Draft of 10/23/97
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HON INDUSTRIES INC.
(an Iowa corporation)
3,395,000 Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: October 23, 1997
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TABLE OF CONTENTS
INTERNATIONAL PURCHASE AGREEMENT..................................................... 1
SECTION 1. Representations and Warranties........................................... 4
(a) Representations and Warranties by the Company............................ 4
(i) Compliance with Registration Requirements........................ 4
(ii) Incorporated Documents........................................... 5
(iii) Independent Accountants.......................................... 5
(iv) Financial Statements............................................. 6
(v) No Material Adverse Change in Business........................... 6
(vi) Good Standing of the Company..................................... 6
(vii) Good Standing of Subsidiaries.................................... 7
(viii) Capitalization................................................... 7
(ix) Authorization of Agreement....................................... 7
(x) Authorization and Description of Securities...................... 7
(xi) Absence of Defaults and Conflicts................................ 8
(xii) Absence of Labor Dispute......................................... 9
(xiii) Absence of Proceedings........................................... 9
(xiv) Accuracy of Exhibits............................................. 9
(xv) Possession of Intellectual Property.............................. 9
(xvi) Absence of Further Requirements.................................. 10
(xvii) Possession of Licenses and Permits............................... 10
(xviii) Title to Property................................................ 10
(xix) Absence of Manipulation.......................................... 11
(xx) Investment Company Act........................................... 11
(xxi) Environmental Laws............................................... 11
(b) Representations and Warranties by Bandag and the Selling Shareholder..... 12
(i) Accurate Disclosure.............................................. 12
(ii) Authorization of Agreements...................................... 12
(iii) Good and Marketable Title........................................ 13
(iv) Absence of Manipulation.......................................... 13
(v) Absence of Further Requirements.................................. 13
(vi) No Association with NASD......................................... 14
(c) Officer's Certificates................................................... 14
SECTION 2. Sale and Delivery to International Managers; Closing..................... 14
i
(a) Initial International Securities......................................... 14
(b) International Option Securities.......................................... 15
(c) Payment.................................................................. 15
(d) Denominations; Registration.............................................. 16
SECTION 3. Covenants of the Company................................................. 16
(a) Compliance with Securities Regulations and Commission Requests........... 16
(b) Filing of Amendments..................................................... 17
(c) Delivery of Registration Statements...................................... 17
(d) Delivery of Prospectuses................................................. 17
(e) Continued Compliance with Securities Laws................................ 18
(f) Blue Sky Qualifications.................................................. 18
(g) Rule 158................................................................. 19
(h) Use of Proceeds.......................................................... 19
(i) Listing.................................................................. 19
(j) Restriction on Sale of Securities........................................ 19
(k) Reporting Requirements................................................... 20
SECTION 4. Payment of Expenses...................................................... 20
(a) Expenses................................................................. 20
(b) Expenses of Bandag and the Selling Shareholder........................... 21
(c) Termination of Agreement................................................. 21
(d) Allocation of Expenses................................................... 21
SECTION 5. Conditions of International Managers' Obligations........................ 21
(a) Effectiveness of Registration Statement; Filing of Prospectus............ 21
(b) Opinion of Counsel for Company........................................... 22
(c) Opinion of Counsel for Bandag and the Selling Shareholder................ 22
(d) Opinion of Counsel for International Managers............................ 22
(e) Officers' Certificate.................................................... 22
(f) Certificate of Bandag and the Selling Shareholder........................ 23
(g) Accountant's Comfort Letter.............................................. 23
(h) Bring-down Comfort Letter................................................ 23
(i) Approval of Listing...................................................... 23
(j) No Objection............................................................. 24
(k) Purchase of Initial U.S. Securities...................................... 24
(l) Lock-up Agreements....................................................... 24
(m) Conditions to Purchase of International Option Securities................ 24
(i) Officers' Certificate.............................................. 24
ii
(ii) Opinion of Counsel for Company..................................... 24
(iii) Opinion of Counsel for International Managers...................... 25
(iv) Bring-down Comfort Letter.......................................... 25
(n) Additional Documents..................................................... 25
(o) Termination of Agreement................................................. 25
SECTION 6. Indemnification.......................................................... 26
(a) Indemnification of International Managers by the Company................. 26
(b) Indemnification of International Managers by Bandag
and the Selling Shareholder............................................. 27
(c) Indemnification of Company, Directors and Officers, Bandag
and the Selling Shareholder............................................. 28
(d) Actions against Parties; Notification.................................... 28
(e) Settlement without Consent if Failure to Reimburse....................... 29
(f) Other Agreements with Respect to Indemnification......................... 29
SECTION 7. Contribution............................................................. 29
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........... 31
SECTION 9. Termination of Agreement................................................. 31
(a) Termination; General..................................................... 31
(b) Liabilities.............................................................. 32
SECTION 10. Default by One or More of the International Managers..................... 32
SECTION 11. Default by Bandag and the Selling Shareholder or the Company............. 33
SECTION 12. Notices.................................................................. 34
SECTION 13. Parties.................................................................. 34
SECTION 14. Governing Law And Time................................................... 34
SECTION 15. Effect of Headings....................................................... 34
iii
SCHEDULES
Schedule A - List of Underwriters............................................ Sch A-1
Schedule B - Shares to be sold by the Company and the Selling Shareholder.... Sch B-1
Schedule C - Pricing Information............................................. Sch C-1
Schedule D - List of Subsidiaries............................................ Sch D-1
Schedule E - Persons Executing Lock-up Agreements............................ Sch E-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Vice President, Human Resources... A-1
Exhibit A-2 - Form of Opinion of Company's Counsel........................... A-2
Exhibit A-3 - Form of Opinion of Selling Shareholder's Counsel............... A-3
Exhibit B - Form of Opinion of Bandag's and Selling Shareholder's Counsel.... B-1
Exhibit C - Form of Opinion of Counsel for the International Managers........ C-1
Exhibit D - Form of Lock-up Letter........................................... D-1
ANNEXES
Annex A - Form of Accountant's Comfort Letter................................ A-1
iv
HON INDUSTRIES INC.
