Exhibit 1.4
▇▇▇▇▇-ILLINOIS, INC.
$250,000,000 7.80% Senior Debentures due 2018
UNDERWRITING AGREEMENT
May 14, 1998
May 14, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
BT ALEX. ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
▇▇▇▇▇▇▇, SACHS & CO.
▇▇▇▇▇▇ BROTHERS INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC.
SALOMON BROTHERS INC
c/o MORGAN ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
▇▇▇▇▇-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $250,000,000 principal amount of its 7.80% Senior
Debentures due 2018 (the "Securities") to be issued pursuant to the provisions
of an Indenture dated as of May 20, 1998 (the "Indenture") by and between the
Company and The Bank of New York, as Trustee (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.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"),
Post-Effective Amendment No. 1 to the Registration Statement (File No.
333-25175), as amended, relating to the Securities and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act. Such
registration statements, as amended, have 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 the Preliminary Prospectus (as defined
herein) pursuant to Rule 424(b) under the Securities Act in accordance with Rule
424(b) under the Securities Act.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that the
Registration
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Statement and any post-effective amendment or amendments thereto became or
become effective. "Execution Time" shall mean the date and 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 Securities prior
to the date hereof and any preliminary prospectus included in the Registration
Statement at the Effective Date. "Prospectus" shall mean the prospectus,
including any prospectus supplement relating to the Securities, that is first
filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final prospectus relating to
the Securities included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement (File No.
333-47519) referred to above, including incorporated documents and financial
statements, as amended at the Execution Time and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date (as
defined herein), shall also mean such registration statement as so amended. Any
reference herein to the Registration Statement, a Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") on or
before the Effective Date of the Registration Statement or the issue date of
such Preliminary Prospectus or the Prospectus, as the case may be; 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.
1. Representations and Warranties. (a) The Company represents and
warrants, as of the date hereof and as of the Closing Date, to and agrees with
each of the Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement, at the time the Registration
Statement became effective, as of the Closing Date and as amended or
supplemented, if applicable, and the Prospectus, when it is first filed in
accordance with Rule 424(b) under the Securities Act and on the Closing
Date, complied and will comply, as the case may be, in all material
respects with the requirements of the
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Securities Act and the applicable rules and regulations of the Commission
thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or 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.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
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) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented 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 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 (A) to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus or (B) to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification under the Trust
Indenture Act (Form T-1) of the Trustee under the Indenture.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, 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 the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit to state a material
fact required to be stated therein
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or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(v) Each of Ernst & Young LLP and Ernst & Young (Australia), who are
reporting upon the audited financial statements and schedules included or
incorporated by reference in the Registration Statement and the
Prospectus, each as amended or supplemented, if applicable, are
independent public accountants as required by the Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company 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, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the
Preliminary Prospectus and the Prospectus under the heading "Unaudited Pro
Forma Condensed Consolidated Financial Information" have been prepared on
a basis consistent with the historical statements referred to in (vi)
above, except for the pro forma adjustments specified therein, and (A)
include all material adjustments to the historical financial data required
by Rule 11-02 of Regulation S-X necessary to reflect the Acquisition and
the related financing and the Offerings (each as defined in the
Preliminary Prospectus or the Prospectus), (B) give effect to the
assumptions made on a reasonable basis, (C) present fairly in all material
respects, the historical and proposed transactions contemplated by the
Preliminary Prospectus and the Prospectus and (D) comply in all material
respects with the requirements of Rules 11-01 and 11-02 of Regulation S-X;
and the other pro forma financial information and pro forma financial data
set forth in the Prospectus under the captions "Summary -- Summary
Historical and Pro Forma Financial Data" and "Consolidated Capitalization"
are derived from such
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"Unaudited Pro Forma Condensed Consolidated Financial Information.
(viii) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), properties, assets, business or results of operations of the
Company and its subsidiaries, considered as one enterprise (a "Material
Adverse Effect").
