1
Exhibit 1.1
THE ▇▇▇▇▇-▇▇▇▇▇▇▇ STORES CORP.
2,800,000 Common Shares*
UNDERWRITING AGREEMENT
----------------------
July ___, 1998
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
Warburg Dillon Read LLC
▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C.
As Representatives of the Several Underwriters
c/▇ ▇▇▇▇▇▇▇▇ & Company Securities, Inc.
▇▇▇▇▇▇▇▇ Investment Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
1. INTRODUCTORY. The ▇▇▇▇▇-▇▇▇▇▇▇▇ Stores Corp., an Ohio
corporation (the "Company"), proposes to issue and sell 2,800,000 of its common
shares, no par value (the "Common Shares"), which are authorized but unissued,
to the public through the underwriters named in Schedule A annexed hereto (the
"Underwriters") for whom you are acting as the Representatives. The 2,800,000
Common Shares to be purchased from the Company are hereinafter referred to as
the "Firm Stock." The Company also proposes to sell to the Underwriters, at
their option, an aggregate of not more than 420,000 additional Common Shares,
which are hereinafter referred to as the "Option Stock." The Firm Stock and the
Option Stock are hereinafter collectively referred to as the "Stock" and are
more fully described in the Registration Statement and the Prospectus (as
hereinafter defined). The Company hereby confirms its several agreements with
you, acting as the Representatives of the Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than those listed
in Exhibit 21 to the Registration
------------------
* Plus an option to purchase up to 420,000 additional shares to cover
over-allotments.
2
Statement (as hereinafter defined). The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of Ohio with
power and authority to own and lease its properties and conduct its business as
described in the Prospectus (as hereinafter defined). Each of the Company's
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of incorporation,
with power and authority to own and lease its properties and conduct its
respective business. The Company and each of its subsidiaries are duly qualified
to do business as a foreign corporation and are in good standing in all
jurisdictions in which the Company or such subsidiary owns or leases real
property or in which the conduct of business, as presently being conducted,
requires such qualification (except for those jurisdictions in which the failure
to so qualify will not in the aggregate have a material adverse effect on the
Company or such subsidiary). Except as disclosed in the Registration Statement,
the Company does not own, directly or indirectly, any equity securities or
securities convertible into or exchangeable for equity securities of any other
corporation, partnership, joint venture, Massachusetts or other business trust
or any other business enterprise.
(b) This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Company.
(c) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission"), in accordance with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the Rules
and Regulations of the Commission thereunder (as hereinafter defined), a
registration statement on Form S-1 (Registration No. 333-57447) including a
preliminary prospectus relating to the Company's Stock, and such amendments to
such registration statement as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission. The registration
statement as amended at the time when it becomes effective, or, if applicable,
as amended at the time the most recent post-effective amendment to such
registration statement filed with the Commission prior to the execution and
delivery of this Agreement became effective (the "Effective Date"), and
including information (if any) contained in a prospectus subsequently filed with
the Commission pursuant to Rule 424(b) under the Act, and deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Act is hereinafter referred to as the "Registration Statement"; the
prospectus in the form first used to confirm sales of Stock, whether or not
filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter
referred to as the "Prospectus." If an abbreviated registration statement is
prepared and filed with the Commission in accordance with Rule 462(b) under the
Act (an "Abbreviated Registration Statement"), the term "Registration Statement"
as used in this Agreement includes the Abbreviated Registration Statement.
(d) As of the Effective Date, and at all times
subsequent thereto up to and including the respective Closing Dates (as
hereinafter defined) of the offering, (i) the Registration Statement and the
Prospectus, and any amendments thereof or supplements thereto, will in all
material respects conform to the requirements of the Act and the applicable
rules, regulations and interpretive releases of the Commission thereunder (the
"Rules and Regulations"); (ii) the Registration Statement or any amendment
thereof or supplement thereto,
-2-
3
did not or will not contain, as the case may be, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus or any amendment thereof or supplement thereto, did not or will not,
as the case may be, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in the Registration Statement or the Prospectus or any
such amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company through you as the Representatives
specifically for use in the preparation thereof.
(e) The Company has a duly authorized and outstanding
capitalization as set forth under "Capitalization" in the Prospectus except for
changes due to payments required by debt agreements, or as otherwise provided in
the Prospectus; all of the outstanding Common Shares are duly authorized and
validly issued, fully paid and nonassessable, are free of any preemptive rights,
rights of first refusal or similar rights, were issued and sold in compliance
with the applicable Federal and state securities laws and conform in all
material respects to the description in the Prospectus; except as described in
the Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and there are no commitments, plans or arrangements
to issue any shares of capital stock of the Company or any security convertible
or exchangeable or exercisable for capital stock of the Company. There are no
holders of securities of the Company who, by reason of the filing of the
Registration Statement have the right (and have not waived such right) to
request the Company to include in the Registration Statement securities owned by
them, other than such rights as have been satisfied by the inclusion of
securities in the Registration Statement.
(f) The Common Shares of the Company conform in
substance to all statements in relation thereto contained in the Registration
Statement and the Prospectus; the Stock to be sold by the Company hereunder has
been duly authorized and, when issued and delivered pursuant to this Agreement,
will be validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus. All corporate action required
to be taken for the issuance of the Stock by the Company has been validly and
sufficiently taken. No preemptive rights of security holders of the Company
exist with respect to the issuance and sale of the Stock by the Company pursuant
hereto.
(g) All the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned by the Company free and clear of all
liens, encumbrances, equities, security interests, or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any shares of capital
stock of any subsidiary or any security convertible or exchangeable or
exercisable for capital stock of any subsidiary; except as disclosed in the
Registration Statement and except for the shares of stock of each subsidiary
owned by the Company, neither the Company nor any subsidiary owns, directly or
indirectly, any shares of capital stock of any corporation or has any equity
interest in any firm, partnership, joint venture, association or other entity.
