SENIOR DEBENTURES
UNDERWRITING AGREEMENT
NORTHWESTERN CORPORATION
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
November 6, 1998
Ladies and Gentlemen:
On the basis of the representations and warranties, and subject to the
terms and conditions, set forth in this agreement (this "Agreement" or the
"Underwriting Agreement"), we, the Underwriters (as defined below),
understand that Northwestern Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the Underwriters $105,000,000
aggregate principal amount of its 6.95% Senior Debentures due 2028 (the
"Debentures"). The Debentures will be issued pursuant to the provisions of
an Indenture dated as of November 1, 1998 between the Company and The Chase
Manhattan Bank, as Trustee (the "Trustee"), as it will be supplemented by a
supplemental indenture (the "Supplemental Indenture") relating to the
Debentures (said Indenture as so supplemented is hereinafter referred to as
the "Indenture").
The term "Underwriters," as used herein, shall be deemed to mean the
several persons, firms or corporations named in Schedule I hereto, and the
term "Representative," as used herein, shall be deemed to mean the
representative or representatives of such Underwriters by whom or on whose
behalf this Underwriting Agreement is signed. If there shall be one person,
firm or corporation named in Schedule I, the term "Underwriters" and the term
"Representative," as used herein, shall mean that person, firm or
corporation. All obligations of the Underwriters are several and not joint.
The use of the term "Underwriter" herein shall not be deemed to establish or
admit that a purchaser of the Debentures is an "underwriter" of the
Debentures as such term is defined in and used under the Securities Act of
1933, as amended (the "Securities Act").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (Registration Statement
No. 333-58491),
including a prospectus, relating to the Debentures, and has filed with, or
transmitted for filing to, or shall promptly hereafter file with or transmit
for filing to, the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Debentures pursuant to Rule 424
under the Securities Act. The term "Registration Statement" means the
registration statement, including the exhibits thereto, as amended to the
date of this Agreement. The term "Basic Prospectus" means the prospectus
included in the Registration Statement, as amended and supplemented to the
date of this Agreement (exclusive of any supplement to the prospectus
relating solely to securities other than the Debentures). The term
"Prospectus" means the Basic Prospectus together with the Prospectus
Supplement. The term "preliminary prospectus" means a preliminary prospectus
supplement specifically relating to the Debentures, together with the Basic
Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and
"preliminary prospectus" shall include in each case the documents, if any,
incorporated by reference therein. The terms "supplement," "amendment" and
"amend" as used herein shall include all documents deemed to be incorporated
by reference in the Prospectus that are filed subsequent to the date of the
Basic Prospectus by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and
no proceedings for such purpose are pending before or, to the Company's
knowledge, threatened by the Commission.
(c) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder or pursuant
to said rules and regulations will be deemed to comply therewith; (ii) each
part of the Registration Statement, when such part became effective, did not
contain, and each such part, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; (iii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will comply
in all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder or pursuant to said rules and
regulations will be deemed to comply therewith; and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this Section 1(c) do not apply (A) to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter expressly for use therein or (B) to that part of the
Registration Statement that constitutes any Statement of Eligibility (Form
T-l) under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), of the Trustee.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware and has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and to enter into and perform its obligations under
the Underwriting Agreement, the Indenture and the Debentures. The Company is
duly qualified to transact business and is in good standing in each
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jurisdiction in which the conduct of its business or its ownership or leasing
of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(e) Each subsidiary of the Company has been duly incorporated or
formed, is validly existing as a corporation or limited partnership, as the
case may be, in good standing under the laws of the jurisdiction of its
incorporation or formation, as the case may be, has the corporate or
partnership power and authority, as the case may be, to own its property and
to conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the outstanding shares
of capital stock or partnership interests (as applicable) of the Company's
subsidiaries have been duly authorized and are validly issued, fully paid and
non-assessable and (except for the shares or partnership interests of SYN,
Inc., Cornerstone Propane Partners, L.P., Communication Systems USA, Inc. and
Blue Dot Services Inc. that are not beneficially owned by the Company) are
owned directly by the Company or its subsidiaries, free and clear of all
liens, encumbrances, equities or claims.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement, the Indenture and the Debentures will not conflict with, result in
a breach of or constitute a default under any provision of (A) applicable law
(except to the extent that the indemnification provisions hereof may be
unenforceable as against public policy under certain circumstances), (B) the
certificate of incorporation or by-laws of the Company, (C) any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company
or any of its subsidiaries is a party that is material to the Company and its
subsidiaries, taken as a whole, or (D) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary.