(ix) Each subsidiary of the Company that is a "Significant
Subsidiary" (as defined in Rule 1-02 of Regulation S-X under the
Securities Act) (hereinafter a "Significant Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including ▇▇▇▇▇-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain
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securities of the Company, who have the right to request the Company to
register securities held by them under the Securities Act, except for the
Registration Rights Agreement dated as of March 17, 1986 by and among OII
Holdings Corporation (the predecessor in interest to the Company), KKR
Partners II, L.P., OII Associates, L.P., OII Associates II, L.P. and KKR
Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Company has the corporate power and authority to execute
and deliver the Indenture and to perform its obligations provided for
therein; the Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by the Company substantially in the form
filed as an exhibit to the Registration Statement and, when executed and
delivered by the Company and assuming due execution and delivery by the
Trustee, will be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and as rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability (whether
enforcement is considered in a proceeding in equity or at law); and the
Indenture conforms in all material respects to the description thereof
contained in the Prospectus.
(xv) The Company has the corporate power and authority to execute,
issue and deliver the Securities and to incur and perform its obligations
provided for therein; the Securities have been duly authorized and, when
executed, issued and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and
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as rights of acceleration, if any, and the availability of equitable
remedies may be limited by equitable principles of general applicability
(whether enforcement is considered in a proceeding in equity or at law);
and the Securities conform in all material respects to the descriptions
thereof contained in the Prospectus.
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvii) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or its subsidiaries
is subject or by which any of them or any of their properties or assets
may be bound or affected, (B) in violation of any existing applicable law,
ordinance, regulation, judgment, order or decree of any government,
governmental instrumentality, arbitrator or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets or (C) in each case to the knowledge of the
Company, in violation of or has violated any permit, certificate, license,
order or other approval or authorization required in connection with the
operation of its business that, with respect to each of clause (A), (B)
and (C) of this paragraph, would (individually or in the aggregate) (I)
adversely affect the legality, validity or enforceability of this
Agreement, the Indenture or the Securities, (II) have a Material Adverse
Effect or (III) impair the ability of the Company to fully perform on a
timely basis any
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obligations that it has under this Agreement, the Indenture or the
Securities.
(xviii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the Indenture, the compliance by the Company with the terms herein and
therein and the consummation by the Company of the transactions
contemplated hereby, thereby and in the Registration Statement and the
Prospectus, do not and will not result in a violation of any of the terms
or provisions of the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, and (A) will not, as of the Closing
Date, 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, note, lease or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties
or assets is bound, except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or (B) do not and
will not conflict with or result in a breach or violation of any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for any conflict, breach or violation
that would not have a Material Adverse Effect.
(xix) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for (A) the due authorization, execution,
delivery and performance by the Company of this Agreement and the
Indenture or the valid authorization, issuance, sale and delivery of the
Securities, except (I) such as may be required by the securities or blue
sky laws of the various states (the "Blue Sky laws") in connection with
the offer and sale of the Securities and (II) for such authorizations,
approvals, consents or orders of, or qualifications with, any governmental
body or agency that are required and have been received and are in full
force and effect as of the Closing Date.
(xx) There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company,
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threatened, against or affecting the Company or any of its subsidiaries or
any of their properties and assets that (A) is required to be disclosed in
the Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or the Indenture or any of the transactions contemplated hereby
or thereby or (D) questions the legality or validity of any such
transaction or seeks to recover damages or obtain other relief in
connection with any such transaction, and, in each case to the knowledge
of the Company, there is no valid basis for any such action, suit,
investigation or proceeding; the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries
is a party or that affect any of their properties and assets that are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to its business, would not have a
Material Adverse Effect.
(xxi) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required or, in the case of exhibits,
will not be so filed promptly after the Closing Date.
(xxii) Each of the Company and its subsidiaries has good title to
all properties owned by them, in each case free and clear of all liens
except (A) as do not materially interfere with the use made and proposed
to be made of such properties, (B) as set forth in the Registration
Statement and the Prospectus or (C) as could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Registration Statement or the
Prospectus, except to the extent that the failure to so obtain or file
would not have a Material Adverse Effect.
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(xxiv) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
(xxvii) The Securities are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the
Exchange Act.