-3-
4
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
set forth or contemplated in the Prospectus, (i) neither the Company nor any of
its subsidiaries has incurred any material liabilities or obligations, direct or
contingent, nor have any of them entered into any material transaction, (ii)
there has not been any material change in the capital stock of the Company and
its subsidiaries or any material adverse change in the business or the financial
position or results of operations of the Company and its subsidiaries, taken as
a whole and (iii) no loss or damage (whether or not insured) to the property of
the Company and its subsidiaries have been sustained which materially and
adversely affects the operations of the Company and its subsidiaries, taken as a
whole.
(i) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default under, (i) the Articles of Incorporation or the Code of Regulations of
the Company, or the organizational documents of any of its subsidiaries, or (ii)
any indenture, mortgage, deed of trust or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound, or (iii) any order, rule or regulation applicable
to the Company or any of its subsidiaries of any court or of any federal or
state regulatory body or administrative agency or other governmental body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, except, in the case of clauses (ii) and (iii), for such breaches or
defaults as will not have a material adverse effect on the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof by the
Company.
(j) The financial statements of the Company and Stone
& ▇▇▇▇▇▇ included in the Registration Statement and the Prospectus fairly
present the financial position and results of operations of the Company on a
consolidated basis and Stone & ▇▇▇▇▇▇ at the respective dates and for the
respective periods to which they apply, and such financial statements have been
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The pro forma financial
statements of the Company included in the Prospectus comply in all material
respects with the applicable requirements of Rules 11-01 and 11-02 of Regulation
S-X of the Commission and fairly present the information shown therein at the
dates and for the periods to which they apply, and have been prepared to give
effect to certain assumptions and proposed transactions made on reasonable bases
which are described in the Prospectus, and the pro forma adjustments have been
properly applied on the bases described therein.
(k) Deloitte & Touche LLP, who have examined and
expressed their opinion on the financial statements of the Company referenced in
their opinions set forth in the Prospectus, are independent accountants within
the meaning of the Act and the Rules and Regulations.
(l) The Company and its subsidiaries hold all
necessary material authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental
-4-
5
regulatory officials and bodies (collectively the "licenses") required for the
conduct of its business as described in the Prospectus, and all such licenses
are valid and in full force and effect, and the Company and its subsidiaries
have no reason to believe they are not operating in compliance in all material
respects with the terms and provisions of such licenses and with all material
laws, regulations, orders and decrees applicable to the Company and its
subsidiaries, and their respective businesses and assets.
(m) Neither the Company nor any of its subsidiaries
is in violation of any applicable Federal, state or local laws, statutes, rules,
regulations or ordinances relating to public health, safety or the environment,
including, without limitation, relating to releases, discharges, emissions or
disposal to air water, land or groundwater, to the withdrawal or use of
groundwater, to the use, handling or disposal of polychlorinated biphenyls
(PCBs), asbestos or urea formaldehyde, to the treatment, storage, disposal or
management of hazardous substances (including, without limitation, petroleum,
crude oil or any fraction thereof, or other hydrocarbons), pollutants or
contaminants, to exposure to toxic, hazardous or other controlled, prohibited or
regulated substances, which violation would have a material adverse effect on
the business, condition (financial or other) or results of operations of the
Company and its subsidiaries, or which might materially and adversely affect the
consummation of the transactions contemplated by this Agreement. In addition,
and irrespective of such compliance, neither the Company nor any of its
subsidiaries is subject to any liabilities for environmental remediation or
clean-up, including any liability or class of liability of the lessee under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or the Resource Conservation and Recovery Act of 1976, as amended,
which liability would have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, or which might materially and adversely affect the consummation of
the transactions contemplated by this Agreement.
(n) There are no legal or governmental actions, suits
or proceedings pending or, to the knowledge of the Company, threatened to which
the Company or any of its subsidiaries, or any of their executive officers or
directors is a party or of which the business or property (including, without
limitation, any of the licenses referred to in (l) above) of the Company or any
of its subsidiaries or any of the Company's or any of its subsidiaries'
employees is the subject which if decided adversely, would have a material
adverse effect on the business, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole, except as set
forth in the Prospectus.
(o) Neither the Company nor any of its subsidiaries
is in violation of its Articles of Incorporation or its Code of Regulations or
other organizational documents, and no material default exists by the Company or
any of its subsidiaries in the due performance and observance of any term,
covenant or condition of any agreement material to the Company and its
subsidiaries to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound.
(p) The Company and its subsidiaries have good title
to, or valid and enforceable leasehold estates in, all properties and assets
used for their businesses (including the
-5-
6
property described in the Prospectus as being owned or leased by the Company),
in each case free and clear of all liens, encumbrances and defects other than
those set forth or referred to in the Registration Statement or Prospectus or
those which do not materially affect the value of such property or leasehold and
do not materially interfere with the use made or proposed to be made of such
property or leasehold by the Company and its subsidiaries; and all of the leases
and subleases under which the Company and its subsidiaries hold such properties
are in full force and effect.
