EXHIBIT 1.1
$381,113,000
▇.▇. ▇▇▇▇▇▇, INC.
Zero Coupon Convertible Senior Notes Due 2021
UNDERWRITING AGREEMENT
----------------------
May 4, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇.▇. ▇▇▇▇▇▇, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell $381,113,000 aggregate principal amount at maturity of its Zero
Coupon Convertible Senior Notes Due 2021 (the "Firm Notes") and, at the election
of the Underwriter (as defined below), an aggregate of up to an additional
$57,166,000 aggregate principal amount at maturity (the "Optional Notes") of its
Zero Coupon Convertible Senior Notes Due 2021 (the Firm Notes and the Optional
Notes are herein collectively referred to as the "Notes") to ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. (the "Underwriter"). The Notes are to be issued pursuant to the
provisions of an Indenture dated as of June 9, 1997 as supplemented (the
"Indenture") and the supplemental indenture thereto to be dated May 11, 2001
(the "Supplemental Indenture"), among the Company, certain subsidiaries of the
Company and American Stock Transfer and Trust Company, as Trustee (the
"Trustee"). The Company's obligations under the Indenture and the Notes will be
unconditionally guaranteed (the "Guarantees"), jointly and severally, by each of
the subsidiaries of the Company listed on the signature pages hereof (the
"Guarantors"). The Company and the Guarantors are collectively referred to
herein as the "Issuers" and the Notes and the Guarantees are collectively
referred to herein as the "Securities."
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the published rules and regulations of the Commission thereunder (collectively,
the "Act"), a registration statement on Form S-3 (No. 333-57388), including a
base prospectus relating to the Securities. The registration statement as
amended at the time it became effective on April 20, 2001, including information
(if any) deemed to be part of the registration statement at the time of
effectiveness
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pursuant to Rule 430A under the Act, is hereinafter referred to as the
"Registration Statement"; and the base prospectus dated April 20, 2001 (the
"Base Prospectus"), as supplemented by the prospectus supplement relating to the
Securities in the form first used to confirm sales of Securities (the
"Prospectus Supplement"), is hereinafter referred to as the "Prospectus." 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 under the Act, as of the
effective date of the Registration Statement or the date of such preliminary
prospectus or the Prospectus (the "Incorporated Documents"), and, except as
otherwise indicated, when reference is made to information "in" (including by
use of the terms "set forth in," "described in" and similar terms) the
Prospectus or the Registration Statement, such reference shall be deemed to
include information incorporated by reference in the Prospectus or the
Registration Statement, as the case may be.
2. Agreements To Sell and Purchase. The Company agrees to issue and
sell, and, on the basis of the representations and warranties contained in this
Underwriting Agreement (the "Agreement") and subject to its terms and
conditions, the Underwriter agrees to purchase from the Company, all of the Firm
Notes. The aggregate purchase price for the Firm Notes shall be equal to (x)
52.478% of the principal amount at maturity of the Firm Notes, plus (y) the
increase in accreted value of the Firm Notes, if any, from May 11, 2001 to the
First Closing Date (as hereinafter defined) (assuming for this purpose that they
had been outstanding since May 11, 2001), minus (z) $11.81 per $1,000 principal
amount at maturity of the Firm Notes.
3. Terms of Public Offering. The Company is advised by the Underwriter
that the Underwriter proposes to make a public offering of the Securities as
soon after the execution and delivery of this Agreement as in the judgment of
the Underwriter is advisable on the basis set forth in the Prospectus
Supplement.
4. Delivery and Payment. Delivery to the Underwriter of and payment
for the Firm Notes shall be made at 10:00 A.M., New York City time, on May 11,
2001 (the "First Closing Date"), at such place as you shall designate. The First
Closing Date and the location of delivery of and the form of payment for the
Firm Notes may be varied by agreement between you and the Company.
In addition, upon written notice from the Underwriter given to the
Company from time to time not more than 30 days subsequent to the First Closing
Date, the Underwriter may purchase all or less than all of the Optional Notes at
an aggregate purchase price equal to (x) 52.478% of the principal amount at
maturity of the Optional Notes purchased, plus (y) the increase in accreted
value of such Optional Notes from May 11, 2001 to the related Optional Closing
Date (assuming for this purpose that they had been outstanding since May 11,
2001), minus (z) 2.25% of the sum of clauses (x) and (y). The Company agrees to
sell to the Under-
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writer the amount of Optional Notes specified in such notice and the Underwriter
agrees to purchase such Optional Notes. Such Optional Notes may be purchased by
the Underwriter only for the purpose of covering over-allotments made in
connection with the sale of the Firm Notes. No Optional Notes shall be sold or
delivered unless the Firm Notes previously have been, or simultaneously are,
sold and delivered. The right to purchase the Optional Notes or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by the
Underwriter to the Company.
