registered pursuant to
the Registration Statement or otherwise registered by the Company
under the 1933 Act.
The representations in paragraphs (vii), (viii) and (x) regarding
the non-assessibility of securities are subject to the applicability of
Wisconsin Statute (S) 180.0622(2)(b).
-9-
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Representatives or
to counsel for the Underwriters shall be deemed a representation and warranty
by the Company to each Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional 525,000
shares of Common Stock at the price per share set forth in Schedule B, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
The option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One New York Plaza, New York, New York, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date hereof
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company (such time and date of payment and
delivery being herein called "Closing Time").
-10-
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern
time on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
Section 3. Covenants. The Company covenants with each Underwriter as
---------
follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A, Rule 434 or Rule 415, as applicable, and will notify the
Representatives immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement or any Rule 462(b)
Registration Statement shall become effective, or any Prospectus, any supplement
to the Prospectus, any Term Sheet or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus or Term Sheet, as the case may be, transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will
-11-
promptly file such prospectus or Term Sheet, as the case may be. The Company
will make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing underRule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall object; provided, however, that the foregoing provision shall
not obligate the Company to provide the Representative with copies of any
document filed pursuant to the 1934 Act prior to such filing if such filing
occurs after the Closing Time.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus or
preliminary prospectus supplement as such Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary,
-12-
in the opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to maintain the
listing of the Common Stock (including the Securities) on the New York Stock
Exchange.
(j) Restriction on Sale of Securities. During a period of 90 days from
the date of this Agreement, the Company will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of CommonStock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any
-13-
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or(ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder, (B) options
to purchase Common Stock granted pursuant to existing employee benefit plans of
the Company referred to in the Prospectus and Common Stock issuable upon the
exercise of options outstanding on the date of this Agreement and (C) Common
Stock issued to satisfy obligations under acquisition agreements outstanding on
the date hereof to the extent such agreements allow such obligations to be
satisfied in Common Stock.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
Section 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's outside counsel, accountants and other advisors,
(v) the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(f) hereof, including filing fees and the reasonable
fees and disbursements of outside counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, any Term Sheets and of the Prospectus and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of outside counsel to the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of the sale of the Securities and (x) the fees and expenses incurred
in connection with the listing of the Securities on the New York Stock Exchange;
provided, that the aggregate amount of expenses payable by the Company to
counsel for the Underwriters pursuant to (v) and (ix) above shall not exceed
$15,000.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the
-14-
reasonable fees and disbursements of counsel for the Underwriters.
Section 5. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
434 and Rule 424(b) or, if the Company has elected to rely on Rule 415, the
final prospectus supplement relating to the Securities and, if required by Rule
424(b), the related final prospectus shall have been filed with the Commission
in accordance with Rule 424(b).
(b) Opinions of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of Closing
Time, of ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C., counsel for the Company in the form set forth in
Exhibit A-1 hereto and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., General Counsel of the Company
in the form set forth in Exhibit A-2 hereto.Such letters shall be in form and
substance satisfactory to counsel for the Underwriters. The Representatives
shall receive signed or reproduced copies of such letters for each of the other
Underwriters.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
together with signed or reproduced copies of suchletter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (iv),
(v) (solely as to preemptive or other similar rights arising by operation of law
or under the charter or by-laws of the Company), (vii) through (ix), inclusive,
(xi), (xii) (solely as to the information in the Prospectus under "Description
of Common Stock") and the penultimate paragraph of Exhibit A-1 hereto. In giving
such opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives. ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely on the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C. with
respect to matters governed by Wisconsin law. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
-15-
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President, the Senior Vice President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche LLP a
letter dated such date, substantially in the form of Exhibit C hereto and
otherwise in form and substance satisfactory to the Representatives, together
with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.
(h) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) Officers' Certificates. Certificates, dated such Date of
----------------------
Delivery, of the President, the Senior Vice President or a Vice President
of the Company and of the chief financial or chief accounting officer of
the Company confirming that the certificates delivered at the Closing Time
pursuant to Section 5(d) hereof remain true and correct as of such Date of
Delivery.
-16-
(ii) Opinions of Counsel for Company. The favorable opinion of
-------------------------------
▇▇▇▇▇▇▇ & ▇▇▇▇, S.C., counsel for the Company, in the form of Exhibit A-1
hereto and the favorable opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., General
Counsel of the Company, in the form of Exhibit A-2 hereto, and in each case
in form and substance satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinions
required by Section 5(b) hereof.