(q) Other than as set forth in the Prospectus, the
Company and its subsidiaries own or possess, or can acquire on reasonable terms,
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets, applications and other unpatented or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, and trade names (collectively, "Proprietary Rights") used in or
necessary for the conduct of their businesses as now conducted and as proposed
to be conducted as described in the Prospectus; the Company and its subsidiaries
have the right to use all Proprietary Rights used in or necessary for the
conduct of their businesses without infringing the rights of any person or
violating the terms of any licensing or other agreement to which the Company or
any of its subsidiaries is a party, and to the knowledge of the Company no
person is infringing upon any Proprietary Right which the Company or any of its
subsidiaries has the sole and exclusive right to use; no charges, claims or
litigation have been asserted or to the knowledge of the Company threatened
against the Company or any of its subsidiaries contesting the right of the
Company or any of its subsidiaries to use, or the validity of, any Proprietary
Right or challenging or questioning the validity or effectiveness of any license
or agreement pertaining thereto or asserting the misuse thereof, and, to the
Company's knowledge, no valid basis exists for the assertion of any such charge,
claim or litigation; all licenses and other agreements to which the Company or
any of its subsidiaries is a party relating to Proprietary Rights are in full
force and effect and constitute valid, binding and enforceable obligations of
the Company or such subsidiary, and, to the Company's knowledge, the other
respective parties thereto, and there have not been and there currently are not
any defaults which would have a material adverse effect on the Company and its
subsidiaries, and no event has occurred which (whether by notice or lapse of
time or both) would constitute a default under any license or other agreement
affecting Proprietary Rights used in or necessary for the conduct of the
businesses of the Company and its subsidiaries by any party; and except as set
forth in the Prospectus, the validity, continuation and effectiveness of all
such licenses and other agreements and the current terms thereof will not be
affected by the transactions contemplated by this Agreement.
(r) No approval, authorization, consent or other
order of any public board or body (other than a Nasdaq National Market
Notification Form for Listing of Additional Shares or in connection with or in
compliance with the provisions of the Act and the securities or Blue Sky laws of
various jurisdictions) is legally required for the sale of the Stock by the
Company.
(s) The Common Shares have been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended, and have been
authorized for trading over-the-
-6-
7
counter on the Nasdaq National Market ("Nasdaq"), and the Stock has been
authorized for trading on the Nasdaq, subject only to official notice of
issuance.
(t) The Company and its subsidiaries have filed on a
timely basis all necessary federal, state and local income tax returns required
to be filed through the date hereof and have paid all taxes shown as due
thereon; and no tax deficiency has been asserted against the Company or any of
its subsidiaries, nor does the Company know of any tax deficiency which is
likely to be asserted against the Company or any of its subsidiaries which if
determined adversely to the Company or such subsidiary could materially
adversely affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries. All tax liabilities are adequately provided for on the books of
the Company.
(u) The Company and each of its subsidiaries maintain
insurance of the types and in the amounts generally deemed adequate for their
respective businesses and, to the best of the Company's knowledge, consistent
with insurance coverage maintained by similar companies in similar businesses.
(v) The Company has obtained the agreement of each of
its executive officers and directors that, for a period of 180 days from the
date of the Prospectus, subject to certain limited exceptions, such persons will
not, without the prior written consent of ▇▇▇▇▇▇▇▇ & Company Securities, Inc.,
directly or indirectly sell, offer to sell, grant any option for the sale of, or
otherwise dispose of any of the Company's Common Shares (including, without
limitation, shares of Common Shares which may be deemed to be beneficially owned
by such persons in accordance with the 1934 Act Regulations) or any securities
convertible into Common Shares.
(w) To the best of the Company's knowledge, no labor
problem exists with its employees or is threatened or imminent that could
materially adversely affect the Company and its Subsidiaries.
(x) Neither the Company nor any of its officers,
directors or affiliates (as defined in the Act and the Rules and Regulations),
has taken or will take, directly or indirectly, any action designed to stabilize
or manipulate, or which has constituted, or might in the future reasonably be
expected to cause or result in, stabilization or manipulation of, the price of
the Stock of the Company in order to facilitate the sale or resale of the Stock
or otherwise.
(y) The Company's system of internal accounting
controls is sufficient to meet the broad objectives of internal accounting
control insofar as those objectives pertain to the prevention or detection of
errors or irregularities in amounts that would be material in relation to the
Company's financial statements, and, to the best of the Company's knowledge,
neither the Company nor any employee or agent of the Company or any of its
subsidiaries has made any payment of funds of the Company or any of its
subsidiaries or received or retained any funds and no funds of the Company or
any of its subsidiaries have been set aside to be used for any payments in
violation of any law, rule or regulation.
-7-
8
(z) Neither the Company nor any of its subsidiaries
is an "investment company" under the Investment Company Act of 1940, as amended.
(aa) All contracts and documents which are required
to be filed as exhibits to the Registration Statement have been so filed.
3. SALE, PURCHASE AND DELIVERY OF STOCK. (a) On the basis of
the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company hereby agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees to purchase
from the Company the respective number of shares of the Firm Stock set forth
opposite the Underwriter's name in Schedule A hereto, at a price of $______ per
share.
(b) The Company will deliver the Firm Stock to you for the
respective accounts of the several Underwriters at the office of ▇▇▇▇▇▇▇▇ &
Company Securities, Inc., ▇▇▇▇▇▇▇▇ Investment Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M., Cleveland time, or to your designee at a
specified place at the same time, against payment of the purchase price at the
place of such Closing, by wire transfer in immediately available funds to the
account designated by the Company in writing on the third full business day
after the effective date of the Registration Statement (or, if the Firm Stock is
priced after 4:30 p.m., Cleveland time on the effective date of the Registration
Statement, the fourth full business day after the effective date of the
Registration Statement), or at such other time not later than seven full
business days after such initial public offering as you shall determine, such
time and place being herein referred to as the "Closing Date." The certificates
for the Firm Stock so to be delivered will be in such denominations and
registered in such names as you may specify to the Company at or before 3:00
P.M., Cleveland time, on the second full business day prior to the Closing Date.
Such certificates will be made available for checking and packaging at least 24
hours prior to the Closing Date.