Each time for the delivery of and payment for the Optional Notes,
being herein referred to as the "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by the
Underwriter but shall not be later than seven full business days after written
notice of election to purchase Optional Notes is given.
Certificates for the Securities to be issued on any Closing Date shall
be registered in such names and issued in such denominations as you shall
request in writing not later than two full business days prior to such Closing
Date. Such certificates shall be made available to you for inspection not later
than 9:30 A.M., New York City time, on the business day next preceding such
Closing Date. Certificates in definitive form evidencing the Securities shall
be delivered to you on such Closing Date with any transfer taxes thereon duly
paid by the Company, for the account of the Underwriter, against payment of the
purchase price therefor by wire or certified or official bank checks payable in
Federal funds to the order of the Company. If the Securities will be issued in
book-entry form, the Company shall deposit the global certificate(s)
representing the Securities with the Depository Trust Company ("DTC"), or its
designated custodian, at such Closing Date, and the Company will deliver such
global certificate(s) to the Underwriter by causing DTC to credit the Securities
to the accounts of the Underwriter at DTC against payment therefor as set forth
above.
5. Agreements of the Issuers. The Issuers, jointly and severally,
agree with the Underwriter as follows:
(a) The Issuers will, if necessary or required by law, file an
amendment to the Registration Statement or, if necessary pursuant to Rule
430A under the Act, a post-effective amendment to the Registration
Statement, as soon as practicable after the execution and delivery of this
Agreement, and will use their best efforts to cause the Registration
Statement or such post-effective amendment to become effective at the
earliest possible time. The Company will comply fully and in a timely
manner with the applicable provisions of Rule 424 and Rule 430A under the
Act.
(b) The Issuers will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of the effectiveness of any
amendment to the Registration
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Statement; (ii) of the transmission to the Commission for filing of any
supplement to the Prospectus (including any document that would as a result
of such filing become an Incorporated Document) and to furnish you with
copies thereof; (iii) of the receipt of any comments from the Commission
that relate to the Registration Statement or of any request by the
Commission for amendment of or a supplement to the Registration Statement
or the Prospectus or for additional information; (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of the
Prospectus or of the suspension of qualification of the Securities for
offering or sale in any jurisdiction or the initiation or the threatening
of any proceeding for such purpose; and (v) within the period of time
referred to in paragraph (e) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth
or results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply with
the Act or any other law. If at any time any stop order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of the Prospectus or suspending any such qualification
shall be issued, the Issuers will promptly use their best efforts to obtain
the withdrawal of such order at the earliest possible time.
(c) The Issuers will furnish to you, without charge, (i) five copies
of the registration statement as originally filed with the Commission and
of each amendment thereto, including all exhibits thereto, (ii) the
Prospectus and any amendment or supplement thereto, (iii) such number of
copies of the registration statement as originally filed and of each
amendment thereto, but without exhibits, as you may request, (iv) such
number of copies of the Incorporated Documents, without exhibits, as you
may request, and (v) five copies of the exhibits to the Incorporated
Documents.
(d) The Issuers will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus or, prior
to the end of the period of time referred to in paragraph (e) below, file
any document which, upon filing becomes an Incorporated Document, of which
you shall not previously have been advised or to which, after you shall
have received a copy of the document proposed to be filed, you shall
reasonably object.
(e) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion
of counsel for the Un-
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derwriter a prospectus is required by the Act to be delivered in connection
with sales by the Underwriter or any dealer, the Issuers will expeditiously
deliver to the Underwriter and each dealer, without charge, as many copies
of the Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. The Issuers consent to the use of the Prospectus (and
of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Securities are offered by the Underwriter and by all dealers to
whom Securities may be sold, both in connection with the offering and sale
of the Securities and for such period of time thereafter as the Prospectus
is required by the Act to be delivered in connection with sales by the
Underwriter or any dealer.