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(xxviii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940 Act")
(xxix) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Agreement to Sell and Purchase. The Company hereby agrees,
subject to the terms and conditions set forth herein, to sell to the several
Underwriters, and, upon the basis of the representations and warranties herein
contained and subject to the conditions hereinafter stated, each Underwriter
agrees, severally and not jointly, to purchase from the Company (A) the
respective principal amounts of Securities set forth in Schedule I hereto
opposite its name at 98.482% of their respective principal amounts (the
"Securities Purchase Price") plus accrued interest, if any, from May 20, 1998 to
the date of payment and delivery, calculated on the basis of a 360-day year of
twelve 30-day months.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable. The Company is further advised by you that the
Securities are to be offered to the public initially at 99.982% of their
principal amount (the "Securities Public Offering Price") plus accrued interest,
if any, from May 20, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
.65% of their principal amount under the Securities Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of .40% of their principal amount, to any Underwriter or to certain
other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company by wire transfer in federal funds or other funds immediately
available in New York City or through the facilities of The Depository Trust
Company of the Securities Purchase Price against delivery of
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such Securities for the respective accounts of the several Underwriters at 10:00
A.M., New York City time, on May 20, 1998, or at such other time on the same or
such other date, not later than May 26, 1998, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Closing Date."
Payment for the Securities shall be made against delivery to you for
the respective accounts of the several Underwriters of global certificates
representing the Securities registered in the name of Cede & Co. with any
transfer taxes payable in connection with the transfer of the Securities to the
Underwriters duly paid.
The Company agrees to have the global certificates referred to above
available for inspection and checking by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated in
New York, New York, not later than 1:00 P.M., New York City time on the business
day prior to the Closing Date.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g) (2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock.
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by
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the Chairman of the Board or the president or a Vice President and the
Treasurer or Controller of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility of the Trustee on
Form T-1. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, such counsel has assumed
that the statements made therein (or incorporated by reference
therein) are correct and complete;
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the
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effectiveness of the Registration Statement has been issued under
the Securities Act and no proceedings therefor have been initiated
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;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
property and to conduct its business as described in the
Registration Statement and the Prospectus;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Indenture has been (A) duly qualified under the Trust
Indenture Act and (B) duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by the Trustee, will be a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms except (i) as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors, (ii) as may be limited by the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or law, and the discretion of the court before
which any proceeding therefor may be brought; (iii) the
enforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to liability where such
indemnification or contribution is contrary to public policy; (iv)
such counsel shall not be required to express any opinion concerning
the enforceability of the waiver or right or defenses contained in
Section 4.06 of the Indenture; and (v) the manner by which the
acceleration of the Securities may affect the collectibility of that
portion of the stated principal amount thereof which might be
determined to constitute unearned interest thereon;
(vi) the Securities, when executed and authenticated in
accordance with the terms of the
15
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be legally valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms except (i) as may be limited
by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) as may be
limited by the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the enforceability under certain circumstances under
law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to
liability where such indemnification or contribution is contrary to
public policy; (iv) such counsel shall not be required to express
any opinion concerning the enforceability of the waiver or rights or
defenses contained in Section 4.06 of the Indenture; and (v) the
manner by which the acceleration of the Securities may affect the
collectibility of that portion of the stated principal amount
thereof which might be determined to constitute unearned interest
thereon;
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or New York statute, or any
rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or New York
statute known to such counsel to be applicable to the Company
(except that no opinion shall be expressed with respect to federal
or state securities or "blue sky" laws) or (B) the breach of or a
default under (i) any indenture or other agreement or instrument
pertaining to the Company's long-term debt listed in the Prospectus
Supplement under the caption "Consolidated Capitalization",
excluding long-term debt listed as "Other," or (ii) any court or
administrative orders, writs, judgments or decrees specifically
directed to the Company and identified to such counsel by an officer
of the Company as material to the Company;
16
(viii) to such counsel's knowledge, no authorization,
approval, consent or order of, or filing or qualification with, any
federal or New York State court or governmental body or agency is
required to be obtained or made by the Company for the execution and
delivery by the Company of this Agreement and the Indenture or the
issuance and sale of the Securities by the Company, except (A) such
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities and
(B) except such as have been obtained or made;
(ix) the statements set forth in the Prospectus under the
caption "Description of the Debentures" insofar as such statements
constitute summaries of the documents referred to therein, are
accurate in all material respects; and the Securities conform in all
material respects to the description thereof incorporated by
reference in the Prospectus;
(x) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations" insofar
as such statements constitute a summary of legal matters, are
accurate in all material respects; and
(xi) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and have not made any independent check or
verification thereof (except as set forth in paragraphs (ix) and (x) above),
during the course of such participation, no facts came to such counsel's
attention that caused such counsel to believe that the Registration Statement
(including the incorporated documents), 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 that the Prospectus (including the incorporated documents),
17
as of its date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that such
counsel express no belief with respect to the financial statements, schedule and
other financial data or the Statement of Eligibility of the Trustee on Form T-1
included or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than ▇▇▇▇▇-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver
18
the foregoing opinion: Continental PET Holdings Pty Limited,
▇▇▇▇▇-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.l.)