(c) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to 420,000 additional shares in the aggregate of the Option
Stock at the purchase price set forth in Section 3(a) hereof, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Stock. The option granted hereunder may be exercised at
any time (but not more than once) within 30 days after the date the Registration
Statement becomes effective, upon written or telegraphic notice by the
Representatives to the Company setting forth the aggregate number of shares of
the Option Stock as to which the Underwriters are exercising the option and the
time and place at which certificates will be delivered, such time (which, unless
otherwise determined by you and the Company, shall not be earlier than three nor
later than seven full business days after the exercise of said option) being
herein called the "Second Closing Date." The number of shares of the Option
Stock to be sold by the Company to each Underwriter and purchased by such
Underwriter from the Company shall be the same percentage of the total number of
shares of the Option Stock to be purchased by the several Underwriters on the
Second Closing Date as such Underwriter purchased of the total number of shares
of the Firm Stock, as adjusted by the
-8-
9
Representatives to avoid fractions and to reflect any adjustment required by
Section 11 hereof. The Company will deliver certificates for the shares of the
Option Stock being purchased by the several Underwriters to you on the Second
Closing Date at the place and time of such Closing, or to your designee at a
specified place at the same time, against payment of the purchase price at the
place of such Closing, by wire transfer in immediately available funds to the
account designated by the Company in writing. The certificates for the Option
Stock so to be delivered will be in such denominations and registered in such
names as you may specify to the Company at or before 3:00 P.M., Cleveland time,
on the second full business day prior to the Second Closing Date. Such
certificates will be made available for checking and packaging at least 24 hours
prior to the Second Closing Date. The option granted hereby may be cancelled by
you as the Representatives of the several Underwriters, as to the shares of the
Option Stock for which the option is unexercised, at any time prior to the
expiration of the 30-day period, upon notice to the Company.
4. OFFERING BY UNDERWRITERS. Subject to the terms and
conditions hereof, the several Underwriters agree that (i) they will offer the
Stock to the public as set forth in the Prospectus as soon after the
Registration Statement becomes effective as may be practicable, but in no event
later than 5:00 p.m., Cleveland time, on the 15th business day subsequent to the
date that the Registration Statement becomes effective, and (ii) they will offer
and sell the Stock to the public only in those jurisdictions, and in such
amounts, where due qualification and/or registration has been effected or an
exemption from such qualification and/or registration is available under the
applicable securities or Blue Sky laws of such jurisdiction; it being
understood, however, that such agreement only covers the initial sale of the
Stock by the Underwriters and not any subsequent sale of such Stock in any
trading market which may develop after the public offering.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will make every reasonable effort to
cause the Registration Statement to become effective and will advise you when it
is effective under the Act. The Company will not file any amendment to the
Registration Statement, or supplement to the Prospectus, of which you have not
been previously advised and furnished with a copy, or to which you have
reasonably objected in writing.
(b) The Company will advise you promptly of any
request of the Commission for amendment of the Registration Statement or
Prospectus or for additional information and of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose of which it has
knowledge, and the Company will make every reasonable effort to prevent the
issuance of any such stop order and to obtain as soon as possible the lifting
thereof, if issued.
(c) The Company will comply, to the best of its
ability, with the Act so as to permit the continuance of sales of and dealings
in the Stock under the Act for such
-9-
10
period as may be required by the Act; whenever it is necessary to amend or
supplement the Prospectus to make the statements therein not misleading,
furnish, without charge to you as the Representatives, either amendments to the
Prospectus or supplemental information, so that the statements in the Prospectus
as so amended or supplemented will not be misleading; and file a post-effective
amendment to the Registration Statement whenever such an amendment may be
required and furnish, without charge to you, a reasonable number of copies of
any such amendment and related Prospectus.
(d) Not later than the 45th day following the end of
the fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders and
deliver to you an earnings statement (which need not be audited) covering a
period of at least 12 months beginning not earlier than the Effective Date which
shall satisfy the provisions of Section 11(a) of the Act and/or Rule 158
promulgated under the Act.
(e) The Company will furnish to you copies of the
Registration Statement (two of which will be signed and will include all
exhibits thereto), each preliminary prospectus, the Prospectus, all amendments
of and supplements to such documents, and all correspondence between the
Commission and the Company or its counsel or accountants relating thereto, in
each case as soon as available and in such quantities as you may reasonably
request.
(f) For a period of three years from the date of the
Prospectus, the Company will deliver to you (i) within 90 days after the end of
each fiscal year, consolidated balance sheets, statements of income, statements
of cash flow and statements of changes in stockholders' equity of the Company
and its consolidated subsidiaries, if any, as at the end of and for such year
and the last preceding year, all in reasonable detail and certified by
independent accountants, (ii) within 45 days after the end of each of the first
three quarterly periods in each fiscal year, unaudited consolidated balance
sheets and statements of income, statements of cash flow and statements of
changes in stockholders' equity of the Company and its consolidated
subsidiaries, if any, as at the end of and for such period, all in reasonable
detail, (iii) as soon as available, all such proxy statements, financial
statements and reports as the Company shall send or make available to its
stockholders or the stockholders of any subsidiary any of whose stock is owned
by any person other than the Company or any subsidiary, and (iv) copies of all
annual or periodic reports as the Company or any subsidiary shall file with the
Commission as required by the Act, the Exchange Act and any rules or regulations
thereunder, which are available for public inspection at the Commission, or any
material reports filed in connection with the Company's listing on any stock
exchange; PROVIDED, HOWEVER, that if the Company delivers to you all documents
required by this clause (iv), the Company will be deemed to have satisfied its
obligations under clauses (i) and (ii) above.
(g) The Company will apply the net proceeds from the
sale of the Stock sold by it in the manner set forth in the Prospectus, and will
comply with any reporting obligations as may be required by Rule 463 under the
Act.
-10-
11
(h) If, at the time that the Registration Statement
becomes effective, any information shall have been omitted therefrom in reliance
upon Rule 430A promulgated under the Act, then not later than the Commission's
close of business on the second business day following the execution of this
Agreement, the Company will prepare, and file or transmit for filing with the
Commission in accordance with Rule 430A and Rule 424(b) promulgated under the
Act, copies of an amended Prospectus or, if required by such Rule 430A, a
post-effective amendment (including an amended Prospectus), containing all
information so omitted.