(h) The Federal Energy Regulatory Commission (the "FERC") has
issued an appropriate order or orders with respect to the issuance and sale
of the Debentures in accordance with the Underwriting Agreement; such order
or orders are in full force and effect; the issuance and sale of the
Debentures are in conformity with the terms of such order or orders; and no
other authorization, approval or consent of any other governmental body or
agency is legally required for the issuance and sale of the Debentures as
contemplated by the Underwriting Agreement, except such as have been obtained
under the Securities Act and the Trust Indenture Act and such as may be
required under the state securities or Blue Sky laws in connection with the
purchase and distribution of the Debentures by the Underwriters.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that set forth in
the Prospectus.
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(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described, or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration Statement that are not described,
filed or incorporated as required.
(k) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(l) No holder of any security of the Company has any right under
(i) the warrants to purchase Common Stock issued by the Company to former
stockholders of Empire Energy Corporation or (ii) any agreement entered into
in connection with the issuance of such warrants, or otherwise, to require
the Company to (x) register the sale of any security of the Company in
connection with the filing of the Registration Statement (other than the
shares of Common Stock beneficially owned by the Selling Stockholders named
therein as described under the caption "Selling Stockholders") and the
Prospectus or the consummation of the transactions contemplated by this
Agreement or (y) include any security of the Company in the offering
contemplated by this Agreement.
(m) No pro forma financial statements of the Company or its
subsidiaries are required to be included or incorporated by reference in the
Registration Statement or the Prospectus, including in connection with the
proposed acquisition of Propane Continental, Inc. by Cornerstone Propane
Partners, L.P.
2. PUBLIC OFFERING. The Company is advised by the Representative that
the Underwriters propose to make a public offering of their respective
portions of the Debentures as soon after the Underwriting Agreement has been
entered into as in the Underwriters' judgment is advisable. The terms of the
public offering of the Debentures are set forth in the Prospectus.
3. PURCHASE AND DELIVERY. Subject to the terms and conditions herein
set forth, the Company hereby agrees to sell and the Underwriters agree to
purchase, severally and not jointly, the respective principal amounts of
Debentures set forth opposite the name of such Underwriter in Schedule I
hereto at the purchase price set forth in Schedule II hereto in the type of
funds and method of payment specified in such Schedule II.
Delivery of the Debentures and payment of the purchase price shall be
made at the time, date and place indicated in Schedule II hereto. The time
and date of such payment and delivery are hereinafter referred to as the
Closing Date.
The Debentures shall be delivered to the Underwriters in such authorized
denominations and registered in such names as the Representative shall
request in writing not less than two full business days prior to the date of
delivery. The Company agrees to make the Debentures available to the
Underwriters for checking not later than 2:30 P.M., New York time, on the
last business day preceding the Closing Date at such place as may be agreed
upon between the Representative and the Company.
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4. CONDITIONS TO CLOSING. The several obligations of the Underwriters
hereunder are subject to the following conditions:
(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date,
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus,
that, in the judgment of the Representative, is material and adverse and
that makes it, in the judgment of the Representative, impracticable to
market the Debentures on the terms and in the manner contemplated in the
Prospectus; and
(iii) at the Closing Date, the order or orders of the FERC
authorizing the issuance, sale and delivery of the Debentures as
contemplated by this Agreement shall be in full force and effect and shall
not be contested or the subject of review or appeal.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company to the effect (x) set forth in clause (a)(i) and (iii) above and (y)
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company
has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied on or before the Closing Date. The
officer signing and delivering such certificate may rely upon the best of his
knowledge as to proceedings threatened.