(an Iowa corporation)
3,395,000 Shares of Common Stock
(Par Value $1.00 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL Dated: October 23, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
as Lead Managers of the several International Managers
c/o Merrill ▇▇▇▇▇ International
Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Ladies and Gentlemen:
HON INDUSTRIES Inc., an Iowa corporation (the "Company"), and Bandag,
Incorporated, an Iowa corporation ("Bandag"), and BTC, Inc., a Delaware
corporation (the "Selling Stockholder") confirm their respective agreements with
▇▇▇▇▇▇▇ ▇▇▇▇▇ International ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other
international underwriters named in Schedule A hereto (collectively, the
"International Managers", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
and ▇▇▇▇▇▇▇▇ & Company Securities, Inc. are acting as representatives (in such
capacity, the "Lead Managers"), with respect to (i) the issue and sale by the
Company and the Selling Shareholder, acting severally and not jointly, and the
purchase by the International Managers, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $1.00 per share, of the
Company ("Common Stock") set forth in Schedules A and B hereto, and (ii) the
grant by the Company to the International Managers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 101,850 additional shares of Common Stock to cover over-allotments, if
any. The aforesaid 679,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the
101,850 shares of Common Stock subject to the option described in Section 2(b)
hereof (the "International Option Securities") are hereinafter called,
collectively, the "International Securities".
It is understood that the Company, Bandag and the Selling Shareholder are
concurrently entering into an agreement dated the date hereof (the "U.S.
Purchase Agreement") providing for the offering by the Company and the Selling
Shareholder of an aggregate of 2,716,000 shares of Common Stock (the "Initial
U.S. Securities") through arrangements with certain underwriters in the United
States and Canada (the "U.S. Underwriters") for which ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
& Co. Incorporated and ▇▇▇▇▇▇▇▇ & Company Securities, Inc. are acting as
representatives (the "U.S. Representatives") and the grant by the Company to the
U.S. Underwriters, acting severally and not jointly, of an option to purchase
all or any part of the U.S. Underwriters' pro rata portion of up to 407,400
additional shares of Common Stock solely to cover over allotments, if any (the
"U.S. Option Securities" and, together with the International Option Securities,
the "Option Securities"). The Initial U.S. Securities and the U.S. Option
Securities are hereinafter called the "U.S. Securities". It is understood that
neither the Company nor the Selling Shareholder is obligated to sell, and the
International Managers are not obligated to purchase, any Initial International
Securities unless all of the Initial U.S. Securities are contemporaneously
purchased by the U.S. Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities", and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (in
such capacity, the "Global Coordinator").
The Company, Bandag and the Selling Shareholder understand that the
International Managers propose to make a public offering of the International
Securities as soon as the Lead Managers deem advisable after this Agreement has
been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-36433) covering the
registration of the Securities
2
under the Securities Act of 1933, as amended (the "1933 Act"), including the
related preliminary prospectus or prospectuses. Promptly after execution and
delivery of this Agreement, the Company will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two forms
of prospectus are to be used in connection with the offering and sale of the
Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of International Prospectus is identical to the Form
of U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting" and the inclusion in the Form of
International Prospectus of a section under the caption "United States Taxation
of Foreign Shareholders." The information included in any such prospectus or in
any such Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each Form of
International Prospectus and Form of U.S. Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of
International Prospectus and the final Form of U.S. Prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the forms first furnished to the Underwriters for use in
connection with the offering of the Securities are herein called the
"International Prospectus" and the "U.S. Prospectus," respectively, and
collectively, the "Prospectuses." If Rule 434 is relied on, the terms
"International Prospectus" and "U.S. Prospectus" shall refer to the preliminary
International Prospectus dated October 3, 1997 and preliminary U.S. Prospectus
dated October 3, 1997, respectively, each together with the applicable Term
Sheet and all references in this Agreement to the date of such Prospectuses
shall mean the date of the applicable Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the International Prospectus, the U.S. Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
3
All references in this Agreement to financial statements and schedules and
other information which is "disclosed," "contained," "referred to," "included"
or "stated" in the Registration Statement, any preliminary prospectus (including
the Form of U.S. Prospectus and Form of International Prospectus) or the
Prospectuses (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Registration Statement, any preliminary
prospectus (including the Form of U.S. Prospectus and Form of International
Prospectus) or the Prospectuses, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectuses shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934 (the "1934
Act") which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectuses, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each International Manager as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each International
Manager, as follows:
(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
4
necessary to make the statements therein not misleading. Neither of the
Prospectuses nor any amendments or supplements thereto, at the time the
Prospectuses or any amendments or supplements thereto were issued and at
the Closing Time (and, if any International Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434. The
representations and warranties in this subsection shall not apply to
information stated in or omitted from statements in or omissions from the
Registration Statement or the International Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by any International Manager through the Lead Managers expressly for use in
the Registration Statement or the International Prospectus.
Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the
Commission (assuming for purposes hereof that the Company's Annual Report
on Form 10-K for the year ended December 28, 1996 (the "Form 10-K")
included, at the time such Form 10-K was originally filed, the information
set forth in the Company's Form 10-K/A filed with the Commission on October
6, 1997), complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, as modified,
superseded and read together with the other information in the
Prospectuses, at the time the Registration Statement became effective, at
the time the Prospectuses were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of Delivery),
did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
5
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules, if any, included in the
Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements included in the
Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectuses present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) except for regular quarterly dividends on the
Common Stock in amounts per share that are consistent with the current
dividend policy and past practice of the Company, there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Iowa and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectuses and to enter into and perform its obligations under
this Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of
6
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each of the entities listed on
Schedule D hereto (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectuses
and is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary. The only subsidiaries of the Company that constitute
"significant subsidiaries" of the Company (as such term is defined in Rule
1-02 of Regulation S-X) are the subsidiaries listed on Schedule D hereto.
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee or director benefit plans referred to
in the Prospectuses or pursuant to the exercise of convertible securities
or options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company.
(ix) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by the
Company.
(x) Authorization and Description of Securities. The Securities to
be purchased by the International Managers and the U.S. Underwriters from
the Company have been duly
7
authorized for issuance and sale to the International Managers pursuant to
this Agreement and the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to this Agreement and the U.S. Purchase Agreement, respectively,
against payment of the consideration set forth herein and the U.S. Purchase
Agreement, respectively, will be validly issued, fully paid and non-
assessable; the Common Stock conforms in all material respects to all
statements relating thereto contained in the Prospectuses and such
description conforms in all material respects to the rights set forth in
the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the U.S. Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the U.S. Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectuses under the caption "Use of Proceeds") and
compliance by the Company with its obligations under this Agreement and the
U.S. Purchase Agreement have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any subsidiary pursuant to,
the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances or Repayment Events that would
not result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of the Company or
any subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations (except for any
such violation as would not reasonably be expected to result in a Material
Adverse Effect). As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such
8
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
(xii) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xiii) Absence of Proceedings. Except as otherwise disclosed in the
Registration Statement, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any subsidiary,
which is required to be disclosed in the Registration Statement, or which
might reasonably be expected to result in a Material Adverse Effect, or
which may reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement and the U.S. Purchase Agreement or the
performance by the Company of its obligations hereunder or thereunder; all
pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, are, in the aggregate, not reasonably likely to result in a
Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required (assuming for purposes hereof that the Form 10-K included, at the
time such Form 10-K was originally filed, the information set forth in the
Company's Form 10-K/A filed with the Commission on October 6, 1997).
(xv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpainted and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on, in all
material respects, the business now operated by them, and neither
9
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities under this Agreement and the U.S. Purchase Agreement or the
consummation of the transactions contemplated by this Agreement and the
U.S. Purchase Agreement, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations and foreign
or any foreign or state securities or blue sky laws.
(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them and are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure to possess such Governmental Licenses or to so
comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xviii) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them and which
are material to the business of the Company and its subsidiaries,
considered as one enterprise, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectuses or (b) do not, singly or in the aggregate, materially
10
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company or any of its
subsidiaries; and all of the leases and subleases material to the business
of the Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries holds properties
described in the Prospectuses, are in full force and effect, and neither
the Company nor any subsidiary has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to
the continued possession of the leased or subleased premises under any such
lease or sublease.
(xix) Absence of Manipulation. The Company has not taken, and will
not take, directly or indirectly, any action which is designed to or which
has constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of, and neither the Company nor
any affiliated purchaser (as such term is defined in Rule 100 under
Regulation M) has or will, directly or indirectly, bid for, purchased or
attempted to induce any person to bid for or purchase, any security of the
Company to facilitate the sale or resale of the Securities.
(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, 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 (the "1940 Act").
(xxi) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) there are no pending or threatened
administrative, regulatory or judicial actions,
11
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (C) there are no events
or circumstances that may reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(b) Representations and Warranties by Bandag and the Selling Shareholder.
Bandag and the Selling Shareholder each represents and warrants to each
International Manager as of the date hereof and as of the Closing Time and
agrees with each International Manager, as follows:
(i) Accurate Disclosure. To the best knowledge of Bandag and the
Selling Shareholder, the representations and warranties of the Company
contained in Section 1(a) hereof are true and correct; each of Bandag and
the Selling Shareholder has reviewed and is familiar with the Registration
Statement and the Prospectuses and neither the Prospectuses nor any
amendments or supplements thereto includes any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading (provided, that this representation and warranty
shall only apply to statements in or omissions from the Registration
Statement and the Prospectuses made in reliance upon and in conformity with
the information furnished to the Company in writing by Bandag or the
Selling Shareholder expressly for use in the Registration Statements and
the Prospectuses); the Selling Shareholder is not prompted to sell the
Securities to be sold by the Selling Shareholder hereunder by any
information concerning the Company or any subsidiary of the Company which
is not set forth in the Prospectuses.
