EXHIBIT 1.1
EXECUTION COPY
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$75,000,000
CHATTEM, INC.
8 7/8% SENIOR SUBORDINATED NOTES DUE 2008
UNDERWRITING AGREEMENT
DATED APRIL 29, 1999
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Table of Contents
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Page
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Section 1. Representations and Warranties of the Company...................2
(a) Compliance with Registration Requirements.......................2
(b) Exchange Act Compliance.........................................3
(c) Offering Materials Furnished to Underwriters....................3
(d) Distribution of Offering Material By the Issuers................3
(e) Company Not an "Investment Company."............................3
(f) No Material Adverse Change......................................4
(g) Incorporation and Good Standing of the Company and its
Subsidiaries..................................................4
(h) Capitalization and Other Capital Stock Matters..................4
(i) The Underwriting Agreement......................................4
(j) Authorization of the Notes......................................5
(k) Authorization of the Guarantees.................................5
(l) Authorization of the Indenture..................................5
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required..........................5
(n) Conformation of Descriptions....................................6
(o) No Material Actions or Proceedings..............................6
(p) Title to Properties.............................................6
(q) Independent Accountants.........................................7
(r) Preparation of the Financial Statements.........................7
(s) Company's Accounting System.....................................7
(t) Solvency........................................................8
(u) Intellectual Property Rights....................................8
(v) Compliance with Environmental Laws..............................8
(w) Periodic Review of Costs of Environmental Compliance............8
(x) No Labor Disturbances...........................................9
(y) No Unlawful Contributions.......................................9
(z) Florida Statute Compliance......................................9
(aa) No Applicable Registration or Other Similar Rights..............9
(bb) No Price Stabilization or Manipulation..........................9
(cc) Stock Exchange Listing..........................................9
(dd) Timely Filings.................................................10
(ee) Year 2000 Compliance...........................................10
(ff) All Necessary Permits, etc.....................................10
(gg) Tax Law Compliance.............................................10
(hh) Insurance......................................................11
(ii) Related Party Transactions.....................................11
(jj) ERISA Compliance...............................................12
(kk) Industry Data..................................................12
(ll) No Claims for Finder's Fee.....................................12
(mm) No Prohibition under ERISA or Internal Revenue Code............12
Section 2. Purchase, Sale and Delivery of the Securities..................13
(a) The Securities.................................................13
(b) The Closing Date...............................................13
(c) Public Offering of the Securities..............................13
(d) Payment for the Securities.....................................13
(e) Delivery of the Securities.....................................13
(f) Delivery of Prospectus to the Underwriters.....................14
(g) Delivery of Independent Underwriter............................14
Section 3. Additional Covenants of the Company............................14
(a) Review of Proposed Amendments and Supplements..................14
(b) Securities Act Compliance......................................14
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters.......................................15
(d) Copies of any Amendments and Supplements to the Prospectus.....15
(e) Future Reports to the Underwriters.............................15
(f) Blue Sky Compliance............................................15
(g) Use of Proceeds................................................16
(h) Not an Investment Company......................................16
(i) Periodic Reporting Obligations.................................16
(j) Exchange Act Compliance........................................16
(k) Best Efforts...................................................16
Section 4. Payment of Expenses............................................16
Section 5. Conditions of the Obligations of the Underwriters..............17
(a) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD..........................................17
(b) No Material Adverse Change or Ratings Agency Change............17
(c) Officers' Certificate..........................................18
(d) Opinion of Counsel for the Company.............................18
(e) Opinion of Counsel for the Underwriters........................18
(f) Pricing Opinion of the Independent Underwriter.................18
(g) Accountants' Comfort Letter....................................18
(h) Bring-down Comfort Letter......................................19
(i) Additional Documents...........................................19
Section 6. Reimbursement of Underwriters' Expenses........................19
Section 7. Effectiveness of this Agreement................................19
Section 8. Indemnification................................................20
(a) Indemnification of the Underwriters............................20
(b) Indemnification of the Company, its Directors and Officers.....21
(c) Notifications and Other Indemnification Procedures.............21
(d) Settlements....................................................22
Section 9. Contribution...................................................23
Section 10. Termination of this Agreement..................................24
Section 11. Representations and Indemnities to Survive Delivery............24
Section 12. Notices........................................................24
Section 13. Successors.....................................................25
Section 14. Partial Unenforceability.......................................26
Section 15. Governing Law Provisions.......................................26
Section 16. General Provisions.............................................26
UNDERWRITING AGREEMENT
April 29, 1999
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇▇ BROTHERS INC.
c/o NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. Chattem, Inc., a Tennessee corporation (the
"Company), proposes to issue and sell to NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
"NMS") and ▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇" and, together with NMS, the
"Underwriters") $75,000,000 in aggregate principal amount of its 8 7/8% Senior
Subordinated Notes due 2008 (the "Notes"). The Notes will be fully and
unconditionally guaranteed (the "Guarantee" and, collectively with the Notes,
the "Securities") on a senior subordinated basis, by Signal Investment &
Management Co. (the "Guarantor" and, together with the Company, the "Issuers").
The Securities are to be issued pursuant to an indenture, dated as of March 24,
1998 (the "Indenture"), by and among the Company, the Guarantor and SouthTrust
Bank, National Association (the "Trustee").
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No.333-69397), which registration statement contains a form of prospectus
relating to the offering from time to time of up to $250,000,000 in aggregate
principal amount of debt securities, shares of preferred stock, shares of common
stock and/or warrants of the Company in accordance with Rule 415 under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act"). Such registration statement, as
amended, has been declared effective by the Commission and the Indenture has
been qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). In addition, the Company has prepared and filed with the
Commission a Preliminary Prospectus (as defined) pursuant to Rule 424(b)(2)
under the Securities Act in accordance with Rule 424(b)(2) under the Securities
Act.