(c) The Representative shall have received on the Closing Date an
opinion dated the Closing Date of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, special counsel to
the Company, to the effect that
(i) the Company has been duly incorporated and, based upon
certificates or letters from state or other appropriate authorities, is
validly existing as a corporation in good standing under the laws of the
State of Delaware and is duly qualified and in good standing as a foreign
corporation in the States of Iowa, Nebraska, North Dakota and South Dakota,
with corporate powers and statutory authority to carry on the business
which it now carries on as stated in the Prospectus and to own and operate
the properties used by it in such business;
(ii) each subsidiary of the Company has been duly
incorporated or formed and based upon certificates or letters from state
or other appropriate authorities, is validly existing as a corporation
or partnership, as the case may be, in good standing under the laws of
the jurisdiction of its incorporation or formation, as the case may be,
with corporate or partnership powers, as the case may be, and statutory
authority to carry on
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the business which it now carries on as stated in the Prospectus and to
own and operate the properties used by it in such business and is duly
qualified and in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(iii) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights and general
equitable principles (whether considered in a proceeding at law or in
equity);
(iv) the Debentures have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be
entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, in each case enforceable in accordance with
their respective terms, except as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights and by general
equitable principles (whether considered in a proceeding at law or in
equity);
(v) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement, the Indenture and the Debentures will not conflict with, result
in a breach of or constitute a default under any provision of (A)
applicable law (except to the extent that the indemnification provisions
hereof may be unenforceable as against public policy under certain
circumstances), (B) the certificate of incorporation or by-laws of the
Company, (C) any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party that
is material to the Company and its subsidiaries, taken as a whole, or (D)
any judgment, order or decree known to such counsel of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary;
(vii) the FERC has issued an appropriate order or orders with
respect to the issuance and sale of the Debentures in accordance with the
Underwriting Agreement; to the knowledge of such counsel, such order or
orders are in full force and effect; the issuance and sale of the
Debentures are in conformity with the terms of such order or orders; and no
other authorization, approval or consent of any other governmental body or
agency (including, without limitation, in the jurisdictions of South
Dakota, Nebraska, North Dakota and Iowa) is legally required for the
issuance and sale of the Debentures as contemplated by the Underwriting
Agreement, except such as have been obtained under the Securities Act and
the Trust Indenture Act and such as may be required under the
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state securities or Blue Sky laws in connection with the purchase and
distribution of the Debentures by the Underwriters;
(viii) the statements (A) in the Prospectus under the captions
"Description of the Senior Debentures," "Description of Debt Securities,"
"Underwriters" and "Plan of Distribution" and (B) in the Registration
Statement under Item 15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the matters
referred to therein;
(ix) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated
by reference as exhibits to the Registration Statement that are not
described, filed or incorporated as required;
(x) the Company is not (A) an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended or (B) a
"holding company" as such term is defined in the Public Utility Holding
Company Act of 1935, as amended;
(xi) the Registration Statement has become effective under the
Securities Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for a stop order with respect thereto are pending or
threatened under Section 8(d) of the Securities Act; and
(xii) such counsel (A) is of the opinion that (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion) each document, if any, filed pursuant
to the Exchange Act and incorporated by reference in the Prospectus
complied when so filed as to form in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, (B) believes that (except for financial statements and
schedules as to which such counsel need not express any belief and except
for that part of the Registration Statement that constitutes any Form T-l
heretofore referred to) each part of the Registration Statement, when such
part became effective, did not and, as of the date such opinion is
delivered, does not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (C) is of the opinion that the
Registration Statement and Prospectus (except for financial statements and
schedules included therein as to which such counsel need not express any
opinion), comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder
and (D) believes that (except for financial statements and schedules as to
which such counsel need not express any belief) the Prospectus as of the
date such opinion is delivered does not contain any
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untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Representative shall have received on the Closing Date an
opinion dated the Closing Date of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Vice-President -
Law of the Company to the effect that (i) the Company (A) is in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, or pollutants or
contaminants ("Environmental Laws"), (B) has received all permits, licenses
or other approvals required of it under applicable Environmental Laws to
conduct its business and (C) is in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company, (ii) all of the outstanding shares of capital
stock or partnership interests (as applicable) of the Company's subsidiaries
have been duly authorized and are validly issued, fully paid and
non-assessable and (iii) the statements in "Item 3 - Legal Proceedings" of
the Company's most recent annual report on Form 10-K incorporated by
reference in the Prospectus and in "Item 1 - Legal Proceedings" of Part II of
the Company's quarterly reports on Form 10-Q filed since such annual report
and reviewed by such counsel, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred
to therein, fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the matters
referred to therein.