(ii) Authorization of Agreements. Each of Bandag and the Selling
Shareholder has the full right, power and authority to enter into this
Agreement and the U.S. Purchase Agreement and to sell, transfer and deliver
the Securities to be sold by the Selling Shareholder under this Agreement
and the U.S. Purchase Agreement. The execution and delivery of this
Agreement and the U.S. Purchase Agreement and the sale and delivery of the
Securities to be sold by the Selling Shareholder and the consummation of
the transactions contemplated herein and under the U.S. Purchase Agreement
and compliance by each of Bandag and the Selling Shareholder with its
obligations hereunder and under the U.S. Purchase Agreement have been duly
authorized by each of Bandag and the Selling Shareholder and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or
12
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the Securities to
be sold by the Selling Shareholder or any property or assets of Bandag or
the Selling Shareholder pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, license, lease or other agreement
or instrument to which Bandag or the Selling Shareholder is a party or by
which Bandag or the Selling Shareholder may be bound, or to which any of
the property or assets of Bandag or the Selling Shareholder is subject, nor
will such action result in any violation of the provisions of the charter
or by-laws or other organizational instrument of Bandag or the Selling
Shareholder, if applicable, or any applicable treaty, law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
Bandag or the Selling Shareholder or any of its properties.
(iii) Good and Marketable Title. The Selling Shareholder has and
will at the Closing Time have good and marketable title to the Securities
to be sold by the Selling Shareholder hereunder and under the U.S. Purchase
Agreement, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind, other than pursuant to
this Agreement and the U.S. Purchase Agreement; and upon delivery of such
Securities and payment of the purchase price therefor as herein
contemplated, assuming each such Underwriter has no notice of any adverse
claim, each of the Underwriters will receive good and marketable title to
the Securities purchased by it from the Selling Shareholder, free and clear
of any security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iv) Absence of Manipulation. Neither Bandag nor the Selling
Shareholder has taken, and neither will take, directly or indirectly, any
action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation
of the price of, and none of Bandag, the Selling Shareholder or any
affiliated purchaser (as such term is defined in Rule 100 under Regulation
M) has or will, directly or indirectly, bid for, purchased or attempted to
induce any person to bid for or purchase any security of the Company to
facilitate the sale or resale of the Securities.
(v) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by either Bandag or the Selling
Shareholder of their respective obligations hereunder or under the U.S.
Purchase Agreement, or in connection with the sale and delivery of the
Securities hereunder or under the U.S. Purchase Agreement or the
consummation of the transactions
13
contemplated by this Agreement or the U.S. Purchase Agreement, except such
as may have previously been made or obtained or as may be required under
the 1933 Act or the 1933 Act Regulations or state securities laws.
(vi) No Association with NASD. Except for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior
Director at ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., L.L.C. and a director of Bandag, none of
Bandag, the Selling Stockholder nor any of their respective affiliates
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the By-
laws of the National Association of Securities Dealers, Inc.), any member
firm of the National Association of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the Lead
Managers or to counsel for the International Managers shall be deemed a
representation and warranty by the Company to each International Manager as to
the matters covered thereby; and any certificates signed by or on behalf of
Bandag or the Selling Shareholder as such and delivered to the Global
Coordinator, the Lead Managers or to counsel for the International Managers
pursuant to the terms of this Agreement shall be deemed a representation or
warranty by Bandag or the Selling Shareholder, as the case may be, to each
International Manager as to the matters covered thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
(a) Initial International Securities. On the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, (i) the Company and (ii) Bandag and the Selling Shareholder,
severally and not jointly, each agrees to sell to each International Manager,
severally and not jointly, and each International Manager, severally and not
jointly, agrees to purchase from the Company and Bandag and the Selling
Shareholder , at the price per share set forth in Schedule C, that proportion of
the number of Initial International Securities set forth in Schedule B opposite
the name of the Company or the Selling Shareholder, as the case may be, which
the number of Initial International Securities set forth in Schedule A opposite
the name of such International Manager, plus any additional number of Initial
International Securities which such International Manager may become obligated
to purchase pursuant to the provisions of Section 10 hereof, bears to the total
number of Initial International Securities subject, in each case, to such
adjustments among the International Managers as the Lead Managers in their sole
discretion shall make to eliminate any sales or purchasers of fractional
securities.
14
(b) International Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
International Managers, severally and not jointly, to purchase up to an
additional 101,850 shares of Common Stock at the price per share set forth in
Schedule B, at the price per share set forth in Schedule C less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial International Securities but not payable on the
International Option Securities (but only if the Company establishes a record
date for such dividend or distribution which is prior to the Date of Delivery
(as defined below) for the International Option Securities). The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial International Securities upon notice by the Global Coordinator to the
Company setting forth the number of International Option Securities as to which
the several International Managers are then exercising the option and the time
and date of payment and delivery for such International Option Securities. Any
such time and date of delivery for the International Option Securities (a "Date
of Delivery") shall be determined by the Global Coordinator, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the International Option Securities, each
of the International Managers, acting severally and not jointly, will purchase
that proportion of the total number of International Option Securities then
being purchased which the number of Initial International Securities set forth
in Schedule A opposite the name of such International Manager bears to the total
number of Initial International Securities, subject in each case to such
adjustments as the Global Coordinator in its discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Sidley
& Austin, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Global Coordinator, the Company, Bandag and
the Selling Shareholder, at 9:00 A.M. (Eastern time) on the third (fourth, if
the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator, the Company and Bandag and
the Selling Shareholder (such time and date of payment and delivery being herein
called "Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such
15
International Option Securities shall be made at the above-mentioned offices, or
at such other place as shall be agreed upon by the Global Coordinator and the
Company, on each Date of Delivery as specified in the notice from the Global
Coordinator to the Company.