The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "Effective Date" shall mean each date that
the Registration Statement (as defined), any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean the
date and the time that this Agreement is executed and delivered by the parties
hereto. "Preliminary Prospectus" shall mean any preliminary prospectus,
including any preliminary prospectus supplement, used in connection with the
offer of any Notes prior to the date hereof and any preliminary prospectus
included in the Registration Statement at the Effective Date. The form of
prospectus, including any prospectus supplement, relating to the Notes as first
filed pursuant to Rule 424(b)(5) after the Execution Time or, if no filing
pursuant to Rule 424(b)(5) is required, such form of prospectus
included in the Registration Statement at the Effective Date, is hereinafter
called the "Prospectus." "Registration Statement" shall mean the registration
statement referred to above (File No.333-69397), including all documents and
financial statements incorporated or deemed to be incorporated by reference
therein, as amended at the Execution Time and, in the event any post-effective
amendment thereto becomes effective or any supplement thereto is filed prior to
the Closing Date (as defined), shall also mean such registration statement as so
amended or supplemented. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents and financial statements incorporated or deemed to be incorporated
therein pursuant to Item 12 of Form S-3 which were filed under the securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act"), on or before the Effective Date
of the Registration Statement or the issue date of such Preliminary Prospectus
or Prospectus, as the case may be, and shall include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("▇▇▇▇▇"); and any reference herein to the terms, "amend," "amendment" or
"supplement" with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by reference.
The Issuers hereby confirm their agreements with the Underwriters
as follows:
Section 1. Representations and Warranties of the Company.
The Issuers, jointly and severally, hereby represent, warrant
and covenant to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement, as of the Effective Date of the Registration Statement and as of the
Closing Date (as defined) and the Prospectus, as of the date first filed in
accordance with Rule 424(b)(5) under the Securities Act after the Execution Time
and on the Closing Date complied and will comply, as the case may be, in all
material respects with the requirements of the Securities Act and, if filed by
electronic transmission pursuant to ▇▇▇▇▇ (except as permitted by Regulation S-T
under the Securities Act), was identical in content to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Securities. The Indenture conforms in all material respects to the
requirements of the Trust Indenture Act. The Registration Statement has been
declared effective by the Commission under the Securities Act and the Indenture
has been qualified under the Trust Indenture Act; no stop order suspending the
effectiveness of the Registration Statement is in effect and no proceedings for
such purpose have been instituted or are pending before or threatened by the
Commission; and any required filing of the Prospectus pursuant to Rule 424(b)
under the Securities Act has been made in accordance with Rule 424(b) under the
Securities Act. The Registration Statement, as of the Effective Date of the
Registration Statement (and, if any amendment to the Registration Statement or
an annual report on Form 10-K has been filed by the Company with the Commission
subsequent to the Effective Date, then at the time of the most recent such
filing) and as of the Closing Date 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. The
Prospectus, as amended or supplemented, as of its issue date and as of the
Closing Date did not and will not contain any untrue statement of a material
fact or omit to state a material fact
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necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
(A) statements in or omissions from the Registration Statement or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by any Underwriter expressly for use in the Registration
Statement or the Prospectus or (B) that part of the Registration Statement
constituting the Statement of Eligibility and Qualification under the Trust
Indenture Act ("Form T-1"). There are no contracts or other documents required
to be described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described, filed or incorporated by reference
therein, as required.
(b) Exchange Act Compliance. The documents incorporated or deemed to
be incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at the
Closing Date, as the case may be, 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, in the light of the circumstances
under which they were made, not misleading.
(c) Offering Materials Furnished to Underwriters. The Issuers have
delivered to the Underwriters conformed copies of the Registration Statement,
the Preliminary Prospectus and the Prospectus, as amended or supplemented, in
such quantities and at such places as the Underwriters have reasonably
requested.
(d) Distribution of Offering Material By the Issuers. The Issuers
have not distributed and will not distribute, prior to the later of the Closing
Date and the completion of the Underwriters' distribution of the Securities, any
offering material in connection with the offering and sale of the Securities
other than the Preliminary Prospectus, the Prospectus or the Registration
Statement (including any documents deemed to be incorporated by reference
therein).
(e) Company Not an "Investment Company." The Company and its
subsidiaries have been advised of the rules and requirements under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
Neither the Company nor any of its subsidiaries is, or after receipt of payment
for the Notes will be, an "investment company" within the meaning of the
Investment Company Act, and each of the Company and its subsidiaries will
conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(f) No Material Adverse Change. Since the respective dates as of
which information is given in the Prospectus, except as otherwise stated
therein, (i) there has been no material adverse change in the condition
(financial or otherwise), results of operations, affairs or business prospects
of the Company and its subsidiaries considered as a whole, whether or not
arising in the ordinary course of business; and (ii) there have been no material
transactions entered into by the Company or any of its subsidiaries (together
with (i), a "Material Adverse Change").
(g) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the laws of the
state of its incorporation with corporate power and authority to own, lease
3
and operate its properties and conduct its business as described in the
Prospectus and enter into and perform its obligations under this Agreement. The
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which the conduct of its business
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not, singly or in the aggregate,
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), results of operations, affairs or business prospects
of the Company and its subsidiaries considered as a whole (a "Material Adverse
Effect"). The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
the Company's Annual Report on Form 10-K for the fiscal year ended November 30,
1998 and the subsidiaries listed on Schedule B attached hereto. Each of the
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subsidiaries of the Company has been duly organized and is validly existing and
in good standing under the laws of the jurisdiction of its organization, has the
requisite power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus and is duly qualified as a
foreign organization to transact business and is in good standing in each
jurisdiction in which the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified or be in good standing
would not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(h) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in the
Prospectus). All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and have been issued in compliance with federal and state
securities laws. All of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued and is
fully paid and nonassessable, and, except as described in the Prospectus, all
shares of capital stock of each subsidiary of the Company are owned by the
Company (except for directors' qualifying shares issued for Chattem (U.K.) Ltd.
and HBA Insurance Ltd.), directly or through subsidiaries of the Company, free
and clear of any mortgage, pledge, lien, encumbrance, claim or equity.