(iii) Opinion of Counsel for Underwriters. The favorable opinion
-----------------------------------
of Fried, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Deloitte & Touche
LLP, in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section 5(f) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(i) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(j) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
Section 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact
-17-
contained in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact included in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss,liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇
▇▇▇▇▇ expressly for use in the Registration Statement (or any amendment
-18-
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
--------
however, that counsel to the indemnifying party shall not (except with the
-------
consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim 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 any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if(i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 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.
Section 7. Contribution. If the indemnification provided for in Section
------------
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on
-19-
the other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the prospectus supplement, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, 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 any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same
-20-
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
-------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
-21-
Section 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
Section 10. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the obligation
of the Underwriters to
-22-
purchase and of the Company to sell the Option Securities to be purchased
and sold on such Date of Delivery, shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone the Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
Section 11. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇; and notices to the Company shall be directed to the Company at ShopKo
Stores, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇.▇. Box 19060, Green Bay, WI 54307, attention of
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., Senior Vice President and Chief Financial Officer,
with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Senior Vice President and General
Counsel.
Section 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and, the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
Section 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
Section 14. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
-23-
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
SHOPKO STORES, INC.
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
BANC OF AMERICA SECURITIES LLC
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY, L.L.C.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:
---------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
-24-
SCHEDULE A
Number of
Initial Securities
Name of Underwriter ------------------
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated..............................................
Banc of America Securities LLC...............................
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated..........................
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C...............................
---------
Total........................................................ 3,500,000
=========
Sch. A-1
SCHEDULE B
SHOPKO STORES, INC.
3,500,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $ , being an amount equal to the initial
public offering price set forth above less $ per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be
reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not
payable on the Option Securities.
Sch. C-1
Exhibit A-1
FORM OF OPINION OF ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Wisconsin (meaning
in Wisconsin that such corporation has filed its most recent annual report and
has not filed articles of dissolution).
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and the Company has corporate power and authority to enter into
and perform its obligations under the Purchase Agreement.
(iii) The capital stock of the Company conforms as to legal matters to
the description thereof set forth in the Prospectus under the caption
"Description of Common Stock--General"; the shares of issued and outstanding
capital stock of the Company, including the Securities to be purchased by the
Underwriters from the Company, have been duly authorized and validly issued and
are fully paid and non-assessable (subject to Wisconsin Statute (S)
180.0622(2)(b)); and none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive rights of any securityholder
of the Company arising from any law, statute, rule, regulation or the Company's
charter or bylaws or, to our best knowledge, other similar rights of any
securityholder of the Company.
(iv) The Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment of
the consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable (subject to Wisconsin Statute (S)
180.0622(2)(b)) and no holder of the Securities is or will be subject to
personal liability by reason of being such a holder (subject to Wisconsin
Statute (S) 180.0622(2)(b)).
(v) The issuance and sale of the Securities by the Company is not
subject to preemptive rights of any securityholder of the Company arising from
any law, statute, rule, regulation or the Company's charter or bylaws or, to our
best knowledge, other similar rights of any securityholder of the Company.
(vi) Each corporate Subsidiary listed on Schedule A to this opinion has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus; except as otherwise disclosed in the
Registration Statement and the Prospectus, all of the issued and outstanding
capital stock of each Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable (subject, in the case of a Wisconsin corporation,
to Wisconsin Statute (S) 180.0622(2)(b)) and, to the best of our knowledge, is
owned by the Company, directly or
A-1
through subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of capital
stock of any Subsidiary was issued in violation of the preemptive rights of any
securityholder of such Subsidiary arising from any law, statute, rule,
regulation or the Company's charter or bylaws or, to our best knowledge, similar
rights of any securityholder of such Subsidiary.
(vii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the best of
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or threatened by the Commission.
(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus and each amendment or supplement to the Registration
Statement and Prospectus as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(x) If Rule 434 has been relied upon, the Prospectus was not "materially
different," as such term is used in Rule 434, from the prospectus included in
the Registration Statement at the time it became effective.
(xi) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.
(xii) The information in the Prospectus under "Description of Common
Stock" and "Certain United States Federal Income Tax Consequences" and in the
Registration Statement under Item 15, to the extent that it constitutes matters
of law, summaries of legal matters, the Company's charter and bylaws or legal
proceedings, or legal conclusions, has been reviewed by us and is correct in all
material respects.