(f) If during the period of time referred to in paragraph (e) above
any event shall occur as a result of which, in the judgment of the Issuers
or in the opinion of counsel for the Underwriter, it becomes 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 it is necessary to amend or supplement the
Prospectus to comply with the Act or any other law, the Issuers will
forthwith prepare and, subject to the provisions of paragraph (d) above,
file with the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with law,
and to furnish to the Underwriter and to such dealers as you shall specify
such number of copies thereof as the Underwriter or such dealers may
reasonably request. In the event that the Issuers and you agree that the
Prospectus should be amended or supplemented, the Issuers, if requested by
you, will promptly issue a press release announcing or disclosing the
matters to be covered by the proposed amendment or supplement.
(g) The Issuers will cooperate with you and with counsel for the
Underwriter in connection with the registration or qualification of the
Securities for offering and sale by the Underwriter and by dealers under
the securities or Blue Sky laws of such jurisdictions as you may designate
and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or
qualification; provided, however, that in no event shall any Issuer be
obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Securities, in any jurisdiction where it is not now so subject.
(h) The Issuers will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the date of the Prospectus and ending
not later than 15 months
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thereafter, as soon as practicable after the end of such period, which
consolidated earnings statement shall satisfy the provisions of Section
11(a) of the Act and Rule 158 thereunder, and will advise you in writing
when such statement has been made available.
(i) During the period of five years hereafter, the Issuers will
furnish to you as soon as available, a copy of all public materials
furnished by the Company to its stockholders and all public reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the common stock of the Company may be
listed pursuant to requirements of or agreements with such exchange or to
the Commission.
(j) The Company will apply the net proceeds from the sale of the
Securities in accordance with the description set forth in the Prospectus
under the caption "Use of Proceeds."
(k) Neither the Company nor any of its subsidiaries has taken, or will
take, 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 the Securities to facilitate the sale or resale of the
Securities.
(l) The Issuers will pay all costs, expenses, fees and taxes incident
to (i) the preparation, printing, filing and distribution under the Act of
the Registration Statement (including financial statements and exhibits),
and all amendments and supplements thereto prior to or during the period
specified in paragraph (e) above, (ii) the printing and delivery of the
Prospectus and all amendments or supplements thereto during the period
specified in paragraph (e) above, (iii) the printing and delivery of this
Agreement, the Preliminary and Supplemental Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents printed and
delivered in connection with the offering of the Securities (including in
each case any disbursements of counsel for the Underwriter relating to such
printing and delivery), (iv) the registration or qualification of the
Securities for offer and sale under the securities or Blue Sky laws of the
several states (including in each case the reasonable fees and
disbursements of counsel for the Underwriter relating to such registration
or qualification and memoranda relating thereto), (v) filings and clearance
with the National Association of Securities Dealers, Inc. in connection
with the offering, (vi) the listing, if any, of the Securities on any
national securities exchange, and (vii) furnishing such copies of the
Registration Statement, the Prospectus and all amendments and supplements
thereto as may be requested for use in connection with the offering or sale
of the Securities by the Underwriter or by dealers to whom Securities may
be sold.
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(m) The Issuers will not during the period beginning on the date
hereof and continuing to and including the First Closing Date, offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company
or any warrants, options or other rights to purchase or acquire debt
securities of the Company or any securities convertible into or
exchangeable for debt securities of the Company (other than (i) the
Securities and (ii) commercial paper issued in the ordinary course of
business), without the prior written consent of the Underwriter.
(n) The Company will not sell, contract to sell or otherwise dispose
of any Common Stock (other than any shares issued upon conversion of the
Notes) or any securities convertible into or exercisable or exchangeable
for Common Stock (other than the Notes), or grant any options, warrants or
other rights to purchase Common Stock, for a period of 90 days after the
date of this Agreement, without the prior written consent of the
Underwriter; provided, however, that the foregoing shall not prohibit (i)
the grant of options pursuant to stock option or other employee benefit
plans, (ii) the issuance of Common Stock upon exercise of options or other
rights to acquire Common Stock granted under stock option or other employee
benefit plans, or (iii) contracts for and the sale or issuance of Common
Stock or options, warrants or other rights to purchase Common Stock in
connection with the acquisition of a business or property or assets by the
Company or any of its subsidiaries or in connection with any business
combination.
(o) The Issuers will use their best efforts to do and perform all
things required or necessary to be done and performed under this Agreement
by the Issuers prior to a Closing Date and to satisfy all conditions
precedent to the delivery of the Securities.