Payment shall be made to the Company and the Selling Shareholder by wire
transfer of immediately available funds to a bank account designated by the
Company and the Selling Shareholder, as the case may be, against delivery to the
Lead Managers for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each International Manager has authorized the Lead Managers, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial International Securities and the International
Option Securities, if any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the International Managers, may (but
shall not be obligated to) make payment of the purchase price for the Initial
International Securities or the International Option Securities, if any, to be
purchased by any International Manager whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such International Manager from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
International Securities and the International Option Securities, if any, will
be made available for examination and packaging by the Lead Managers in The City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Global
Coordinator immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectuses or for additional information, and (iv) of the issuance by
the
16
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the International Managers shall
reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Lead Managers and counsel for the International
Managers, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the Lead
Managers, without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the International Managers. The copies of the Registration Statement
and each amendment thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each International Manager,
without charge, during the period when the International Prospectus is
required to
17
be delivered under the 1933 Act or the 1934 Act, such number of copies of
the International Prospectus (as amended or supplemented) as such
International Manager may reasonably request. The International Prospectus
and any amendments or supplements thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement, the U.S. Purchase
Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the International
Managers or for the Company, to amend the Registration Statement or amend
or supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend
or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare
and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the International Managers
such number of copies of such amendment or supplement as the International
Managers may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the International Managers, to qualify the Securities
for offering and sale under the applicable securities laws of such states
and other jurisdictions (domestic or foreign) as the Global Coordinator may
reasonably designate and to maintain such qualifications in effect for a
period of not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such
18
jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement
and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
quotation of the Securities on the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 90 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act (other than on Form S-8) with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to (A) the Securities to be sold
hereunder or under the U.S. Purchase Agreement, (B) any shares of Common
Stock issued by the Company upon the exercise of an option, right or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectuses, (C) any shares of Common Stock, or other
securities convertible into or exercisable or exchangeable for Common
Stock, issued or options or contracts to purchase Common Stock granted or
entered into pursuant to existing employee benefit plans of the Company
referred to in the Prospectuses or (D) any shares of Common Stock, or other
securities convertible into or exercisable or exchangeable for Common
Stock, issued or options or contracts to purchase Common Stock pursuant to
any non-employee director stock plan or dividend reinvestment plan or the
Company's shareholder rights plan.
19
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and Bandag and the Selling Shareholder
will pay or cause to be paid all expenses incident to the performance of
their obligations under this Agreement, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto,
(ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may
be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities to the Underwriters, including any
stock or other transfer taxes and any stamp or other duties payable upon
the sale, issuance or delivery of the Securities to the Underwriters and
the transfer of the Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, if any, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and
in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, any Term Sheets and of the
Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the
Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of
any transfer agent or registrar for the Securities and (ix) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities and (x) the fees and expenses incurred in connection with the
inclusion of the Securities being issued by the Company in the Nasdaq
National Market.
It is understood, however, that except as provided in this Section and
Section 6 hereof, the Underwriters will pay all their own costs and
expenses, including the fees and disbursements of their counsel, and any
advertisement expenses connected with any offers they may make.
20
(b) Expenses of Bandag and the Selling Shareholder. Bandag and the
Selling Shareholder will pay all expenses incident to the performance of
its obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital
duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the Underwriters, and their transfer between the Underwriters
pursuant to an agreement between such Underwriters, and (ii) the fees and
disbursements of their counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5, Section
9(a)(i) or Section 11 hereof, the Company and Bandag and the Selling
Shareholder shall reimburse the International Managers for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the International Managers.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and Bandag and the Selling
Shareholder may make for the sharing of such costs and expenses.
SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company and Bandag and the
Selling Shareholder contained in Section 1 hereof or in certificates of any
officer of the Company or any subsidiary of the Company or Bandag and the
Selling Shareholder delivered pursuant to the provisions hereof, to the
performance by the Company and Bandag and the Selling Shareholder of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement; Filing of Prospectus.
The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened
by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the
21
requirements of Rule 430A) or, if the Company has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance
with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Lead
Manager(s) shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company, ▇▇▇▇▇, Day,
▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice
President, General Counsel and Secretary of the Company, in form and
substance satisfactory to counsel for the International Managers, together
with signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibits ▇-▇, ▇-▇ and A-3
hereto.
(c) Opinion of Counsel for Bandag and the Selling Shareholder. At
the Closing Time, the Lead Managers shall have received the favorable
opinion, dated as of Closing Time, of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for Bandag
and the Selling Shareholder, in form and substance satisfactory to counsel
for the International Managers, together with signed or reproduced copies
of such letter for each of the other International Managers to the effect
set forth in Exhibit B hereto.
(d) Opinion of Counsel for International Managers. At Closing Time,
the Lead Manager(s) shall have received the favorable opinion, dated as of
Closing Time, of Sidley & Austin, counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the
other International Managers with respect to the matters set forth in
Exhibit C. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
New York and the federal law of the United States, upon the opinions of
counsel satisfactory to the Lead Managers. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Lead Manager(s) shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to
22
the effect that (i) there has been no such material adverse change, (ii)
the representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and as
of Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are threatened by the
Commission.