(i) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Issuers, enforceable against the Issuers in accordance with its terms,
except that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions thereof may be
limited under applicable securities laws or the public policies underlying such
laws.
(j) Authorization of the Notes. The Notes have been duly
authorized by the Company and, when executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Underwriters in accordance with this Agreement, will constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, and will be entitled to the benefits of the
Indenture, except that enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of
4
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
(k) Authorization of the Guarantees. The Guarantees endorsed on the
Notes have been duly authorized by the Guarantor and when the Notes are executed
and authenticated in accordance with the provisions of the Indenture and
delivered to the Underwriters in accordance with this Agreement, the Guarantees
will constitute the valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with their terms, and will be entitled to
the benefits of the Indenture, except that enforcement thereof may be subject to
(A) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
(l) Authorization of the Indenture. The Indenture has been duly
authorized by the Issuers. When the Securities are delivered and paid for
pursuant to this Agreement on the Closing Date, the Indenture will have been
duly executed and delivered by the Issuers and, assuming the due execution and
delivery thereof by the Trustee, will constitute the valid and binding agreement
of the Issuers, enforceable against the Issuers in accordance with its terms,
except that enforcement thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. The execution, delivery and performance of
this Agreement and the Indenture by the Issuers and the consummation of the
other transactions contemplated hereby and by the Prospectus will not conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which either the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets of the Company
or any of its subsidiaries are subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute to which they may be subject or any order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties or assets
(except to the extent any such conflict, breach, violation or default singly or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect); and except for such consents, approvals, authorizations, registrations
or qualifications as may be required under applicable state securities and Blue
Sky laws in connection with the purchase and distribution of the Securities by
the Underwriters or such consents which have been obtained, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement or the Indenture by the Issuers and the
consummation of the other transactions contemplated hereby and by the
Prospectus, and the issuance and sale of the Notes by the Issuers (except to the
extent the failure to obtain such consent would not reasonably be expected to
have a Material Adverse Effect). Neither the Company nor any of its subsidiaries
is in breach or violation of any of the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the properties or assets
of the Company or any of its subsidiaries are subject, nor is the Company or any
of its subsidiaries in violation of the provisions of its respective charter or
by-laws or
5
any statute or any judgment, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, any of its
subsidiaries or any of their properties or assets (except to the extent any such
conflict, breach, violation or default is cured at or prior to the Closing Date
and within the grace period applicable thereto or would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect).
(n) Conformation of Descriptions. As of the Closing Date, the
Securities and the Indenture will conform in all material respects to the
descriptions thereof contained in the Prospectus.
(o) No Material Actions or Proceedings. Except as set forth in the
Prospectus, there is no action, suit or proceeding before or 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 Issuers or any of
its subsidiaries that would reasonably be expected to result in a Material
Adverse Change or, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the offering of the
Securities.
(p) Title to Properties. The Company and each of its subsidiaries
has good and indefeasible title in fee simple to all real property and good and
indefeasible title to all personal property owned by it and necessary in the
conduct of the business of the Company or such subsidiary, in each case free and
clear of all liens, encumbrances and defects except (i) such as are referred to
in the Registration Statement and the Prospectus or (ii) such as do not
materially and adversely affect the value of such property to the Company or
such subsidiary, and do not interfere with the use made and proposed to be made
of such property by the Company or such subsidiary to an extent that such
interference would, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. All leases to which the Company or its subsidiaries is
a party are valid and binding, and no default has occurred or is continuing
thereunder which could, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect or materially and adversely affect the offering
of the Securities, and the Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a party as
lessee (with such exceptions as do not materially interfere with the use made by
the Company or such subsidiary).
(q) Independent Accountants. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Pricewaterhouse
Coopers LLP, who have expressed their opinions with respect to the financial
statements (which term as used in this Agreement includes the related notes
thereto) and supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus, are independent public
accountants as required by the Securities Act and the Exchange Act.
(r) Preparation of the Financial Statements. The financial
statements included or incorporated by reference in the Registration Statement
and the Prospectus, or in any supplement thereto or amendment thereof, present
fairly, in all material respects the consolidated financial position of the
Company and its subsidiaries, on a consolidated basis as at the dates indicated
and the results of their respective operations and changes in their financial
position for the periods specified. The supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. No other financial statements or supporting
schedules are required to be included in the Registration Statement. The other
financial information and data included in the Registration Statement and the
Prospectus, historical and pro forma,
6
are accurately presented in all material respects and prepared on a basis
consistent with the financial statements, historical and pro forma, included in
the Prospectus and the books and records of the Company and its subsidiaries.
The statistical information and data included in the Prospectus are accurately
presented in all material respects.
(s) Company's Accounting System. The Company and each of its
subsidiaries maintains a system of accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles as applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) Solvency. Neither the Company nor any of its subsidiaries is now
or, after giving effect to the issuance of the Securities, and the application
of the proceeds thereof, will be (i) insolvent, (ii) left with unreasonably
small capital with which to engage in its anticipated businesses or (iii)
incurring debts beyond its ability to pay such debts as they become due.
(u) Intellectual Property Rights. Except as would not reasonably
be expected to have a Material Adverse Effect, both before and immediately after
giving effect to the transactions contemplated by this Agreement, the Company
and its subsidiaries own, or otherwise possess the right to use, all patents,
trademarks, service marks, trade names and copyrights, all applications and
registrations for each of the foregoing, and all other proprietary rights and
confidential information used in the conduct of their respective businesses as
currently conducted; and, except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with the rights of any third party with
respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably be
expected to have a Material Adverse Effect.