(i) The Company will file with the NASD all documents
and notices required of companies that have issued securities that are traded in
the over-the-counter market and quotations for which are reported by the Nasdaq.
(j) The Company will cooperate with you and your
counsel to qualify the Stock for sale under the securities or Blue Sky laws of
such jurisdictions within the United States as you reasonably designate,
including furnishing such information and executing such instruments as may be
required, and will continue such qualifications in effect for a period of at
least three months from the date hereof; provided, however, the Company shall
not be required to register or qualify as a foreign corporation or as a dealer
in securities nor, except as to matters and transactions relating to the offer
and sale of the Stock, consent to a service of process in any jurisdiction.
(k) For a period of 180 days from the date of the
Prospectus, the Company will not publicly sell, except with your prior written
consent, any Common Shares or securities convertible into Common Shares for
cash, except pursuant to the exercise of any outstanding stock options of the
Company that are described in the Prospectus.
6. PAYMENT OF EXPENSES. The Company will pay or cause to be
paid all costs and expenses incident to the performance of the obligations of
the Company hereunder, including, but not limited to, the reasonable fees and
disbursements of its counsel; the reasonable fees, costs and expenses of
preparing, printing and delivering the certificates for the Stock; the
reasonable fees, costs and expenses of the transfer agent and registrar for the
Common Shares; the reasonable fees and disbursements of its accountants; the
filing fees and reasonable expenses incurred in connection with the
qualification, registration or exemption of the Stock under state securities or
Blue Sky laws and the fees and disbursements of counsel for the Underwriters in
connection with such qualification, registration or exemption and the
preparation and printing of the preliminary and final Blue Sky Surveys; the
filing fees paid by the Underwriters, in connection with the review of the terms
of the underwriting arrangements by the NASD; the costs and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including exhibits thereto) and the Prospectus and the furnishing to
the Underwriters of such copies of each preliminary and final Prospectus as the
Underwriters may reasonably require; and the costs and expenses in connection
with the printing of this Agreement, the Agreement Among Underwriters, the
Selected Dealers Agreement and other documents distributed to the Underwriters.
-11-
12
7. CONDITIONS OF THE OBLIGATION OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Stock
on the Closing Date and the Option Stock on the Second Closing Date shall be
subject to the condition that the representations and warranties made by the
Company herein are true and correct as of the date hereof and as of the
respective Closing Dates, to the condition that the written statements of
Company officers made pursuant to the provisions hereof are true and correct,
and to the performance by the Company of their obligations hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., Cleveland time, on the date of this
Agreement, or at such later time as shall have been consented to by you, and
prior to each Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending, or to the knowledge of
the Company or you, shall be contemplated by the Commission.
(b) You shall not have advised the Company that the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto contains an untrue statement of fact which, in the reasonable opinion of
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, is material, or
omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(c) You shall have received as of each Closing Date
(or prior thereto as indicated) the following:
(i) An opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, dated the respective Closing Dates, to the effect that:
(aa) The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of Ohio with corporate power and authority to own its properties and
conduct its business as described in the Prospectus.
(bb) The authorized capital stock of
the Company is as set forth under "Capitalization" in the Prospectus; all issued
and outstanding Common Shares of the Company have been duly authorized and
validly issued, are free of preemptive rights of stockholders, rights of first
refusal or similar rights and are fully paid and nonassessable. Except as
described in the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue any shares of capital stock of the Company or any security
convertible or exchangeable or exercisable for capital stock of the Company. To
the best of such counsel's knowledge, there are no holders of securities of the
Company who, by reason of the filing of the Registration Statement have the
right (and have not waived such right) to request the Company to include in the
Registration Statement securities owned by them, other than such rights as have
been satisfied by the inclusion of securities in the Registration Statement.
-12-
13
(cc) The Common Shares of the
Company to be issued and sold by the Company hereunder have been duly
authorized, and, when issued, delivered and paid for pursuant to this Agreement,
will be validly issued, fully paid and nonassessable. No preemptive rights of
security holders of the Company exist with respect to the issuance and sale of
the stock by the Company pursuant to this Agreement. The Common Shares of the
Company conform to the description thereof contained in the Prospectus and the
certificates for the Common Shares of the Company (including the Stock) are in
due and legal form under Ohio law.
(dd) The Company has the corporate
power and authority to enter into and perform this Agreement, and to issue and
deliver the Stock as provided herein. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all necessary action
of the Company.
(ee) The Registration Statement has
become effective under the Act and, to the best of the knowledge of such
counsel, 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 contemplated under the Act.
(ff) The consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not result in a breach of any of the terms and provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is a
party and of which such counsel has knowledge after reasonable investigation, or
the Articles of Incorporation or Code of Regulations of the Company, or the
organizational documents of any of its subsidiaries, or, to the knowledge of
such counsel, any order, rule or regulation binding upon the Company or any of
its subsidiaries of any court or of any federal or state regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or any of its subsidiaries or the properties of any of them, except for
such breaches or defaults as will not have a material adverse effect on the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof by the Company.
(gg) All approvals, consents and
orders of all governmental bodies required in connection with the valid
authorization, issuance and sale of the Stock as contemplated by this Agreement
have been obtained, except such as may be required under the securities or Blue
Sky laws of any jurisdiction as to which such counsel need express no opinion.
(hh) The Company is not required to
be registered as an "investment company" or is not a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(ii) Such counsel is of the opinion
that the statements contained in the Prospectus under the caption "Description
of Capital Stock" and Item 15 in part II of the Registration Statement, insofar
as they purport to summarize the provisions of the
-13-
14
documents referred to therein, present fair summaries of such provisions.