(f) Certificate of Bandag and the Selling Shareholder. At Closing
time, the Lead Managers shall have received a certificate of a duly
authorized officer of each of Bandag and the Selling Shareholder, dated as
of Closing Time, to the effect that (i) the representations and warranties
of each of Bandag and the Selling Shareholder contained in Section 1(b)
hereof are true and correct in all respects with the same force and effect
as though expressly made at and as of Closing Time and (ii) each of Bandag
and the Selling Shareholder has complied in all material respects with all
agreements and all conditions on its part to be performed under this
Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Lead Managers shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a
letter dated such date, in form and substance satisfactory to the Lead
Managers to the effect set forth in Annex A hereto, together with signed or
reproduced copies of such letter for each of the other International
Managers containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(h) Bring-down Comfort Letter. At Closing Time, the Lead Manager(s)
shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
23
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Managers of the Initial International
Securities under this Agreement, the U.S. Underwriters shall have purchased
the Initial U.S. Securities under the U.S. Purchase Agreement.
(l) Lock-up Agreements. At the date of this Agreement, the Lead
Managers shall have an agreement substantially in the form of Exhibit D
hereto signed by the persons listed on Schedule E hereto.
(m) Conditions to Purchase of International Option Securities. In the
event that the International Managers exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the International
Option Securities, the representations and warranties of the Company
contained herein and the statements in any certificates furnished by the
Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Lead Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(e) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇, counsel for the Company, ▇▇▇▇▇, Day, ▇▇▇▇▇▇
& ▇▇▇▇▇, counsel for the Company, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice
President, General Counsel and Secretary of the Company, in form and
substance satisfactory to counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
24
(iii) Opinion of Counsel for International Managers. The
favorable opinion of Sidley & Austin, counsel for the International
Managers, dated such Date of Delivery, relating to the International
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(d)
hereof.
(iv) Bring-down Comfort Letter. A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, in form and substance satisfactory to the Lead Managers and dated
such Date of Delivery, substantially in the same form and substance as
the letter furnished to the Lead Managers pursuant to Section 5(g)
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the International Managers shall have been furnished
with such documents and opinions as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and
Bandag and the Selling Shareholder in connection with the issuance and sale
of the Securities as herein contemplated shall be satisfactory in form and
substance to the Lead Managers and counsel for the International Managers.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of
International Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several International Managers to
purchase the relevant Option Securities may be terminated by the Lead
Manager(s) by notice to the Company at any time at or prior to Closing Time
or such Date of Delivery, as the case may be, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
25
SECTION 6. Indemnification.
(a) Indemnification of International Managers by the Company. The
Company agrees to indemnify and hold harmless each International Manager
and each person, if any, who controls any International Manager within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
26
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense (i) to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished
to the Company by any International Manager through the Lead Manager(s)
expressly for use in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the International Prospectus
(or any amendment or supplement thereto) and (ii) with respect to any
preliminary prospectus to the extent that any such loss, liability, claim,
damage or expense of such International Manager results solely from the
fact that such International Manager sold Securities to a person as to whom
the Company shall establish that there was not sent by commercially
reasonably means, at or prior to the written confirmation of such sale, a
copy of the appropriate Prospectus in any case where such delivery is
required by the 1933 Act, if the Company has previously furnished copies
thereof in sufficient quantity to such International Manager and the loss,
claim, damage or liability of such International Manger results from an
untrue statement or omission of a material fact contained in a preliminary
prospectus that was corrected in the appropriate Prospectus (not including
documents incorporated by reference therein).
(b) Indemnification of International Managers and the Company by
Bandag and the Selling Shareholder. Bandag and the Selling Shareholder,
jointly and severally, agree to indemnify and hold harmless each
International Manager and each person, if any, who controls any
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act and the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and Rule 434 Information, if applicable, or the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, 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
or the Prospectuses (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Company by
Bandag or the Selling Shareholder expressly for use therein; and will
reimburse each International Manager and the Company for any legal or other
expenses reasonably incurred by such International Manager or the Company
in
27
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Indemnification of Company, Directors and Officers and Bandag and
the Selling Shareholder. Each International Manager severally agrees to
indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, and Bandag and the Selling Shareholder and
each person, if any, who controls either Bandag or the Selling Shareholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or any preliminary international
prospectus or the International Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company by such International Manager through the Lead
Managers expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the International Prospectus (or
any amendment or supplement thereto).
(d) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof
and in any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Sections 6(a) and 6(b) above, counsel to
the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the
case of parties indemnified pursuant to Section 6(c) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances. An indemnifying party may, without the prior written
consent of the indemnified parties, settle or compromise or consent to the
entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened,
or any claim
28
whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), if such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding 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, an indemnifying
party shall not be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its consent if such indemnifying party
(i) reimburses such indemnified party in accordance with such request to
the extent it considers such request to be reasonable and (ii) provides
written notice to the indemnified party substantiating the unpaid balance
as unreasonable, in each case prior to the date of such settlement.
(f) Other Agreements with Respect to Indemnification. The provisions
of this Section shall not affect any agreements among the Company and
Bandag and the Selling Shareholder with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and Bandag and the Selling Shareholder on the one hand and the
International Managers on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and Bandag and the Selling Shareholder on the one
hand and of the International Managers on the other hand in connection with the
statements or omissions
29
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company and Bandag and the Selling
Shareholder on the one hand and the International Managers on the other hand in
connection with the offering of the International Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the International Securities pursuant to this
Agreement (before deducting expenses) received by the Company and Bandag and the
Selling Shareholder and the total underwriting discount received by the
International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet, bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.