(v) Compliance with Environmental Laws. The Company and its
subsidiaries, both before and immediately after giving effect to the offering of
the Securities, are (i) in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
received required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(w) Periodic Review of Costs of Environmental Compliance. In the
ordinary course of its business, the Company conducts a periodic review of the
effect of Environmental Laws on the business, operations and properties of the
Company and its subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded that
such associated
7
costs and liabilities would not singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(x) No Labor Disturbances. No labor problem or disturbance with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Issuers, is threatened which, singly or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(y) No Unlawful Contributions. Neither the Company nor any of its
subsidiaries, nor, to the Issuers' knowledge, any director, officer, agent,
employee, shareholder or other person, in any such case, acting on behalf of the
Company or any of its subsidiaries, has used any corporate funds during the last
five years for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, payoff, influence payment, kickback or other payment
that is unlawful.
(z) Florida Statute Compliance. The Company and its subsidiaries have
complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-
198, Laws of Florida) relating to doing business with the Government of Cuba or
with persons or affiliates located in Cuba.
(aa) No Applicable Registration or Other Similar Rights. There are not
currently, and will not be as a result of the transactions contemplated by this
Agreement, any contracts, agreements or understandings between the Company or
any of its subsidiaries and any person granting such person the right to require
the Company or any of its subsidiaries to file a registration statement under
the Securities Act with respect to any securities owned or to be owned by such
person or to require the Company or any of its subsidiaries to include such
securities in any securities being registered pursuant to any registration
statement filed by the Company or any of its subsidiaries under the Securities
Act.
(bb) No Price Stabilization or Manipulation. None of the Company or
any of its subsidiaries has (i) taken, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities, (ii) since the date of the
Prospectus, (A) sold, bid for, purchased or paid any person any compensation for
soliciting purchases of the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
(cc) Stock Exchange Listing. The common stock of the Company is
registered pursuant to Section 12(b) of the Exchange Act and is listed on the
Nasdaq National Market, and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of its common stock
under the Exchange Act or delisting its common stock from the Nasdaq National
Market, nor has the Company received any notification that the Commission or the
National Association of Securities Dealers, Inc. (the "NASD") is contemplating
terminating such registration or listing.
(dd) Timely Filings. During the past twenty-four months, the Company
has filed in a timely manner each document or report required to be filed by it
pursuant to the Exchange Act; each such document or report at the time it was
filed conformed to the requirements of the Exchange Act; and none of such
documents or reports contained an untrue statement of any material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
8
(ee) Year 2000 Compliance. The Company has (i) initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Company or any of its subsidiaries (or
suppliers, vendors and customers) that are material to the Company's or any of
its subsidiaries' business or operations may be unable to recognize and perform
properly date-sensitive functions involving certain dates on and after January
1, 2000), (ii) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the actions taken by the Company to
date, the Company is not aware of any reason its suppliers, vendors and
customers would fail to be Year 2000 Compliant (as defined). Based on the
foregoing, the Company believes that all computer applications that are material
to its or any of its subsidiaries' business and operations are reasonably
expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
Compliant"), except to the extent that a failure to do so could not reasonably
be expected to have Material Adverse Change.
(ff) All Necessary Permits, etc. The Company and its subsidiaries
possess adequate certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, and except as set forth in the
Prospectus, neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorably decision, ruling or finding, would, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(gg) Tax Law Compliance. The Company and its subsidiaries have filed
all necessary federal, state and foreign income and franchise tax returns, other
than those returns which failure to file would not result in a Material Adverse
Change and have paid all taxes required to be paid by any of them and, if due
and payable, any related or similar assessment, fine or penalty levied against
any of them other than those amounts being contested in good faith or those
amounts which the failure to pay would not result in a Material Adverse Change
The Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(j) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined.
(hh) Insurance. Each of the Company and its subsidiaries are insured
by recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change.
(ii) Related Party Transactions. There are no business relationships
or related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus which have not been
described as required.
9
(jj) ERISA Compliance. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined) are in
compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(kk) Industry Data. The industry-related data included in the
Registration Statement and the Prospectus is true and accurate in all material
respects.
(ll) No Claims for Finder's Fee. Except pursuant to this Agreement,
there are no contracts, agreements or understandings between the Company, any of
its subsidiaries or any of their joint ventures and any other person that would
give rise to a valid claim against the Company or any of the Underwriters for a
brokerage commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Notes.
(mm) No Prohibition under ERISA or Internal Revenue Code. The
execution and delivery of this Agreement and the sale of the Securities will not
involve any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code.
Any certificate signed by an officer of any Issuer and
delivered to the Underwriters or to counsel for the Underwriters shall be deemed
to be a representation and warranty by such Issuer to each Underwriter as to the
matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Securities.
(a) The Securities. The Issuers, jointly and severally, agree to
issue and sell to the Underwriters the Securities upon the terms set forth
herein. On the basis of the representations, warranties and agreements contained
herein, and upon the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Issuers the respective
principal amount of the Securities set forth opposite such Underwriter's name on
Schedule A attached hereto at an aggregate purchase price equal to 97.615% of
the principal amount thereof.
(b) The Closing Date. Delivery of certificates for the Securities to
be purchased by the
10
Underwriters and payment therefor shall be made at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 9:00 a.m. New York time, on May
7, 1999 or such other time and date the Underwriters shall designate by notice
to the Company (the time and date of such closing are called the "Closing
Date"). The Company hereby acknowledges that circumstances under which the
Underwriters may provide notice to postpone the Closing Date as originally
scheduled include, but are in no way limited to, any determination by the
Company or the Underwriters to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of Section
10 hereof.
(c) Public Offering of the Securities. The Underwriters hereby
advise the Issuers that the Underwriters intend to offer for sale to the public,
as described in the Prospectus, their respective portions of the Securities as
soon after this Agreement has been executed and the Registration Statement has
been declared effective, as the Underwriters have determined is advisable and
practicable.
(d) Payment for the Securities. Payment for the Securities shall be
made at the Closing Date by wire transfer of immediately available funds to the
order of the Company.