6. Representations and Warranties of the Issuers. The Issuers, jointly
and severally, represent and warrant to the Underwriter that:
(a) Each preliminary prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
preliminary prospectus.
(b) The Registration statement has become effective and at the date of
the Prospectus (if different), including at the date of any post-effective
amendment or supplement, the Registration Statement will comply in all
material respects with the provisions of the Act, and will 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 (and any supplements or amendments thereto)
will at all such times comply in all material respects with the provisions
of the
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Act and will not at any such time contain any untrue statement of a
material fact or omit to state any 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 no representation or
warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in conformity
with written information furnished to the Issuers with respect to the
Underwriter specifically for inclusion therein.
(c) The Incorporated Documents, at the time they were filed with the
Commission or, to the extent such documents were subsequently amended prior
to the date hereof, at the time so amended, complied in all material
respects with the requirements of the Act or the Securities Exchange Act of
1934, as amended, and the published rules and regulations of the Commission
thereunder (collectively, the "Exchange Act"), as applicable, and such
documents do not on the date hereof and will not on any Closing Date
contain an untrue statement of a material fact and do not on the date
hereof and will not on any Closing Date 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.
(d) The financial statements (including the related notes and
supporting schedules) in the Registration Statement or the Prospectus
present fairly the consolidated financial position and results of
operations of the entities purported to be shown thereby, at the dates and
for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved.
(e) Ernst & Young, LLP, who have reported on the financial statements
of the Company, are independent public accountants with respect to the
Company and its subsidiaries as required by the Act.
(f) [Reserved].
(g) The Company and each of its subsidiaries have been duly formed and
are validly existing in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in
good standing in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification except where the failure to so qualify, singly or in the
aggregate, would not have a material adverse effect on the financial
condition, results of operations, business or prospects of the Company and
its subsidiaries taken as a whole (a "Material Adverse Effect"), and have
all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged.
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(h) The Company has an authorized capitalization as set forth in the
Prospectus; and all of the issued equity interests of each subsidiary of
the Company have been duly authorized and validly issued and, as to shares
of capital stock of any corporation constituting a subsidiary, are fully
paid and non-assessable and (except for directors' qualifying shares as
disclosed in the Registration Statement or the Prospectus or minority
interests in non-Guarantor subsidiaries) are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or
claims other than restrictions on transfer imposed by applicable securities
laws.
(i) When the Notes are delivered and paid for pursuant to this
Agreement on each Closing Date, such Notes will be convertible into shares
(the "Underlying Shares") of common stock, par value $.01 per share, (the
"Common Stock") of the Company in accordance with the terms of the
Indenture. The Underlying Shares initially issuable upon conversion of the
Notes have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly issued,
fully paid and nonassessable. None of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or similar
rights of any securityholder of the Company. The stockholders of the
Company have no preemptive or similar rights with respect to the capital
stock of the Company, the Securities or the Underlying Shares
(j) Each of the Securities and the Underlying Shares will be listed on
the New York Stock Exchange at the closing.
(k) The execution, delivery and performance of this Agreement, the
Indenture and the Securities by the Issuers, compliance by the Issuers of
all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby 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 agreement or
other material 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 property or assets of the Company or any of
its subsidiaries is subject, nor will such actions result in any violation
of the provisions of the organizational documents of the Company or any of
its subsidiaries or any statute 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 property or assets; and except
for such consents, approvals, authorizations, registrations or
qualifications as may be required under the Act or applicable state or
foreign securities laws in connection with the purchase and distribution of
the Securities by the Underwriter, 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
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this Agreement, the Indenture and the Securities by the Issuers, compliance
by the Issuers of all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby.
(l) This Agreement has been duly authorized, executed and delivered by
the Issuers and is a valid and binding agreement of the Issuers enforceable
in accordance with its terms (except as rights to indemnity and
contribution hereunder may be limited by applicable law).
(m) The Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), and has been duly authorized, executed
and delivered by the Issuers and is a valid and binding agreement of the
Issuers, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(n) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to the Underwriter against payment therefor as provided by this
Agreement, will be entitled to the benefits of the Indenture, and will be
valid and binding obligations of the Company, enforceable in accordance
with their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(o) The Guarantees have been duly authorized and, upon endorsement on
the Notes by the Guarantors, execution and authentication of the Notes in
accordance with the provisions of the Indenture and delivery of the Notes
to the Underwriter against payment therefor as provided by this Agreement,
will be entitled to the benefits of the Indenture, and will be valid and
binding obligations of the Guarantors, enforceable in accordance with their
terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(p) The Securities and the Indenture conform to the description
thereof in the Prospectus.