(jj) In the course of the
preparation by the Company of the Registration Statement and the Prospectus,
such counsel participated in discussions with officers, directors and employees
of the Company, representatives of Deloitte & Touche LLP, the independent
accountants who examined certain of the financial statements of the Company and
its subsidiaries included in the Registration Statement and the Prospectus,
counsel for the Underwriters and your representatives concerning the information
contained in the Registration Statement and Prospectus and the proposed
responses to various items in Form S-1 under the Act. Based upon such counsel's
examination of the Registration Statement and the Prospectus, such counsel's
investigations made in connection with the preparation of the Registration
Statement and the Prospectus and such counsel's participation in the discussions
referred to above, such counsel is of the opinion that the Registration
Statement and the Prospectus (in each case, except for (i) the financial
statements, financial schedules and other financial and statistical information
included therein and (ii) the information referred to under the caption
"Experts" as having been included therein on the authority of Deloitte & Touche
LLP, as experts, as to which such counsel expresses no opinion) at the time the
Registration Statement became effective under the Act, and at the time the
Prospectus was filed pursuant to Rule 424(b) under the Act, respectively,
complied as to form in all material respects with the Act and the rules and
regulations thereunder.
(kk) Such counsel does not know of
any litigation or any governmental proceedings or investigations, pending or
threatened, required to be described in the Prospectus that are not described as
required, or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed as required.
(ll) Such counsel has not
independently verified and is not passing upon, and does not assume any
responsibility for the accuracy, completeness, or fairness of the information
contained in the Registration Statement and Prospectus, except and as to the
extent set forth in paragraph (ii) above with respect to the description of the
Common Shares contained in the Prospectus. Based upon such counsel's
examinations, investigations and participation in the discussions described
above, however, no facts have come to such counsel's attention that cause such
counsel to believe that the Registration Statement (except for (i) the financial
statements, financial schedules and other financial and statistical information
included therein and (ii) the information referred to under the caption
"Experts" as having been included therein on the authority of Deloitte & Touche
LLP, as experts, as to which such counsel expresses no view), at the time it
became effective contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus (with the
foregoing exceptions) as of its date or as of the date hereof contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
-14-
15
In rendering such opinion, such
counsel may (A) limit its opinion to the Federal laws of the United States of
America and the laws of the State of Ohio; (B) rely as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent specified in such opinion, if at all,
upon an opinion or opinions of other counsel, familiar with the applicable laws;
and (C) rely as to matters of fact on certificates of officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries. The opinion of
such counsel for the Company shall state that the opinion of any such other
counsel is in form satisfactory to such counsel and, in their opinion, you and
they are justified in relying thereon.
(ii) An opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
General Counsel of the Company, dated the respective Closing Dates, to the
effect that:
(aa) To the best of his knowledge,
the Company and its subsidiaries hold and are in compliance with all necessary
material authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies (collectively, the
"licenses") required for the conduct of its business as described in the
Prospectus, except where the failure to so hold or comply with any license would
not have, individually or in the aggregate, a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
(bb) Each of the Company's
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of incorporation,
with power and authority to own and lease its properties and conduct its
respective business. The Company and each of its subsidiaries are duly qualified
to do business as a foreign corporation and are in good standing in all
jurisdictions in which their ownership or lease of property or their conduct of
business, as presently being conducted requires such qualification (except for
those jurisdictions in which the failure to so qualify will not in the aggregate
have a material adverse effect on the Company and its subsidiaries).
(cc) All the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned by the
Company free and clear of all liens, encumbrances, equities, security interests,
or claim; and there are no outstanding options, warrants or other rights calling
for the issuance of, and, to such counsel's knowledge, there are no commitments,
plans or arrangements to issue, any shares of capital stock of any subsidiary or
any security convertible or exchangeable or exercisable for capital stock of any
subsidiary; except as disclosed in the Registration Statement and except for the
shares of stock of each subsidiary owned by the Company, neither the Company nor
any subsidiary owns, directly or indirectly, any shares of capital stock of any
corporation or has any equity interest in any firm, partnership, joint venture,
association or other entity.
-15-
16
(dd) Except as set forth in the
Prospectus, such counsel does not know of any past, pending or threatened
action, suit, proceeding, inquiry or investigation before any court or before or
by any public, regulatory or governmental body or board against or involving the
business or property of the Company or any of its subsidiaries which, if
successful, could have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
(ee) No facts have come to the
attention of such counsel which would lead such counsel to believe that either
the Registration Statement at the time it became effective and at the Closing
Date or the Second Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of the date thereof and as of the Closing Date or the
Second Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
belief or opinion with respect to the financial statements and schedules and
other financial data included therein).
In rendering such opinion, such
counsel may (A) limit his opinion to the Federal laws of the United States of
America and the laws of the State of Ohio; (B) rely as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which he is admitted, to the extent specified in such opinion, if at all,
upon an opinion or opinions of other counsel, familiar with the applicable laws;
and (C) rely as to matters of fact on certificates of officers of the Company.
The opinion of ▇▇. ▇▇▇▇▇▇ shall state that the opinion of any such other counsel
is in form satisfactory to him and, in his opinion, you and they are justified
in relying thereon.
(iii) Such opinion or opinions of ▇▇▇▇▇▇,
Halter & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, dated the respective
Closing Dates, with respect to the sufficiency of all corporate proceedings and
other legal matters relating to this Agreement, the validity of the Stock, the
Registration Statement, the Prospectus, and other related matters as you may
reasonably request, and the Company shall have furnished to such counsel such
documents as they may request for the purpose of enabling them to pass upon such
matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company.
(iv) A certificate of the Company executed
by the principal executive officer and the principal financial and accounting
officer of the Company, dated each respective Closing Date, to the effect that:
(aa) The representations and
warranties of the Company in Section 2 of this Agreement are true and correct as
of each respective Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to each respective Closing Date.
-16-
17
(bb) 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, to the knowledge of the
respective signers of the certificate, are contemplated under the Act.