(xiii) All descriptions in the Registration Statement and Prospectus of
contracts and other documents to which the Company or any of its subsidiaries is
a party are accurate in all material respects.
(xiv) To our knowledge, neither the Company nor any subsidiary is in
violation of its charter or by-laws and no default by the Company or any
subsidiary exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is filed or
A-2
incorporated by reference as an exhibit to the Registration Statement or listed
on Schedule B to this opinion (the "Material Contracts"), other than such
defaults which, singly or in the aggregate, would not result in a Material
Adverse Effect.
(xv) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency, domestic or foreign (other than under the 1933 Act and the 1933 Act
Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance
or sale of the Securities.
(xvi) The execution, delivery and performance by the Company of the
Purchase Agreement and the consummation by the Company of the transactions
contemplated in the Purchase Agreement and in the Registration Statement and the
Prospectus (including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus under
the caption "Use Of Proceeds") and compliance by the Company with its
obligations under the Purchase Agreement do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or (except as disclosed in the Registration
Statement) Repayment Event (as defined in Section 1(a)(xi) of the Purchase
Agreement) under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to any of the Material Contracts (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not, singly or in the
aggregate, have a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule or regulation known to us.
(xvii) The documents incorporated by reference in the Prospectus
(other than the financial statements and supporting schedules therein or omitted
therefrom, as to which we express no opinion), when they became effective or
were filed with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the 1933 Act or the 1934 Act, as
applicable, and the rules and regulations of the Commission thereunder.
(xviii) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we make no statement), at the time such Registration
Statement or any such amendment became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data
A-3
included therein or omitted therefrom, as to which we need make no statement),
at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials and
such opinions shall have such other customary limitations and qualifications as
are acceptable to counsel for the Underwriters. Such opinion shall not state
that it is to be governed or qualified by, or that it is otherwise subject to,
any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991). The opinion will state that all opinions as to the non-
assessability of securities will be subject to Wisconsin Statute
(S)180.0622(2)(b).
A-4
Schedule A
----------
SVS Trucking, Inc.
ProVantage Holdings, Inc.
ShopKo Ventures-Duluth, Inc.
ShopKo Properties, Inc.
▇▇▇▇-▇▇▇▇▇▇▇, Incorporated
ProVantage Health Services, Inc.
ParMark Corporation
PVHS, Inc.
ProVantage Prescription Management Services L.L.C.
Bravell, Inc.
ProVantage Mail Services, Inc.
ProVantage Vision Management Services, Inc.
ProVMed, LLC
A-5
Schedule B
----------
1. Agreement and Plan of Merger, dated as of May 10, 1999, by and among ShopKo
Stores, Inc., ShopKo Merger Corp. and Pamida Holdings Corporation.
A-6
Exhibit A-2
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) To the best of my knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any subsidiary is a party, or to which the property of the Company or any
subsidiary is subject, before or brought by any court or governmental agency or
body, domestic or foreign, of the type required to be disclosed in the
Registration Statement which is not so disclosed, or which might reasonably be
expected to result in a Material Adverse Effect or which might reasonably be
expected to materially and adversely affect the consummation of the transactions
contemplated by the Company or the performance of the Company's obligations
under the Purchase Agreement.
(ii) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement, do not and
will not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to any judgment,
order, writ or decree, known to me, of any government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or operations.
(iii) The information in the prospectus supplement under the sections
entitled "Business--Government Regulation" and "Business--Legal Proceedings,"
to the extent that it constitutes matters of law, summaries of legal matters,
the Company's charter and bylaws or legal proceedings, has been reviewed by
me and is correct in all material respects.
(iv) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(v) Each corporate Subsidiary is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(vi) To the best of my knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.
A-7
(vii) To the best of my knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement other than
those described or referred to therein or filed or incorporated by reference as
exhibits thereto, and the descriptions thereof or references thereto are correct
in all material respects.
(viii) To the best of my knowledge, except as described in the
Registration Statement, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
(ix) To my knowledge, no default by the Company nor any subsidiary
exists in the due performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described or
referred to in the Registration Statement or the Prospectus, other than such
defaults, which, singly or in the aggregate, would not result in a Material
Adverse Effect.