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all of the issued and outstanding capital stock of each
significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and all of the issued and
outstanding capital stock of such Significant Subsidiaries, except
as set forth on Schedule II hereto, is owned of record by the
Company, directly or through subsidiaries, and is free and clear of
any material lien, claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
(v) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) (B) the
breach of or default under (I) any indenture or other agreement or
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one
enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such counsel;
(vi) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its
19
subsidiaries is a party or to which any of the properties or assets
of the Company or any of its subsidiaries is subject that is
required to be described in the Registration Statement or the
Prospectus and is not so described therein; or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
described or filed as required, except such exhibits which are
permitted, pursuant to the Securities Act, to be filed subsequently
on a Current Report on Form 8-K; and
(vii) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility of the Trustee on Form T-l. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel has assumed that the statements made
therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), 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 that the Prospectus, as of its
date and as of the Closing Date, contained or
20
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; it
being understood that such counsel expresses no belief with respect to the
financial statements, schedules and other financial data included or
incorporated by reference in the Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder
and the Trust Indenture Act and the regulations thereunder, and neither
the Registration Statement nor the Prospectus, as they may then be amended
or supplemented, shall 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 case of the Prospectus, in the
light of the circumstances under which they were made, not misleading;
(ii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement, any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus
other than as set forth therein and no proceedings shall be pending or, to
the knowledge of the Company, threatened against it or any of its
subsidiaries before
21
or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect, other than as set forth in the prospectus; (iv)
the Company shall have complied with all material agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date; and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement and the Indenture, each as contemplated in this Agreement, shall
be reasonably satisfactory in form and substance to you and to your
counsel.
(i) If Securities are to be listed on the New York Stock Exchange
(the "NYSE"), such Securities shall have been duly authorized for listing
on the NYSE at or by the Closing Date, subject only to official notice of
issuance thereof and notice of a satisfactory distribution of the
Securities.
22
(j) Prior to the Closing Date, the Company shall have furnished to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated such further information, certificates
and documents as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated may reasonably request.
(k) On or prior to the Closing Date, the Company shall have (i)
completed the public offering of 13,800,000 shares of its Common Stock,
par value $.0l per share, as contemplated by the Prospectus Supplement
dated May 14, 1998 relating thereto and the accompanying Prospectus dated
April 20, 1998 and (ii) completed the public offering of 8,000,000 shares
of its Convertible Preferred Stock, par value of $.0l per share, as
contemplated by the Prospectus Supplement dated May 14, 1998 relating
thereto and the accompanying Prospectus dated April 20, 1998.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10 (a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second
23
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required under the Securities Act;
to make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein;
(b) To furnish to each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and its
counsel, without charge, one signed copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto)
and, during the period mentioned in paragraph (d) below, as many copies of
the Preliminary Prospectus and the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
24
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to the Registration Statement,
(ii) of the mailing or the delivery to the Commission for filing of any
supplement to the Preliminary Prospectus or the Prospectus or any document
to be filed pursuant to the Exchange Act which will be incorporated by
reference into the Registration Statement, Preliminary Prospectus or the
Prospectus, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement, the Preliminary Prospectus or the
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary
Prospectus or the Prospectus or for additional information and (v) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for
that purpose. The Company will make every commercially reasonable effort
to prevent the issuance of any stop order and, if any stop order is
issued, to obtain, as soon as possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act, the Exchange Act and the Trust Indenture Act and the
regulations thereunder so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and the Prospectus;
and the Company, during the period when the Preliminary Prospectus and the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant
to Section 13 or 14 of the Exchange Act within the time periods required
under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect
25
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have
been qualified as above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period covered
thereby a consolidated earnings statement for a twelve-month period
beginning after the effective date (as defined in Rule 158 (c) under the
Securities Act) of the Registration Statement relating to such Securities,
but not later than the first day of the Company's fiscal quarter next
following such effective date and that otherwise satisfies the provisions
of Section 11(a) of the Securities Act and the regulations thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the
Securities (other than (i) the Securities and (ii) any debt securities of
the Company with a maturity of less than one year), without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
(l) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the
26
Securities; (iii) the fees and disbursements of the Company's counsel and
accountants and of the Trustee and its counsel; (iv) the qualification of
the Securities under the state securities or blue sky laws in accordance
with the provisions of Section 6(g) herein, including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the preliminary and
final state securities laws or blue sky surveys (the "Blue Sky Surveys")
or any Legal Investment Memoranda; (v) the printing and delivery to the
Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of each Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto;
(vi) the printing and delivery to the Underwriters of copies of the Blue
Sky Surveys or any Legal Investment Memoranda; (vii) any fees charged by
rating agencies for the rating of the Securities or the listing, if any,
of the Securities on the NYSE; (viii) the filing fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc. (the "NASD") made in connection with the offering
of the Securities; (ix) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (x) document
production charges, if any, of counsel to the Underwriters incurred in
connection with the preparation of the Indenture.