(q) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements in the
Prospectus, any loss or interference with the business of the Company and
its subsidiaries taken as a whole from fire,
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explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, resulting in
a Material Adverse Effect; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Prospectus.
(r) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(s) The Company and its subsidiaries own the items of real property
and personal property purported to be owned by them which are material to
the conduct of the business of the Company and its subsidiaries taken as a
whole, free and clear of all liens, encumbrances and defects, except such
as are described in the Prospectus or such as would not have a Material
Adverse Effect. All real property held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are described in the Prospectus or such as
would not have a Material Adverse Effect.
(t) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject which are reasonably likely to
have a Material Adverse Effect; and to the Issuers' knowledge, no such
proceedings are threatened by governmental authorities or by others.
(u) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(v) To the Issuers' knowledge, all real property owned (either
presently or at any time in the past) or presently leased by the Company
and its subsidiaries in connection with the operation of their business,
including, without
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limitation, any subsurface soils and ground water (collectively, the
"Realty"), is free of contamination from any substance or material
presently known to be toxic or hazardous, including, without limitation,
any radioactive substance, methane, volatile hydrocarbons or industrial
solvents (each, a "Hazardous Substance"), which could reasonably be
expected to materially impair the beneficial use thereof by the Company and
its subsidiaries or constitute or cause a significant health, safety or
other environmental hazard to occupants or users (except for contaminations
which would not have a Material Adverse Effect); and to the Issuers'
knowledge, the Realty does not contain any underground storage or treatment
tanks, active or abandoned water, gas or oil ▇▇▇▇▇, or any other
underground improvements or structures, other than the foundations,
footings or other supports for the improvements located thereon, the
presence of which would have a Material Adverse Effect. Notwithstanding the
foregoing, Hazardous Substances shall be deemed not to include any supplies
or substances maintained, used, stored or held on the Realty which are (i)
naturally occurring, (ii) installed by public utilities or (iii) used in
the ordinary course of the Company's or its subsidiaries' business,
provided that such supplies or substances are stored, used, maintained and
held in all material respects in accordance with any applicable
governmental requirements and with restrictions, conditions and standards
suggested by the manufacturer and the Company's insurance carriers.
(w) The Company and its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses.
(x) The Company and its subsidiaries own or possess adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights and licenses necessary for the conduct of their respective
businesses the absence of which would have a Material Adverse Effect and
have no reason to believe that the conduct of their respective businesses
will conflict with, and have not received any notice of any claim of
conflict with, any such rights of others.
(y) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration
Statement by the Act which have not been described in the Prospectus or
filed as exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Act.
(z) No labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the Issuers' knowledge, is imminent which could
reasonably be expected to have a Material Adverse Effect.
(aa) The Company and its subsidiaries have filed all federal, state
and local income and franchise tax returns required to be filed through the
date hereof and has paid all taxes due thereon, except where the failure to
do so has not had and would
-13-
reasonably not be expected to have a Material Adverse Effect, and no tax
deficiency has been determined adversely to the Company or any of its
subsidiaries which has had (nor does any Issuer have any knowledge of any
tax deficiency which would reasonably likely have) a Material Adverse
Effect.
(bb) Since the date as of which information is given in the
Prospectus, and except as may otherwise be disclosed in the Prospectus,
neither the Company nor any of its subsidiaries has (i) entered into any
material transaction not in the ordinary course of business or (ii) except
for the cash dividend of $0.05 per share declared in January 2001 and paid
on February 15, 2001, an 11% stock dividend declared in February 2001 and
payable on March 23, 2001 and the cash dividend of $0.05 per share declared
on April 24, 2001, declared or paid any dividend on its capital stock, and,
from the date of the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liability other than in the ordinary
course of business.
(cc) The Company is in full compliance with Section 13(b)(2) of the
Exchange Act.
(dd) Neither the Company nor any of its subsidiaries (i) is in
violation of its organizational documents, (ii) is in default in any
material respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties or assets is subject as a result of which default there
would be a Material Adverse Effect or (iii) is in violation of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business which violation or failure would have a Material Adverse Effect.
(ee) Neither the Company nor any of its subsidiaries is an "investment
company" or an entity "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the rules
and regulations of the Commission thereunder.