It is understood that NMS has been authorized, for its own account
and the accounts of the Underwriters, to accept delivery of and receipt for, and
make payment of the purchase price for, the Securities. NMS, individually and
not as an Underwriter, may (but shall not be obligated to) make payment for any
Securities to be purchased by any Underwriter whose funds shall not have been
received by NMS, in its capacity as Underwriter, by the Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
(e) Delivery of the Securities. The Issuers shall deliver, or cause
to be delivered, to NMS for the accounts of the Underwriters certificates at the
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The certificates
for the Securities shall be in definitive fully registered form and registered
in the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"),
or such other name or names and in such denominations as the Underwriters shall
have requested at least two full business days prior to the Closing Date and
shall be made available for inspection on the business day preceding the Closing
Date at a location in New York City as the Underwriters may designate. Time
shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
(f) Delivery of Prospectus to the Underwriters. Not later than
12:00 p.m. on the second business day following the date the Securities are
released by the Underwriters for sale to the public, the Issuers shall deliver,
without charge, or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Underwriters shall request.
(g) Delivery of Independent Underwriter. The Company hereby retains
▇▇▇▇▇▇, and ▇▇▇▇▇▇ hereby agrees, to act as qualified independent underwriter
pursuant to the rules of the NASD (the "Independent Underwriter") in connection
with the offer and sale of the Securities.
11
Section 3. Additional Covenants of the Company.
The Issuers, jointly and severally, further covenant and agree with each
Underwriter as follows:
(a) Review of Proposed Amendments and Supplements. During such period
beginning on the date hereof and ending on the later of the Closing Date or such
date, as in the opinion of counsel for the Underwriters, the Prospectus is no
longer required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), prior to amending or
supplementing the Registration Statement or the Prospectus, the Company shall
furnish to the Underwriters for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement to which the Underwriters reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Underwriters in writing (i) of the receipt of
any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
Preliminary Prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the common stock of the Company from any
securities exchange upon which it is listed for trading or included or
designated for quotation, or of the threatening or initiation of any proceedings
for any of such purposes. If the Commission shall enter any such stop order at
any time, the Issuers will use their best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Issuers agree that they
shall comply with the provisions of Rules 424(b) and 430A, as applicable, under
the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under Rule 424(b) were received in a timely manner
by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Underwriters or counsel for the Underwriters it is
otherwise necessary to amend or supplement the Prospectus to comply with the
Securities Act or any other law, the Issuers agree to promptly prepare (subject
to Section 3(a) hereof), file with the Commission and furnish at its own expense
to the Underwriters and to dealers, amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented,
will comply with the Securities Act and any other applicable laws.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Issuers agree to furnish to the Underwriters, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto (including any documents incorporated or deemed
incorporated by reference therein) as the Underwriters may request.
(e) Future Reports to the Underwriters. So long as the Securities
are outstanding, the
12
Issuers shall to the Underwriters copies of any annual reports, quarterly
reports and current reports filed with the Commission on Forms 10-K, 10-Q, and
8-K or such other reports filed by the Company with the Commission, the NASD or
any securities exchange, and such other documents, reports and information as
shall be furnished by the Issuers to the Trustee or to the holders of the
Securities pursuant to the Indenture.
(f) Blue Sky Compliance. The Issuers will use their best efforts to
qualify the Securities for sale under the securities or Blue Sky laws of such
jurisdictions as the Underwriters reasonably designate and to continue such
qualifications in effect so long as reasonably required for the distribution of
the Securities. The Issuers will also arrange for the determination of the
eligibility for investment of the Securities under the laws of such
jurisdictions as the Underwriters reasonably request. Notwithstanding the
foregoing, the Issuers shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which they are not so qualified or to file a
general consent to service of process or to subject themselves to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
subject.
(g) Use of Proceeds. The Company shall apply the net proceeds from
the sale of the Securities sold by the Issuers in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(h) Not an Investment Company. The Issuers will take such steps as
shall be necessary to ensure that neither the Company nor any of its
subsidiaries shall become an "investment company" within the meaning of the
Investment Company Act.
(i) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under the
Exchange Act.
(j) Exchange Act Compliance. During the Prospectus Delivery Period,
the Company shall file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within
the time periods required by the Exchange Act.
(k) Best Efforts. The Company shall do all things reasonably
necessary to satisfy the closing conditions set forth in Section 5 hereof.
The Underwriters may, in their sole discretion, waive in writing
the performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
Section 4. Payment of Expenses.
The Issuers, jointly and severally, agree to pay all costs, fees
and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Securities (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Securities, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Securities to the Underwriters, (iv) all fees and expenses of
the Company's counsel, independent public accountants and other advisors, (v)
all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration
13
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each Preliminary Prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) the Securities for offer and sale under the
state securities or blue sky laws or the provincial securities laws of Canada,
and preparing and printing a "Blue Sky Survey" or memorandum, and any
supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in connection with,
the NASD's review and approval of the Underwriters' participation in the
offering and distribution of the Securities, (viii) the fees and expenses of the
Trustee and any agent of the Trustee and the fees and disbursements of any
counsel for the Trustee in connection with the Indenture and the Securities,
(ix) any fees paid to rating agencies in connection with the rating of the
Securities, (x) the costs and expenses of DTC and its nominee, including its
book-entry system and (xi) all other fees, costs and expenses referred to in
Item 14 of Part II of the Registration Statement. Except as provided in this
Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay
their own expenses, including the fees and disbursements of their counsel.
Section 5. Conditions of the Obligations of the Underwriters.