The relative fault of the Company and Bandag and the Selling Shareholder on
the one hand and the International Managers on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company and Bandag
and the Selling Shareholder or by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, Bandag, the Selling Shareholder and the International Managers
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the International
Managers were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such International Managers has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
30
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Managers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company, Bandag or the Selling Shareholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company or Bandag and the Selling Shareholder, as
the case may be. The International Managers' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
Initial International Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and Bandag and the Selling Shareholder with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or Bandag and the Selling Shareholder submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any International Manager or controlling
person, or by or on behalf of the Company or Bandag and the Selling Shareholder,
and shall survive delivery of the Securities to the International Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this Agreement,
by notice to the Company and Bandag and the Selling Shareholder, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the International Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation of any existing hostilities or other calamity or crisis or any change
or development involving a prospective change
31
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the Lead
Managers, impracticable to market the International Securities or to enforce
contracts for the sale of the International Securities, or (iii) if trading in
any securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the New
York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by such exchange or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the International Managers. If
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Lead Managers
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Lead Managers shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of International Securities to be purchased on such date, each of
the non-defaulting International Managers shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
International Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing Time,
the obligation of the International Managers to purchase and of the Company
to sell the Option Securities to be purchased and
32
sold on such Date of Delivery shall terminate without liability on the part
of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either (i) the Lead
Managers or (ii) the Company or Bandag and the Selling Shareholder shall have
the right to postpone Closing Time, or the Company or the Lead Managers shall
have the right to postpone the relevant Date of Delivery, as the case may be,
for a period not exceeding seven days in order to effect any required changes in
the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "International Manager" includes any
person substituted for an International Manager under this Section 10.
SECTION 11. Default by Bandag and the Selling Shareholder or the
Company. (a) If Bandag and the Selling Shareholder shall fail at Closing Time
to sell and deliver the number of Securities which the Selling Shareholder is
obligated to sell hereunder, then the International Managers may, at the option
of the Lead Managers, by notice from the Lead Managers to the Company and Bandag
and the Selling Shareholder, either (a) terminate this Agreement without any
liability on the fault of any non-defaulting party except that the provisions of
Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or (b) elect to
purchase the Securities which the Company has agreed to sell hereunder. No
action taken pursuant to this Section 11 shall relieve Bandag and the Selling
Shareholder from liability, if any, in respect of such default.
In the event of a default by Bandag and the Selling Shareholder as referred
to in this Section 11, each of the Lead Managers and the Company shall have the
right to postpone Closing Time or Date of Delivery for a period not exceeding
seven days in order to effect any required change in the Registration Statement
or Prospectus or in any other documents or arrangements.
(b) If the Company shall fail at Closing Time or at the Date of Delivery to
sell the number of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any non-
defaulting party; provided, however, that the provisions of Section 1,
33
4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant to
this Section shall relieve the Company from liability, if any, in respect of
such default.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇.
▇'▇▇▇▇▇; notices to the Company shall be directed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of General Counsel;
notices to Bandag shall be directed to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President, Finance; and
notices to the Selling Shareholder shall be directed to it c/o Bandag,
Incorporated at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇
▇. ▇▇▇▇, Secretary.
SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the International Managers, the Company and Bandag and the
Selling Shareholder and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the International Managers, the Company
and Bandag and the Selling Shareholder and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the International Managers, the
Company and Bandag and the Selling Shareholder and their respective successors,
and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any International Manager shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
34
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company, Bandag and the Selling Shareholder a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between the International Managers, the Company and
Bandag and the Selling Shareholder in accordance with its terms.
Very truly yours,
HON INDUSTRIES INC.
By: ____________________________________
Title:
BANDAG, INCORPORATED
By: ____________________________________
Title:
BTC, INC.
By: ___________________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY, L.L.C.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
By _______________________________
Authorized Signatory
For themselves and as Lead Managers of the
other International Managers named in Schedule A hereto.
35
SCHEDULE A
Number of Initial
Name of International Manager International Securities
----------------------------- ------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ International..........
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., L.L.C...........
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated...
▇▇▇▇▇▇▇▇ & Company Securities, Inc...
Total
===========
Sch A-1
SCHEDULE B
Number of Initial Maximum Number of
International International Option
Securities to be Sold Securities to be Sold
--------------------- ---------------------
HON INDUSTRIES INC. 200,000 101,850
BANDAG, INCORPORATED 479,000
_______ _______
Total 679,000 101,850
======= =======
Sch B-1
SCHEDULE C
HON INDUSTRIES INC.
3,395,000 Shares of Common Stock
(Par Value $1.00 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_______.
2. The purchase price per share for the International Securities to be
paid by the several International Managers shall be $_______, being an amount
equal to the initial public offering price set forth above less $_______ per
share; provided that the purchase price per share for any International Option
Securities purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial International
Securities but not payable on the International Option Securities (but only if
the Company establishes a record date for such dividend or distribution which is
prior to the Date of Delivery for the International Option Securities).
Sch C-1
SCHEDULE D
Hearth Technologies, Inc.
Holga Inc.
BPI Inc.
The Gunlocke Company
HON Export Limited
T.M. Export Inc.
Allsteel, Inc.