Nothing has come to my attention that would lead me to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which I need make no statement), at the time such Registration
Statement or any such amendment became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which I need make no statement), at the time the Prospectus was
issued, at the time any such amended or supplemented prospectus was issued or at
the Closing Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials and
such opinions shall have such other customary limitations and qualifications as
are acceptable to counsel for the Underwriters. Such opinion shall not state
that it is to be governed or qualified by, or that it is otherwise subject to,
any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
A-8
Exhibit C
[Form of Comfort Letter of Deloitte & Touche]
July __, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Banc of America Securities LLC
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
as Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have audited the consolidated balance sheets of ShopKo Stores, Inc.
and subsidiaries (the "Company") as of January 30, 1999 and January 31, 1998 and
the related consolidated statements of earnings, shareholders' equity and cash
flows for the year (52 weeks) ended January 30, 1999, the year (49 weeks) ended
January 31, 1998 and for the year (52 weeks) ended February 22, 1997. The above
mentioned financial statements are included in the registration statement (No.
333-79763) on Form S-3 filed by the Company with the Securities and Exchange
Commission. We also audited the consolidated financial statement schedule
included in the Company's Form 10-K for the year ended January 30, 1999 (the
"Form 10-K"). Our report with respect to the financial statements referenced
above is included and incorporated by reference in the registration statement,
and our report with respect to the consolidated financial statement schedule is
included in the Form 10-K and incorporated by reference in the registration
statement. The registration statement as amended through the date hereof is
herein referred to as the Registration Statement.
In connection with the Registration Statement:
1. We are independent certified public accountants with respect to
the Company within the meaning of the Securities Act of 1933, as
amended (the "1933 Act"), and the published rules and regulations
thereunder.
2. In our opinion, the audited consolidated financial statements of
the Company audited by us and included and incorporated by
reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of
the 1933 Act and the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the published rules and regulations
thereunder. In addition, the consolidated financial statement
schedule included in the Form 10-K, when considered in relation to
the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.
3. We have not audited any financial statements of the Company as of
any date or for any period subsequent to January 30, 1999. Although
we have conducted an audit for the year ended January 30, 1999, the
purpose (and therefore the scope) of the audit was to enable us to
express our opinion on the Company's consolidated financial
statements as of January 30, 1999 and for the year then ended, but
not on the financial statements for any interim period within that
year. Therefore, we are unable to and do not express any opinion on
the unaudited consolidated balance sheet as of May 1, 1999 or the
unaudited consolidated statements of earnings, cash flows and
shareholders' equity for the fiscal quarters ended May 1, 1999 and
May 2, 1998, included and incorporated by reference in the
Registration Statement, or on the financial position, results of
operations or cash flows as of any date or for any period
subsequent to January 30, 1999.
4. For purposes of this letter, we have read the 1999 minutes of all
meetings of the stockholders and board of directors and committees
of the board of directors of the Company and its subsidiaries as
set forth in the minute books at _______, 1999, officials of the
Company having advised us that the minutes of all such meetings
through that date were set forth therein; we have carried out other
procedures with respect to the Company to [cut-off date] as follows
(our work did not extend to the period from [cut-off date] to [date
within three business days of pricing]).
5. With respect to the fiscal quarters ended May 1, 1999 and May 2,
1998, we have
a. Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in Statement on Auditing Standards No.
71, Interim Financial Information ("SAS 71"), on the Company's
unaudited consolidated balance sheet as of May 1, 1999 and the
related unaudited consolidated statements of earnings, cash
flows and shareholders' equity for the fiscal quarters ended May
1, 1999 and May 2, 1998, and
b. Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether (1)
the unaudited consolidated balance sheet and related
consolidated statements of earnings, cash flows and
shareholders' equity referred to in 5a above are in conformity
with generally accepted accounting
B-2
principles applied on a basis substantially consistent with that
of the audited consolidated financial statements of the Company
included in the Registration Statement, and (2) comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and
regulations thereunder.
c. On the basis of procedures described in paragraphs 5a and 5b
above, nothing came to our attention that caused us to believe
that the financial statements described in paragraph 5a above do
not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933
Act regulations or any material modifications should be made to
such financial statements for them to be in conformity with
generally accepted accounting principles.