(e) The Representative shall have received on the Closing Date an
opinion dated the Closing Date of Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Underwriters, covering the matters referred to in
subparagraphs (iii), (iv), (v), (viii) (but only as to the statements
referred to in clause (A) thereof), (xi) and (xii) (B), (C) and (D) of
paragraph (c) above.
With respect to the subparagraph (xii) of paragraph (c) above, ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, special counsel to the Company, may state that its opinion
and belief are based upon its participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto (excluding (for purposes of clauses (B) and (D) of such paragraph)
certain of the documents incorporated by reference therein (to be specified
in such opinion)) and review and discussion of the contents thereof
(including the documents incorporated by reference therein), but are without
independent check or verification, except as specified. With respect to
clauses (B), (C) and (D) of subparagraph (xii) of paragraph (c) above,
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may state that their opinion and belief
are based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (but not
including documents incorporated therein by reference) and review and
discussion of the contents thereof (including documents incorporated therein
by reference) but are without independent check or verification, except as
specified.
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The opinions of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, special counsel to the Company
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Vice-President - Law of the Company, described in
paragraphs (c) and (d) above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(f) The Representative shall have received on the date of this
Agreement a letter, dated the date of this Agreement, in form and substance
satisfactory to the Representative, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Company's
independent public accountants, 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 or incorporated by reference into the Prospectus.
(g) The Representative shall have received on the Closing Date a
letter, dated the Closing Date, in form and substance satisfactory to the
Representative, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Company's independent public
accountants, to the effect that such accountants reaffirm, as of the Closing
Date, and as though made on the Closing Date, the statements made in the
letter furnished by such accountants pursuant to Section 4(f), except that
the specified date referred to therein shall be a date not more than three
business days prior to the Closing Date.
(h) On the Closing Date, Standard & Poor's and ▇▇▇▇▇'▇ Investors
Service, Inc. shall have publicly assigned to the Debentures ratings of A and
A2, respectively, which ratings shall be in full force and effect on the
Closing Date.
(i) The Underwriters shall have received such additional documents
as the Representative may reasonably request.
5. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To furnish the Representative, without charge, a signed copy
of the Registration Statement (including exhibits thereto) and to deliver to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and, during the period mentioned in paragraph (d)
below, as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the
Registration Statement as the Underwriters may reasonably request (delivery
of the Prospectus to be made in New York, New York no later than 10:00 A.M.
on the business day immediately succeeding the date of this Agreement).
(b) To cause the Prospectus to be filed with the Commission
pursuant to and in compliance with Rule 424 under the Securities Act.
(c) Before amending or supplementing the Registration Statement or
the Prospectus during such period after the first date of the public offering
of the Debentures as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by any
Underwriter or a dealer, to furnish to the Underwriters a copy of each such
proposed amendment or supplement and not to file any such proposed amendment
or supplement to which the Underwriters reasonably object.