The obligations of the Underwriters to purchase and pay for the
Securities as provided herein on the Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Issuers set
forth in Section 1 hereof as of the date hereof and as of the Closing Date as
though then made to the timely performance by each of the Company and the
Guarantor of its covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the Closing Date:
(i) the Company, if required, shall have filed the Prospectus
with the Commission in the manner and within the time period required by Rule
424(b)(5) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such purpose shall have
been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(b) No Material Adverse Change or Ratings Agency Change. For the
period from and after the date of this Agreement and prior to the Closing Date:
(i) in the judgment of the Underwriters there shall not have
occurred any Material Adverse Change; and
14
(ii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible
change, in the rating accorded any securities of the Company or any of its
subsidiaries by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(c) Officers' Certificate. On the Closing Date, the Underwriters
shall have received a written certificate executed by the Chairman of the Board,
Chief Executive Officer or President of the Company and the Chief Financial
Officer of the Company, dated as of the Closing Date, to the effect set forth in
subsections (a)(ii) and (b)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Issuers
set forth in Section 1 of this Agreement are true and correct with the same
force and effect as though expressly made on and as of such Closing Date; and
(iii) each of the Company and the Guarantor has complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date.
(d) Opinion of Counsel for the Company. On the Closing Date,
the Underwriters shall have received the favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, counsel for the Issuers, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit A.
---------
(e) Opinion of Counsel for the Underwriters. On the Closing Date,
the Underwriters shall have received the favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Underwriters, dated as of the Closing Date.
(f) Pricing Opinion of the Independent Underwriter. On the Closing
Date, NMS and the Company shall have received the pricing opinion from the
Independent Underwriter, in the form attached hereto as Exhibit B.
---------
(g) Accountants' Comfort Letter. On the date hereof, the
Underwriters shall have received from each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and
PricewaterhouseCoopers LLP, a letter dated the date hereof addressed to the
Underwriters, in form and substance satisfactory to the Underwriters and their
counsel, containing statements and information of the type ordinarily included
in accountant's "comfort letters" to underwriters, delivered according to
Statement of Auditing Standards No. 72 (or any successor bulletin), with respect
to the audited and unaudited financial statements and certain financial
information of the Company and its subsidiaries contained in the Registration
Statement and the Prospectus.
(h) Bring-down Comfort Letter. On the Closing Date, the Underwriters
shall have received from each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and PricewaterhouseCoopers
LLP, a letter dated such date, in form and substance satisfactory to the
Underwriters, to the effect that they reaffirm the statements made in the letter
furnished by them pursuant to subsection (a) of this Section 5, except that the
specified date referred to therein for the carrying out of procedures shall be
no more than three business days prior to the Closing Date.
15
(i) Additional Documents. On or before the Closing Date, the
Underwriters and counsel for the Underwriters shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Underwriters by notice to the Company at any time on or prior to the Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 6, Section 8 and Section 9
hereof shall at all times be effective and shall survive such termination.
Section 6. Reimbursement of Underwriters' Expenses.
If this Agreement is terminated by the Underwriters pursuant to
Section 5, Section 7, Section 10 or Section 11 hereof, or if the sale to the
Underwriters of the Securities on the Closing Date is not consummated because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Underwriters (or such Underwriters as have terminated this
Agreement with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Underwriters in connection with the proposed purchase and the offering and sale
of the Securities, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 7. Effectiveness of this Agreement.
This Agreement shall not become effective until the later of (i)
the execution of this Agreement by the parties hereto and (ii) notification by
the Commission to the Company and the Underwriters of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by
any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) either the Company or
the Guarantor to any Underwriter, except that the Issuers shall be obligated to
reimburse the expenses of the Underwriters pursuant to Sections 4 and 6 hereof,
(b) any Underwriter to the Company or the Guarantor, or (c) any party hereto to
any other party, except that the provisions of Section 8 and Section 9 hereof
shall at all times be effective and shall survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. The Issuers, jointly and
severally, agree to indemnify and hold harmless each Underwriter (including the
Independent Underwriter in its role as qualified independent underwriter
pursuant to the rules of the NASD), its officers and employees, and each person,
if any, who controls any Underwriter within the meaning of the Securities Act or
the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter, any such officer or employee, or such
controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law
16
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be part thereof pursuant
to Rule 430A under the Securities Act, 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 (ii) upon any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; or (iii) in whole or in part upon any inaccuracy in
the representations and warranties of the Issuers contained herein; or (iv) in
whole or in part upon any failure of the Issuers to perform their obligations
hereunder or under law; or (v) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Securities or the offering contemplated hereby, and which relates to any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (i) or (ii) above, provided that the Issuers shall not be
liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct; or (vi) any act or failure to act or any
alleged act or failure to act by the Independent Underwriter in connection with
its role as qualified independent underwriter pursuant to the rules of the NASD
(provided that the Issuers shall not be liable under this clause to the extent
that it is determined in a final judgment of a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
acts or failures to act, undertaken or omitted to be taken by such Independent
Underwriter through its gross negligence or willful misconduct) and to reimburse
each Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by the Underwriters) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the foregoing indemnity agreement shall not apply to any loss,
claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Issuers by or on behalf of any of the
Underwriters expressly for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to any Preliminary Prospectus, the
foregoing indemnity shall not inure to the benefit of any Underwriter from whom
the person asserting any loss, claim, damage, liability or expense purchased
Securities, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. The indemnity set forth in this Section 8(a) shall be in addition to
any liabilities that the Issuers may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
each of the Company and the Guarantor, each
17
of its directors, each of the Company's officers who signed the Registration
Statement and each person, if any, who controls any Issuer within the meaning of
the Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which such Issuer, or any such director,
officer or controlling person may become subject, under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Issuers by the
Underwriters expressly for use therein; and to reimburse the Issuers, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by such Issuer, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Issuers
hereby acknowledge that the only information that the Underwriters have
furnished to the Issuers expressly for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto) are the statements set forth as the fourth paragraph, as the first
sentence of the sixth paragraph, as the seventh paragraph and as the ninth
paragraph under the caption "Underwriting" in the Prospectus; and the
Underwriters confirm that such statements are correct. The indemnity set forth
in this Section 8(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the
18
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (NMS in the case of Section 8(b) and Section 9), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there is a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and the indemnifying party has not responded to
such request in good faith and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
Section 9. Contribution.