6. [If the Company's monthly financials for June are completed before
we price] With respect to the months ended June ___, 1999 and June
___, 1998, we have:
a. Read the unaudited financial statements for June of both 1999
and 1998 furnished to us by the Company, officials of the
Company having advised us that no such financial statements as
of any date or for any period subsequent to June ___, 1999 were
available. The financial information for June is incomplete in
that it omits the statement of cash flows and other disclosures.
b. Inquired of certain officials of the Company who have
responsibility for financial and accounting matters as to
whether the unaudited financial statements referred to under 6a
above are stated on a basis substantially consistent with that
of the audited financial statements of the Company included in
the Registration Statement.
c. On the basis of the procedures described in paragraphs 6a and 6b
above, nothing came to our attention that caused us to believe
that (i) on June ___, 1999 there was any change in the capital
stock, increase in long-term obligations or total current
liabilities, or decrease in total assets, working capital or
total shareholders' equity of the Company in each case as
compared with the amounts shown in the May 1, 1999 balance sheet
included in the Registration Statement or (ii) during the period
from May 1, 1999 to June ___, 1999 there was any decrease, as
compared with the corresponding period in the preceding year, in
total revenues, net sales, income from operations, earnings
before income taxes, net earnings before extraordinary item or
net earnings, except in all instances for any increases or
decreases that the Registration Statement discloses have
occurred or may occur.
7. [If June financials are available] As mentioned under 6a above,
Company officials have advised us that no financial statements as
of any date or for any period subsequent to June ___, 1999 are
available. Accordingly, the procedures carried out by us with
respect to changes in financial statement items after June ___,
1999 have,
B-3
of necessity, been even more limited than those with respect to the
periods referred to in 6 above. We have inquired of certain
officials of the Company who have responsibility for financial and
accounting matters whether (i) on [cut-off date], 1999 there was
any change in the capital stock, increase in long-term obligations
or total current liabilities, or decrease in total assets, working
capital or total shareholders' equity of the Company in each case
as compared with the amounts shown in the May 1, 1999 balance sheet
included in the Registration Statement, or (ii) during the period
from May 1, 1999 to [cut-off date], 1999 there was any decrease, as
compared with the corresponding period in the preceding year, in
total revenues, net sales, income from operations, earnings before
income taxes, net earnings before extraordinary item or net
earnings.. On the basis of these inquiries and our reading of the
minutes as described in 4 above, nothing came to our attention that
caused us to believe that there was any such change, increase or
decrease, except in all instances for any increases or decreases
that the Registration Statement discloses have occurred or may
occur.
7. [If no June financials are available] As mentioned under 6a
above, Company officials have advised us that no financial
statements as of any date or for any period subsequent to May 1,
1999 are available. Accordingly, the procedures carried out by us
with respect to changes in financial statement items after May 1,
1999 have, of necessity, been more limited than those with respect
to the periods referred to in 5 above. We have inquired of certain
officials of the Company who have responsibility for financial and
accounting matters whether (i) on [cut-off date], 1999 there was
any change in the capital stock, increase in long-term obligations
or total current liabilities, or decrease in total assets, working
capital or total shareholders' equity of the Company in each case
as compared with the amounts shown in the May 1, 1999 balance sheet
included in the Registration Statement, or (ii) during the period
from May 1, 1999 to [cut-off date], 1999 there was any decrease, as
compared with the corresponding period in the preceding year, in
total revenues, net sales, income from operations, earnings before
income taxes, net earnings before extraordinary item or net
earnings.. On the basis of these inquiries and our reading of the
minutes as described in 4 above, nothing came to our attention that
caused us to believe that there was any such change, increase or
decrease, except in all instances for any increases or decreases
that the Registration Statement discloses have occurred or may
occur.
8. Based upon the procedures set forth above and a reading of the
Selected Historical Consolidated Financial Data included in the
Registration Statement and a reading of the financial statements
from which such data were derived, nothing came to our attention
that caused us to believe that the Selected Historical Consolidated
Financial Data included in the Registration Statement do not comply
as to form in all material respects with the disclosure
requirements of Item 301 of Regulation S-K of the 1933 Act, that
the amounts included in the Selected Historical Consolidated
Financial Data are not in agreement with the corresponding amounts
in the audited consolidated financial statements for the respective
periods or that the financial statements not included in the
Registration Statement from which certain of such data were derived
are not in conformity with generally accepted accounting
principles.
B-4
9. We have compared the information included in or incorporated by
reference in the Registration Statement under selected captions with the
disclosure requirements of Regulation S-K of the 1933 Act and on the
basis of limited procedures nothing came to our attention that caused us
to believe that this information does not comply as to form in all
material respects with the disclosure requirements of Items 302 and 402,
respectively, of Regulation S-K.