(cc) The signers of the certificate
have carefully examined the Registration Statement and the Prospectus; no facts
have come to their attention which would lead them to believe that either the
Registration Statement at the time it became effective (or any amendment thereof
or supplement thereto made prior to the Closing Date or the Second Closing Date,
as the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of the date thereof (or any amendment
thereof or supplement thereto made prior to the Closing Date or the Second
Closing Date, as the case may be, as of the date of such amendment or
supplement) contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; since the latest respective dates as of which information is
given in the Registration Statement, there has been no material adverse change
in the financial position, business or results of operations of the Company and
its subsidiaries, except as set forth in or contemplated by the Prospectus; and
since the Effective Date of the Registration Statement there has occurred no
event required to be set forth in an amended or supplemented Prospectus which
has not been set forth.
(v) Letters from Deloitte & Touche LLP dated
respectively the date of this Agreement and each respective Closing Date,
addressed to you and in form and substance previously approved by you, with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(d) Prior to the Closing Date, the Company shall have
furnished to you such further certificates and documents as you may reasonably
request.
(e) Prior to each Closing Date no stop orders
suspending the qualification of the Stock under the securities or Blue Sky laws
of the states in which the Stock is to be offered and sold shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending, or to the knowledge of the Company or you, shall be contemplated by
the applicable state securities administrators.
If any condition of the Underwriters' obligations specified in
Section 7 to be satisfied prior to any Closing Date is not so satisfied, this
Agreement may be terminated by you prior to such Closing Date, by notice in
writing or by telegram confirmed in writing to the Company.
All such opinions, certificates, letters and documents
furnished to you pursuant to this Section 7 will be in compliance with the
provisions hereof only if they are in all material
-17-
18
respects satisfactory to you and to ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP, counsel for
the Underwriters, as to which both you and such counsel shall act reasonably.
The Company will furnish you with such executed and conformed copies of such
opinions, certificates, letters and documents as you may request.
You, on behalf of the Underwriters, may waive in writing the
compliance by the Company of any one or more of the foregoing conditions or
extend the time for their performance.
8. REPRESENTATIONS OF THE UNDERWRITERS. Each of the
Underwriters severally represents and warrants to the Company that the
information furnished to the Company in writing by such Underwriters or by you
expressly for use in the preparation of the Registration Statement or the
Prospectus does not, and any amendments thereof or supplements thereto thus
furnished 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. Through you each Underwriter has only
furnished to the Company expressly for such use, the statements made in the last
paragraph of the cover page of the Prospectus and the statements relating to the
terms of the offering by the several Underwriters set forth in the first,
second, sixth, seventh and eighth paragraphs under the caption "Underwriting" in
the Prospectus.
9. TERMINATION OF AGREEMENT. (a) This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Stock may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. At any time before
the happening of such occurrence, the Company may, by notice to you, terminate
this Agreement; and at any time prior to such time, you, as the Representatives
of the several Underwriters, may, by notice to the Company, terminate this
Agreement.
(b) This Agreement may also be terminated by you, as the
Representatives of the several Underwriters, by notice to the Company on or
after the Effective Date of the Registration Statement and prior to each
respective Closing Date, if at any time during such period any of the following
has occurred: (i) except as disclosed in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its subsidiaries taken as
a whole or the earnings, business affairs, management or business prospects of
the Company and its subsidiaries taken as a whole, whether or not arising in the
ordinary course of business; (ii) any outbreak of hostilities or escalation in
existing hostilities anywhere in the world or other national or international
calamity or crisis or change in economic or political conditions, if the effect
of such outbreak, escalation, calamity, crisis or change on the financial
markets in the United States would, in your reasonable judgment, make it
impracticable to offer for sale or to enforce contracts made by the Underwriters
for the resale of the Stock agreed to be purchased hereunder; (iii) any general
suspension of trading in securities on the New York Stock
-18-
19
Exchange or the American Stock Exchange or the Nasdaq or any general limitation
on prices for such trading or any general restrictions on the distribution of
securities, all to such a degree as would in your reasonable judgment materially
adversely affect the market for the Stock; or (iv) a banking moratorium shall
have been declared by either Federal, Ohio or New York State authorities.
This Agreement may also be terminated as provided in Sections
7 and 11 hereof.
If this Agreement shall be terminated by you other than
pursuant to Section 9(b)(ii), (iii) or (iv) because of any failure on the part
of the Company to comply with any of the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be unable
to perform its obligations under this Agreement, the Company shall pay, in
addition to the costs and expenses referred to in Section 6, all reasonable
out-of-pocket expenses incurred by the Underwriters in contemplation of the
performance by them of their obligations hereunder, including but not limited to
the reasonable fees and disbursements of counsel for the Underwriters, the
Underwriters' reasonable printing and traveling expenses and postage, telegraph
and telephone charges relating directly to the offering contemplated by the
Prospectus, and also including reasonable advertising expenses of the
Representatives incurred after the Effective Date of the Registration Statement
and so relating, it being understood that such out-of-pocket expenses shall not
include any compensation, salaries or wages of the officers, partners or
employees of any of the Underwriters. Only such out-of-pocket expenses as shall
be accounted for by the Underwriters shall be paid to the Underwriters by the
Company.
The Company shall not in any event be liable to the several
Underwriters for damages on account of loss of anticipated profits arising out
of the transactions contemplated by this Agreement.