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(d) If, during such period after the first date of the public
offering of the Debentures as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales by
an Underwriter or a dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters, and to
the dealers (whose names and addresses the Representative will furnish to the
Company) to which Debentures may have been sold by the Underwriters on behalf
of the Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(e) To endeavor to qualify the Debentures for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters
shall reasonably request and to maintain such qualification for as long as
the Underwriters shall reasonably request.
(f) To make generally available to the Company's security holders
and to the Representative as soon as practicable an earning statement
covering a twelve month period beginning on the first day of the first full
fiscal quarter after the date of the Underwriting Agreement, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder. If such fiscal
quarter is the last fiscal quarter of the Company's fiscal year, such earning
statement shall be made available not later than 90 days after the close of
the period covered thereby and in all other cases shall be made available not
later than 45 days after the close of the period covered thereby.
(g) During the period beginning on the date of this Agreement and
continuing to and including the Closing Date, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, not to (1) 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, directly or indirectly, any debt
securities of the Company or warrants to purchase debt securities of the
Company substantially similar to the Debentures or any securities convertible
into or exercisable or exchangeable therefor (other than (i) the Debentures,
(ii) commercial paper issued in the ordinary course of business and (iii)
other debt securities evidencing commercial bank loans) or (2) enter into any
swap or similar arrangement that transfers, in whole or part, the economic
consequences of ownership of any of the foregoing, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery
of Debentures or such other securities, in cash or otherwise.
(h) Whether or not any sale of Debentures is consummated, to pay all
expenses incident to the performance of its obligations under the Underwriting
Agreement, including: (i) the preparation and filing of the Registration
Statement and the Prospectus and all amendments and supplements thereto, (ii)
the preparation, issuance and delivery of the Debentures, (iii) the fees and
disbursements of the Company's counsel and accountants and of the Trustee and
its counsel, (iv) the qualification of the Debentures under state securities or
Blue Sky laws in
10
accordance with the provisions of Section 5(e), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky Memoranda in
an aggregate amount not to exceed $10,000, (v) the printing and delivery to
the Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of the Prospectus and
any amendments or supplements thereto, (vi) any fees charged by rating
agencies for the rating of the Debentures and (vii) the fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with investigating or defending any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter expressly
for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to information relating
to such Underwriter furnished to the Company in writing by such Underwriter
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing, and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying
11
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by the Representative, in the case
of parties indemnified pursuant to paragraph (a) above, and by the Company,
in the case of parties indemnified pursuant to paragraph (b) above. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request and this
Agreement prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 6 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the
Debentures or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other hand in connection with the
offering of the Debentures shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Debentures (before
deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus Supplement, bear to the
aggregate public offering price of the Debentures. The relative fault of the
Company on the one hand and of the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to
12
contribute pursuant to this Section 6 are several in proportion to the
respective principal amounts of Debentures they have purchased hereunder, and
not joint.
(e) The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 6 were determined
by pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Debentures underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 6 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
7. TERMINATION. This Agreement shall be subject to termination, by
notice given by the Representative to the Company, if (a) after the execution
and delivery of the Underwriting Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by,
as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Representative, is material and adverse and (b) in the case of any of the
events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in the judgment of the
Representative, impracticable to market the Debentures on the terms and in
the manner contemplated in the Prospectus. This Agreement may also be
terminated at any time prior to the Closing Date if in the judgment of the
Representative the subject matter of any amendment or supplement to the
Registration Statement or Prospectus prepared and furnished by the Company
reflects a material adverse change in the business, properties or financial
condition of the Company which renders it either inadvisable to proceed with
such offering, if any, or inadvisable to proceed with the delivery of the
Debentures to be purchased hereunder.