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter
27
through you expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if 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 Securities to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities unless such failure is the result of
non-compliance by the Company with Section 7(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) of this Section
8, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
28
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a)
above and by the Company, in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (not to be
unreasonably withheld), but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party 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 (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 of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless (i) such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 8 is unavailable to an indemnified party or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
29
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amounts of Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this
30
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (c) acceptance of and payment for any of
the Securities.
10. Termination. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated may terminate
this Agreement by notice to the Company, at any time at or prior to the Closing
Date (a) if there has been, since the respective dates as of which information
is given in the Registration Statement or the Prospectus, any Material Adverse
Change, or any development involving a prospective Material Adverse Change or
(b) if there has occurred any new outbreak of hostilities or escalation of
existing hostilities or other calamity or crisis the effect of which on the
financial markets in the United States is such as to make it, in your judgment,
impracticable to market the Securities or enforce contracts for the sale of the
Securities, or (c) if trading in any securities of the Company has been
suspended on any exchange or in any over-the-counter market or by the
Commission, or if trading generally on the NYSE has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission or
any other governmental authority or (d) if a general moratorium on commercial
banking activities in New York State has been declared by either federal or New
York State authorities.
11. Defaulting Underwriters. If, on the Closing Date, any one or
more of the Underwriters shall fail or refuse to purchase and pay for the
Securities that it has or
31
they have agreed to purchase hereunder on such date, and the aggregate principal
amount of Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Securities set forth opposite their respective names in Schedule I
bears to the principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase and pay
for the Securities and the aggregate principal amount of Securities with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
12. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
given (and shall be deemed to have been given upon receipt) by delivery in
person, by cable, by telecopy, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
(a) if to the Underwriters:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
32
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Company:
▇▇▇▇▇-Illinois, Inc.
One ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
General Counsel
with a copy to:
Kohlberg Kravis & ▇▇▇▇▇▇▇ & Co.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Partner
and with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
16. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
17. Authority of Representative. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
hereby represents and warrants to the Company that it has the authority to act
as agent on behalf of the Underwriters named in Schedule I and the Company shall
be
33
entitled to rely upon statements, notices, requests and agreements made by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters.
Very truly yours,
▇▇▇▇▇ - ILLINOIS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
BT ALEX. ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
▇▇▇▇▇▇▇, SACHS & CO.
▇▇▇▇▇▇ BROTHERS INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
SALOMON BROTHERS INC
Acting severally on behalf
of themselves and the several
Underwriters named herein
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Title: Managing Director
34
SCHEDULE I
Principal Amount
of 7.80% Senior
Debentures due
2018
Underwriter To Be Purchased
----------- ---------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated ........................... $100,000,000
BT Alex. ▇▇▇▇▇ Incorporated ............ 25,000,000
Credit Suisse First Boston
Corporation ............................ 25,000,000
▇▇▇▇▇▇▇, Sachs & Co .................... 25,000,000
▇▇▇▇▇▇ Brothers Inc. ................... 25,000,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ ................. 25,000,000
Securities LLC
Salomon Brothers Inc ................... 25,000,000
Total .................................. $250,000,000
============
35
Schedule II
Upon the consummation of the Senior Note Offerings, 100% of the
shares of capital stock of each Significant Subsidiary will be, directly or
indirectly, owned by the Company free and clear of any material lien, except
that the Company owns approximately 99% of the outstanding shares of AVIR S.p.A.