If the indemnification provided for in Section 8 hereof is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Issuers, on the one hand, and the Underwriters, on the
other hand, from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Issuers, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers, on the one hand,
and the Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company, and the total underwriting discount received by
19
the Underwriters, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate initial public offering price of the Securities
as set forth on such cover. The relative fault of the Issuers, on the one hand,
and the Underwriters, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Issuers, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c) hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) hereof with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 9; provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8(c) hereof for purposes of
indemnification.
The Issuers and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Securities
underwritten by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each officer and employee of an
-----------
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Issuers, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Issuers with the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Issuers.
Section 10. Termination of this Agreement.
Prior to the Closing Date this Agreement maybe terminated by the
Underwriters by notice given to the Company if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the Nasdaq National Market, or trading in
securities generally on either the Nasdaq National Market or The New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal or state authorities; (iii) there shall have occurred
any outbreak or escalation of national or international hostilities or any
crisis or calamity, or any change in the United
20
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the judgment of
the Underwriters are material and adverse and makes it impracticable to market
the Securities in the manner and on the terms described in the Prospectus or to
enforce contracts for the sale of securities; (iv) in the judgment of the
Underwriters there shall have occurred any Material Adverse Change; or (v) the
Company shall have sustained a loss by strike, fire, flood, earthquake, accident
or other calamity of such character as in the judgment of the Underwriters may
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section 11 shall be without liability on the part
of (a) the Company to any Underwriter, except that the Company shall be
obligated to reimburse the expenses of the Underwriters pursuant to Sections 4
and 6 hereof, (b) any Underwriter to the Company, or (c) of any party hereto to
any other party except that the provisions of Section 8 and Section 9 hereof
shall at all times be effective and shall survive such termination.
Section 11. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of each of the Company and the Guarantor, of its
officers and of the Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Underwriter or any Issuer or any of its or their partners,
officers or directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Securities sold hereunder and any
termination of this Agreement.
Section 12. Notices.
All communications hereunder shall be in writing and shall be
mailed, hand delivered, overnight couriered or telecopied and confirmed to the
parties hereto as follows:
If to the Underwriters:
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
21
If to the Company:
Chattem, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President and Chief Operating Officer
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
100 Volunteer Building
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 13. Successors.
This Agreement will inure to the benefit of and be binding upon
the parties hereto, including any substitute Underwriters pursuant to Section 10
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9 hereof, and in each
case their respective successors, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Securities as such from any of the Underwriters merely by reason of such
purchase.
Section 14. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
Section 15. Governing Law Provisions.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT
OF LAW RULES THEREOF.
22
Section 16. General Provisions.
This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may be executed in two or more counterparts, each
one of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement may not be
amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. The Table of Contents and the
Section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 hereof and the contribution provisions
of Section 9 hereof, and is fully informed regarding said provisions. Each of
the parties hereto further acknowledges that the provisions of Sections 8 and 9
hereto fairly allocate the risks in light of the ability of the parties to
investigate the Company, its affairs and its business in order to assure that
adequate disclosure has been made in the Registration Statement, any Preliminary
Prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
[Signature pages follow]
23
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Issuers the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
CHATTEM, INC.
By:
-------------------------------------
Name: A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Operating
Officer
SIGNAL INVESTMENT & MANAGEMENT CO.
By:
---------------------------------------
Name: A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
24
The foregoing Agreement is hereby confirmed and accepted by the
Underwriters as of the date first above written.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇ BROTHERS INC.
By:
----------------------------------
Name:
Title:
25
SCHEDULE A
Aggregate Principal
Amount of Notes
Underwriters -------------------
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC .............. $52,500,000.00
▇▇▇▇▇▇ Brothers Inc................................. $22,500,000.00
==============
Total.......................................... $75,000,000.00
26
SCHEDULE B
SUBSIDIARIES
Jurisdiction of
---------------
Name Incorporation
---- -------------
Signal Investment & Management Co. Delaware
Chattem (Canada) Inc. Canada
Chattem (U.K.) Limited United Kingdom
HBA Insurance, Ltd. Bermuda
27
EXHIBIT A
Form of opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP.
1. Each of the Company and the Guarantor is validly existing as a
corporation and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and the Guarantor is duly qualified to do
business and in good standing as a foreign organization in each jurisdiction
with respect to which it has certified to us that it owns property, maintains
business or has employees (except where failure to so qualify would not, singly
or in the aggregate, reasonably be expected to have a Material Adverse Effect).
2. Each of the Company and the Guarantor has the corporate power
and authority to execute and deliver, and to consummate the transactions
contemplated by, the Underwriting Agreement; the Company has the corporate power
and authority to issue and deliver the Notes as contemplated by the Underwriting
Agreement; the Guarantor has the corporate power and authority to issue and
deliver the Guarantee as contemplated by the Underwriting Agreement.
3. The execution and delivery of the Underwriting Agreement have
been duly authorized by all requisite corporate action of the Company and the
Guarantor; and the Underwriting Agreement has been duly executed and delivered
by, and is a valid and binding agreement of, the Company enforceable against the
Company and the Guarantor.
4. The execution and delivery of the Indenture have been duly
authorized by all requisite corporate action of the Company and the Guarantor;
and the Indenture has been duly executed and delivered by the Company and the
Guarantor, and assuming due authorization, execution and delivery by the
Trustee, is a valid and binding agreement of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with its terms,
except that enforcement thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law) and the exercise of discretionary authority
of any court before which a proceeding may be brought.