8. DEFAULTING UNDERWRITERS. If, on the Closing Date, any one or more of
the Underwriters shall fail or refuse to purchase the Debentures that it has or
they have agreed to purchase hereunder on such date, and the aggregate amount of
Debentures which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate amount of the
Debentures to be purchased on such date, the other Underwriters
13
shall be obligated severally in the proportions that the amount of Debentures
set forth opposite their respective names in Schedule I to this Agreement
bears to the aggregate amount of Debentures set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as the
Representative may specify, to purchase the Debentures which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the amount of Debentures that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 8 by an amount in excess of one-ninth of such amount
of Debentures without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase the Debentures that it has or they have agreed to purchase and the
aggregate amount of Debentures with respect to which such default occurs is
more than one-tenth of the aggregate amount of Debentures to be purchased on
such date, and arrangements satisfactory to the Representative and the
Company for the purchase of such Debentures are not made within 36 hours
after such default, the Underwriting Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In
any such case either the Representative or the Company shall have the right
to postpone the Closing Date but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter
under the Underwriting Agreement.
If the Underwriting Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of the Company
to comply with the terms or to fulfill any of the conditions of the
Underwriting Agreement, or if for any reason the Company shall be unable to
perform its obligations under the Underwriting Agreement, the Company will
reimburse the Underwriters or such Underwriters as have so terminated the
Underwriting Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with the
Underwriting Agreement or the offering of the Debentures.
If the Underwriting Agreement shall be terminated by the Company because
of any failure or refusal on the part of the Underwriters to comply with the
terms or to fulfill any of the conditions of the Underwriting Agreement, or
if for any reason the Underwriters shall be unable to perform their
obligations under the Underwriting Agreement, the Underwriters will reimburse
the Company for all out-of-pocket expenses (including the fees and
disbursements of its counsel) reasonably incurred by the Company in
connection with the Underwriting Agreement or the offering of the Debentures.
9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
indemnity and contribution agreements and the representations, warranties and
other statements of the Company, its officers and the Underwriters set forth
in the Underwriting Agreement will remain in full force and effect,
regardless of any termination of the Underwriting Agreement, any
investigation made by or on behalf of any Underwriter or the Company or any
of the officers, directors or controlling persons referred to in Section 6
and delivery of and payment for the Debentures.
14
10. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 6, and no
other person will have any right or obligation hereunder.
11. COUNTERPARTS. The Underwriting Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. The Underwriting Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
13. HEADINGS. The headings of the sections of the Underwriting
Agreement have been inserted for convenience of reference only and shall not
be deemed a part of the Underwriting Agreement.
14. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telecopied and
confirmed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇, or,
if sent to the Company, will be mailed, delivered or telecopied and confirmed
to it at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief Operating Officer, Telecopy No: (605)
978-2910.
15. DEFINITION OF "SUBSIDIARY. The term "subsidiary," as used in this
Agreement with respect to the Company, shall be deemed to refer only to those
direct or indirect subsidiaries of the Company which would qualify (including
on a pro forma basis) as "significant subsidiaries" pursuant to Rule 405
under the Securities Act (and, regardless of such qualification, shall be
deemed to include Communication Systems USA, Inc. and Blue Dot Services
Inc.).
15
Please confirm your agreement by having an authorized officer sign a
copy of this Agreement in the space set forth below.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Accepted, November 6, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - Finance &
Chief Financial Officer
SCHEDULE I
Principal Amount
Name of Underwriter of Debentures
------------------------------------------------------- ------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated . . . . . . . . . . . $ 73,500,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. . . . . . . . . . . . . . . . . $ 31,500,000
-----------
Total $105,000,000
-----------
-----------
Schedule II
Underwriting Agreement dated November 6, 1998
Registration Statement No. 333-58491
Representative and Address:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Securities: Senior Debentures
Designation: 6.95% Senior Debentures due 2028
Principal Amount: $ 105,000,000
Supplemental Indenture
dated as of: November 1, 1998
Date of Maturity: November 15, 2028
Interest Rate: 6.95%
Purchase Price: 94.306%
Public Offering Price: 95.181%
Type of Funds/Method
of Payment: Immediately available funds / wire transfer
Closing Date
and Location: November 12, 1998 at the office of Winthrop, Stimson, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, New York, New York