Sch D-1
SCHEDULE E
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ III
▇▇▇▇▇▇ ▇. ▇▇▇
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Sch E-1
Exhibit A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
FORM OF OPINION OF ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
------------------------------------------
A1-1
Exhibit A-2
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)
FORM OF OPINION OF ▇▇▇▇▇, DAY, ▇▇▇▇▇▇ & ▇▇▇▇▇
---------------------------------------------
A2-1
Exhibit A-3
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)
FORM OF OPINION OF ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
A3-1
Exhibit B
FORM OF OPINION OF COUNSEL FOR BANDAG AND THE SELLING SHAREHOLDER TO BE
DELIVERED PURSUANT TO SECTION 5(c)
B-1
Exhibit C
FORM OF OPINION OF COUNSEL
FOR THE INTERNATIONAL MANAGERS
C-1
Exhibit D
[Form of lock-up from directors and executive officers pursuant to Section 5(1)]
October __, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
as Representatives of the several
Underwriters to be named in the within-mentioned U.S. Purchase Agreement
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇▇ & Company Securities, Inc.
as Lead Managers of the several International Managers to be named in the
within-mentioned International Purchase Agreement
c/o Merrill ▇▇▇▇▇ International
Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Re: Proposed Public Offering by HON INDUSTRIES Inc.
Dear Sirs:
The undersigned, a stockholder and an officer and/or director of HON
INDUSTRIES Inc., an Iowa corporation (the "Company"), understands that ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇
▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company,
D-1
L.L.C., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated and ▇▇▇▇▇▇▇▇ & Company Securities,
Inc. propose to enter into a U.S. Purchase Agreement and an International
Purchase Agreement (collectively, the "Purchase Agreements") with the Company,
Bandag, Incorporated and the Selling Shareholder (as defined in the Purchase
Agreements) providing for the public offering of shares (the "Securities") of
the Company's common stock, par value $1.00 per share (the "Common Stock"). In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder and an officer and/or director of the Company, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned agrees with each underwriter to be
named in the Purchase Agreements that, during a period of 90 days from the date
of the Purchase Agreements, the undersigned will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, in any open market transaction
(i) 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 for the sale of, or otherwise dispose of or transfer any shares of the
Company's Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Very truly yours,
Signature: ___________________________
Print Name: _________________________
D-2
Annex A
[FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(g)]
We are independent public accountants with respect to the Company within
the meaning of the 1933 Act and the applicable published 1933 Act Regulations.
(i) in our opinion, the audited financial statements and the related
financial statement schedules included or incorporated by reference in the
Registration Statement and the Prospectuses comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in accordance with
generally accepted auditing standards) consisting of a reading of the unaudited
interim consolidated financial statements of the Company for the three month
periods ended March 29, 1997 and March 29, 1996, the three and six month periods
ended June 28, 1997 and June 29, 1996, included or incorporated by reference in
the Registration Statement and the Prospectuses (collectively, the "10-Q
Financials"), a reading of the minutes of all meetings of the stockholders and
directors of the Company and its subsidiaries and the committees of the
Company's Board of Directors and any subsidiary committees since January 1,
1997, inquiries of certain officials of the Company and its subsidiaries
responsible for financial and accounting matters, a review of interim financial
information in accordance with standards established by the American Institute
of Certified Public Accountants in Statement on Auditing Standards No. 71,
Interim Financial Information ("SAS 71"), with respect to the description of
relevant periods and such other inquiries and procedures as may be specified in
such letter, nothing came to our attention that caused us to believe that:
(A) the 10-Q Financials incorporated by reference in the
Registration Statement and the Prospectuses do not comply as to form
in all material respects with the applicable accounting requirements
of the 1934 Act and the 1934 Act Regulations applicable to unaudited
financial statements included in Form 10-Q or any material
modifications should be made to the 10-Q Financials incorporated by
reference in the Registration Statement and the Prospectuses for them
to be in conformity with generally accepted accounting principles;
(B) at a specified date not more than five days prior to
the date of this Agreement, there was any change in the capital stock
of the Company and its subsidiaries or any decrease in the
consolidated net current assets or
Annex A-1
shareholders' equity of the Company and its subsidiaries or any
increase in the long-term debt of the Company and its subsidiaries, in
each case as compared with amounts shown in the latest balance sheet
included in the Registration Statement, except in each case for
changes, decreases or increases that the Registration Statement
discloses have occurred or may occur; or
(C) for the period from June 28, 1997 to a specified date not
more than five days prior to the date of this Agreement, there was any
decrease in consolidated net sales, total or per share amounts of
income before extraordinary items or of net income, in each case as
compared with the comparable period in the preceding year, except in
each case for any decreases that the Registration Statement discloses
have occurred or may occur;
(iii) based upon the procedures set forth in clause (ii) above and a
reading of the Selected Consolidated Financial and Operating Data included in
the Registration Statement, nothing came to our attention that caused us to
believe that the Selected Financial and Operating Data included in the
Registration Statement do not comply as to form in all material respects with
the disclosure requirements of Item 301 of Regulation S-K of the 1933 Act;
(iv) we have compared the information in the Registration Statement under
selected captions with the disclosure requirements of Regulation S-K of the 1933
Act and, on the basis of limited procedures specified herein. nothing came to
our attention that caused us to believe that this information does not comply as
to form in all material respects with the disclosure requirements of Items 302,
402 and 503(d), respectively, of Regulation S-K;
Annex A-2