5. The execution and delivery of the Securities have been duly
authorized by all requisite corporate action of the Company and the Guarantor;
the Notes have been duly executed and delivered by the Company and the
Guarantees have been duly executed and delivered by the Guarantor and, assuming
due authentication by the Trustee, the Notes and the Guarantees are valid and
binding obligations of the Company and the Guarantor respectively, entitled to
the benefits of the Indenture, enforceable against the Company and the Guarantor
in accordance with their terms, except that enforcement thereof may be subject
to (A) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law) and
the exercise of discretionary authority of any court before which a proceeding
may be brought. The Notes have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and
paid for by the Underwriters in accordance with this Agreement, will constitute
the valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
6. All of the capital stock of the Company's subsidiaries is
owned of record by the Company, except for directors' qualifying shares in the
case of Chattem (U.K.) Ltd. and HBA Insurance Ltd. All shares of capital stock
of the Company's subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable (except that no opinion is expressed with respect
to Chattem (U.K.) Ltd. and HBA Insurance Ltd.) and except as disclosed in the
Prospectus, to our knowledge, all such shares are owned by the Company free and
clear of any security interests, liens, pledges or encumbrances.
7. To the knowledge of such counsel, neither the Company nor any
of its subsidiaries is in violation of its corporate charter or bylaws, or in
default under any material agreement (including loan and credit agreements),
indenture or instrument known to such counsel, which default could, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect; to the
best knowledge of such counsel, the Company and each of its subsidiaries is not
in violation of any material law, ordinance, governmental rule or regulation or
court decree to which it may be subject which violation, singly or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
8. The execution and delivery by the Company and the Guarantor
of the Underwriting Agreement and the Indenture and the consummation by the
Company and the Guarantor of the other transactions contemplated thereby and by
the Prospectus will not (A) to the knowledge of such counsel, result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any material agreement or instrument of the Company or any of its
subsidiaries or (B) result in any violation of the provisions of the charter or
bylaws of the Company or any of its subsidiaries, or, to the knowledge of such
counsel, any applicable law, rule or regulation with respect to the Company or
any of its subsidiaries or, to the knowledge of such counsel, any rule or
regulation or order of any court or governmental agency having jurisdiction over
the Company or any of its subsidiaries, except for such violations that would
not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and, to the knowledge of such counsel, except for such consents,
approvals or authorizations of, or filings, registrations or qualifications
with, governmental authorities as may be required under the Securities Act and
the rules and regulations thereunder, the Trust Indenture Act and the rules and
regulations thereunder or applicable states securities or Blue Sky laws, rules
or regulations (all of such laws, rules and regulations are collectively
referred to herein as "Securities Laws") in connection with the purchase and
distribution of the Notes by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required in connection with the execution and
delivery by the Company and the Guarantor of the Underwriting Agreement or the
Indenture or the consummation by the Company and the Guarantor of the other
transactions contemplated thereby and by the Prospectus and the issuance and
sale of the Securities by the Company and the Guarantor.
9. The descriptions in the Prospectus of the Indenture and the
Securities are accurate summaries of such documents in all material respects.
10. To the knowledge of such counsel, the Company and its
subsidiaries, both before and immediately after giving effect to the transaction
contemplated by the Underwriting Agreement, own
or otherwise possess the right to use all patents, trademarks, service marks,
trade names and copyrights, all applications and registrations for each of the
foregoing, used in the conduct of their respective businesses as currently
conducted; and, to the knowledge of such counsel, except as disclosed in the
Prospectus, neither the Company nor any of its subsidiaries has received any
notice, of any infringement of or conflict with the rights of any third party
with respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect on the Company.
11. To the knowledge of such counsel, the statements (i) in the
Prospectus under the headings "Risk Factors -- Government Regulation," "Risk
Factors -- Reliance on Brands; Intellectual Property Concerns," "Risk Factors --
Environmental Matters, "The Company -- Trademarks and Patents," "The Company --
Government Regulation," "The Company -- Environmental Matters," and "Certain
United States Federal Tax Considerations For Non-United States Holders," (ii) in
Item 14 and Item 15 of Part II of the Registration Statement and (iii)
incorporated by reference under the caption "Incorporation of Certain Documents
by Reference" in the Prospectus, insofar as such statements constitute matters
of law or legal conclusions, have been reviewed by us and fairly present in all
material respects the information disclosed therein
12. To such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company or any of its subsidiaries is a
party that would be required under the Securities Act to be described in the
Registration Statement that are not so described or, to our knowledge, that seek
to restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Securities to the Underwriters or the consummation of
the transactions described in the Prospectus under the caption "Use of
Proceeds."
13. Neither the Company nor any of its subsidiaries is subject to
registration and regulation as an "investment company" within the meaning of the
Investment Company Act.
14. The Registration Statement has been declared effective by the
Commission under the Securities Act. No stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act, and no
proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b).
15. The Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue
dates, comply as to form in all material respects with the requirements for
registration statements on Form S-3 under the Securities Act and the Exchange
Act.
16. Except as disclosed or incorporated by reference in the
Prospectus, to our knowledge, there are no persons with registration or other
similar rights to have any equity or debt securities registered for sale under
the Registration Statement or included in the offering contemplated by the
Underwriting Agreement, except for such rights as have been duly waived.
17. No shareholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe for
or purchase securities of the Company arising (i) by operation of the charter or
by-laws of the Company or (ii) by operation of the Tennessee Business
Corporation Act or (ii) to our knowledge, otherwise.
In addition, such counsel shall also state that such counsel has
participated in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company and the
Underwriters and their counsel at which the contents of the Prospectus and
related matters were discussed and, although we are not passing upon and do not
assume any responsibility for and have not verified the accuracy, completeness
or fairness of the statements contained in the Prospectus, and have not made any
independent check or verification thereof, on the basis of the foregoing
(relying as to materiality to the extent we deem appropriate upon facts provided
by officers and other representatives of the Company), no facts have come to our
attention that lead us to believe that (i) the Registration Statement, at the
time it became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Prospectus, as of its
date or as of the date hereof, contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which there were made, not misleading (it
being understood that we do not express any belief or opinion with respect to
the financial statements, schedules and other financial and statistical data
included in, or omitted from, the Registration Statement or the Prospectus).