10. INDEMNIFICATION. (a) The Company will indemnify and hold
harmless each Underwriter, and each person, if any, who controls each
Underwriter within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based in whole or in part on, or arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any related preliminary prospectus (if used prior to the
Effective Date), the Prospectus or any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and, subject to the provisions of Section
10(c), will reimburse upon demand each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 10(a) with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter or to
the benefit of any person controlling such Underwriter in respect of any loss,
claim, damage, liability or action asserted by a person who purchases shares of
the Stock from such Underwriter, if such Underwriter failed to
-19-
20
send or give a copy of the Prospectus (as the same may then be amended or
supplemented) to such person with or prior to written confirmation of the sale
to such person; and provided, further, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission or alleged
omission made in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment thereof or supplement thereto in reliance upon or in
conformity with written information furnished to the Company by an Underwriter
specifically for use in the preparation thereof, as referred to in the last
sentence of Section 8 hereof. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Act, each of its directors, and each of its officers who have signed the
Registration Statement against any losses, claims, damages or liabilities to
which the Company, or any such director or officer may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment thereof
or supplement thereto in reliance upon or in conformity with written information
furnished to the Company by such Underwriter through you, as the Representatives
of the Underwriters, specifically for use in the preparation thereof, as
referred to in the last sentence of Section 8 of this Agreement; and will
reimburse the Company and each such director or officer for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which the Underwriters may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify each party against whom indemnification is to be
sought in writing of the commencement thereof; but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the Company of the
commencement thereof, the Company will be entitled to participate in, and to the
extent that it may wish, to assume the defense thereof, with counsel approved by
such indemnified party (which approval shall not be unreasonably withheld), and
after notice from the Company to such indemnified party of its election so to
assume the defense thereof, the Company will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof except as
provided below and except for the reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but
-20-
21
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the named
parties to any such action include both the indemnifying party and the
indemnified party, and the indemnified party shall have reasonably concluded
based on the written advise of counsel that there is an actual or potential
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. In no
event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one or separate but similar or related actions in the same jurisdiction
arising out of the same allegations or circumstances. Anything in this Section
to the contrary notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or action effected without its written consent.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section is for any reason held to
be unavailable from the Company or the Underwriters or is insufficient to hold
harmless a party indemnified hereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of the Act, officers of the Company who signed the Registration Statement and
directors of the Company) to which the Company and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the Underwriters from the
offering of the Stock or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in this Section, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omissions or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or
-21-
22
omission. The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 10(d) 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. Notwithstanding the provisions of
this Section 10(d), (i) in no case shall any Underwriter (except as may be
provided in the Agreement Among Underwriters) be liable or responsible for any
amount in excess of the underwriting discounts and commissions applicable to the
Stock purchased by such Underwriter hereunder and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person, if any, who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 10(d), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act shall have the same rights to contribution as such Underwriter, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 10(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 10(d), notify such party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 10(d) or
otherwise. No party shall be liable for contribution for any settlement of any
action or claim effected without its written consent.
11. DEFAULT OF THE UNDERWRITERS. If any Underwriter or
Underwriters default in their obligations to purchase the Stock hereunder and
arrangements satisfactory to you and the Company, evidenced by a writing or
writings signed by you and the Company, for the purchase of such Stock by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the party of any non-defaulting Underwriter and
the Company (except that the Company shall be liable for the expenses to be paid
by it pursuant to the provisions of Section 6), provided, however, that if the
number of shares of the Stock which all such defaulting Underwriters have agreed
but failed to purchase shall not exceed 10% of the number of shares of the Firm
Stock or the Option Stock, as the case may be, agreed to be purchased pursuant
to this Agreement (other than the shares agreed to be taken up hereunder which
the defaulting Underwriters failed to purchase) by all non-defaulting
Underwriters, the non-defaulting Underwriters shall be obligated proportionately
to take up and pay for the shares of the Firm Stock or the Option Stock which
such defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company shall
have the right to postpone the Closing Date for not more than seven business
days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangement, may be
effected. As used in this Agreement, the term "Underwriters" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from its liability to the other several Underwriters and
the Company for its default hereunder.
-22-
23
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations and warranties of the
Company and the several Underwriters, set forth in or made pursuant to this
Agreement, will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter, the Company or any of its officers or
directors or any controlling person, and will survive delivery of and payment
for the Stock and, in the case of the agreements contained in Sections 6, 9 and
10 hereof, will survive any termination of this Agreement.
13. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to you at ▇▇▇▇▇▇▇▇ & Company Securities, Inc., ▇▇▇▇▇▇▇▇ Investment
Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
with a copy to ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP, 1400 ▇▇▇▇▇▇▇▇ Investment Center,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., or
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to the Company at ▇▇▇▇ ▇▇-▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Senior Vice President, General Counsel and Secretary, with a copy to
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
14. SUCCESSORS, GOVERNING LAW. This Agreement will inure
solely to the benefit of and be binding upon the parties hereto and the officers
and directors and controlling persons referred to in Section 10 hereof and their
respective successors, assigns, heirs, executors and administrators, and no
other persons will have any right or obligation hereunder. This Agreement will
be governed by and construed in accordance with the laws of the State of Ohio,
without giving effect to the principles of conflicts of laws thereof.
15. EXECUTION IN COUNTERPARTS. This Agreement may be executed
by any one or more of the parties hereto in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
16. AUTHORITY OF THE REPRESENTATIVES. You represent and
warrant that you have been authorized by the several Underwriters to enter into
this Agreement on their behalf and to act for them in the manner hereinbefore
provided.
-23-
24
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement by and among the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
THE ▇▇▇▇▇-▇▇▇▇▇▇▇ STORES CORP.
By:
--------------------------------
Its:
-------------------------------
The foregoing Agreement is hereby confirmed
and accepted by us in Cleveland, Ohio,
acting on our own behalf and as the
Representatives of the several Underwriters
named on Schedule A annexed hereto, as of
the date first above written.
▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
WARBURG DILLON READ LLC
▇▇▇▇▇▇▇ ▇▇▇▇ & COMPANY L.L.C.
As Representatives of the Several Underwriters
BY: ▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
By:
------------------------------------
Managing Director
-24-
25
SCHEDULE A
UNDERWRITERS
Number of Shares to
Underwriter be Purchased
----------- ------------
▇▇▇▇▇▇▇▇ & Company Securities, Inc.......................
Warburg Dillon Read LLC .................................
▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C.............................
Total .................................
A-1