10. For purposes of this letter, we have also read the items identified by
you on the attached copies of certain pages of the Registration
Statement and documents incorporated by reference therein and have
performed the following procedures, which were applied as indicated
with respect to the letters explained below:
A. Compared the dollar amounts, descriptions and numbers with the
related information shown in the Company's audited consolidated
financial statements or the notes thereto, for the respective periods
and found them to be in agreement, rounded as appropriate.
B. Agreed to or recomputed based upon information contained within this
registration statement.
C. Compared the dollar amounts, descriptions and numbers with the
related information included in the Company's unaudited consolidated
financial statements or the notes thereto, for the respective periods
and found them to be in agreement, rounded as appropriate.
D. Compared the dollar amounts, percentages, descriptions and numbers
with supporting schedules or report provided or prepared by employees
in the Company's accounting department and found them to be in
agreement. Amounts appearing in such schedule or report were compared
with accounting records of the Company and found to be in agreement.
▇. Recalculated for mathematical accuracy and found to be in
agreement. The amounts or percentages were derived from amounts
included in the Company's audited consolidated financial statements
or the notes thereto for the periods indicated.
F. Recalculated for mathematical accuracy and found to be in
agreement. The amounts or percentages were derived from amounts
included in the Company's unaudited consolidated financial statements
for the fiscal quarters indicated.
G. Compared the dollar amounts, descriptions and number with the
supporting board of directors minutes and found them to be in
agreement.
H. Compared the dollar amounts, descriptions and numbers with the Pamida
B-5
Holdings Corporation financial statements for the period indicated
and found them to be in agreement.
I. Compared the amount with the ProVantage Health Services, Inc.
("ProVantage") financial statements for the period indicated
contained in amendment No. 3 to Form S-1 registration statement (No.
333-71743) filed by ProVantage and found them to be in agreement,
rounded as appropriate.
J. Compared with a schedule or report prepared by ProVantage and found
them to be in agreement. Amounts appearing in such schedule or report
were compared with accounting records of ProVantage and found to be
in agreement, rounded as appropriate.
K. Compared the dollar amounts, percentages, descriptions and number
with the supporting schedules or report provided or prepared by
employees in the Company's accounting department and found them to be
in agreement. Amounts appearing in such schedule or report were
compared or reconciled with accounting records of the Company and
found to be in agreement.
L. We compared the information included under the heading "Ratios of
Earnings to Fixed Charges" with the requirements of Regulation S-K,
Item 503(d). We also inquired of certain officials of the Company who
have responsibility for financial and accounting matters whether this
information conforms with the disclosure requirements of Item 503(d)
of Regulation S-K. Nothing came to our attention as a result of the
foregoing procedures that caused us to believe that this information
does not conform with the disclosure requirements of Item 503(d) of
Regulation S-K.
M. Recalculated for mathematical accuracy and found to be in agreement,
the amounts or percentages were derived from amounts included in the
Company's audited consolidated financial statements or the notes
thereto for the periods indicated and the unaudited consolidated
financial statements or the notes thereto for the fiscal quarter
indicated.
11. Our audit of the financial statements for the periods referred to in
the introductory paragraph of this letter were comprised of audit tests
and procedures deemed necessary for the purpose of expressing an
opinion on such financial statements taken as a whole. For neither the
periods referred to therein nor any other period did we perform audit
tests for the purpose of expressing an opinion on individual balances
of accounts or summaries of selected transactions such as those
enumerated above and, accordingly, we do not express an opinion
thereon.
12. It should be understood that we make no representations regarding
questions of legal interpretation or regarding the sufficiency for your
purposes of the procedures enumerated above and referenced in the
attached marked pages of the Registration Statement; also, such
procedures would not necessarily reveal any material
B-6
misstatement of the amounts or percentages listed in the Registration
Statement. Further, we have addressed ourselves solely to the foregoing
data as set forth in the Registration Statement and make no
representations regarding the adequacy of disclosure or regarding
whether any material facts have been omitted.
13. This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their
investigation of the affairs of the Company in connection with the
offering of common stock covered by the Registration Statement, and it
is not to be used, circulated, quoted or otherwise referred to for any
purpose, including but not limited to the purchase or sale of the
common stock, nor is it to be filed with or referred to in whole or in
part in the Registration Statement or any other document, except that
reference may be made to it in the Purchase Agreement or in any list of
closing documents pertaining to the offering of the common stock
covered by the Registration Statement.
B-7