7. Indemnification. (a) The Issuers, jointly and severally, agree to
indemnify and hold harmless the Underwriter, each person, if any, who controls
the Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the directors, officers, employees and agents of each of the
foregoing (collectively, the "Underwriter Indemnified Parties"), from and
against any and all losses, claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact con-
-14-
tained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, 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, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Underwriter furnished in writing to the Issuers by
or on behalf of the Underwriter expressly for use therein; provided, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of the Underwriter Indemnified Party
asserted by a person with respect to any such losses, claims, damages and
liabilities and judgments, if a copy of the Prospectus (as then amended or
supplemented if the Issuers shall have furnished such amendment or supplement
thereto in the requisite quantity on a timely basis to permit such sending or
giving) was not sent or given by or on behalf of the Underwriter or related
Underwriter Indemnified Party 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 and supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or judgment.
Notwithstanding anything to the contrary herein, the Underwriter shall not be
obligated to send or give any Incorporated Document, or any amendment or
supplement thereto, to any person in order to benefit from the indemnity
provisions herein or otherwise. The foregoing indemnity agreement shall be in
addition to any liability that the Issuers may otherwise have.
(b) In case any action shall be brought against the
Underwriter Indemnified Party, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Issuers, the
Underwriter shall promptly notify the Issuers in writing and the Issuers shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses. The
Underwriter Indemnified Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter Indemnified
Party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Issuers, (ii) the Issuers shall have failed to
assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Underwriter
Indemnified Party and the Issuers and such Underwriter Indemnified Party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Issuers (in which case the Issuers shall not have the right to assume the
defense of such action on behalf of such Underwriter Indemnified Party, it being
understood, however, that the Issuers shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm
-15-
of attorneys (in addition to any local counsel) for all such Underwriter
Indemnified Parties, which firm shall be designated in writing by the
Underwriter and that all such fees and expenses shall be reimbursed as they are
incurred). The Issuers shall not be liable for any settlement of any such action
effected without the Company's written consent but if settled with the written
consent of the Company, the Issuers agree to indemnify and hold harmless the
Underwriter Indemnified Parties from and against any loss or liability by reason
of such settlement. The Company shall not, without the prior written consent of
the Underwriter Indemnified Parties, effect any settlement of any pending or
threatened proceeding in respect of which any Underwriter Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Underwriter Indemnified Party, unless such settlement includes an
unconditional release of such Underwriter Indemnified Party from all liability
on claims that are the subject matter of such proceeding.
(c) The Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their directors, their officers who sign the
Registration Statement and any person controlling the Issuers within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Issuers to the Underwriter Indemnified
Parties but only with reference to information relating to such Underwriter
furnished in writing by or on behalf of the Underwriter expressly for use in the
Registration Statement, the Prospectus or any preliminary prospectus. In case
any action shall be brought against the Issuers, any of its directors, any such
officer or any person controlling the Issuers based on the Registration
Statement, the Prospectus or any preliminary prospectus and in respect of which
indemnity may be sought against the Underwriter, the Underwriter shall have the
rights and duties given to the Issuers (except that if the Issuers shall have
assumed the defense thereof, the Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of the
Underwriter), and the Issuers, their directors, any such officers and any person
controlling the Issuers shall have the rights and duties given to the
Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities or judgments referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers on the one hand and the Underwriter 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 Issuers and the Underwriter in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any
-16-
other relevant equitable considerations. The relative benefits received by the
Issuers and the Underwriter shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company, and the compensation received by the Underwriter (based on discount to
investors on resale), bear to the sum of such total net proceeds and such
compensation. The relative fault of the Issuers and the Underwriter shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Issuers or the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Issuers and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, the
Underwriter shall not 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 which the 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 Act) shall be entitled to contribution from any person who was not
guilty and the seventh paragraph of such fraudulent misrepresentation.
(e) The Underwriter confirms and the Issuers acknowledge that the
statements with respect to the public offering of the Securities by the
Underwriter set forth in the first sentence of the seventh paragraph and the
ninth paragraph of the section entitled "Underwriting" in the Prospectus
Supplement are correct and constitute the only information concerning the
Underwriter furnished in writing to the Issuers by or on behalf of the
Underwriter specifically for inclusion in the Registration Statement and the
Prospectus.
8. Conditions of Underwriter's Obligation. The obligation of the
Underwriter to purchase the Securities under this Agreement on any Closing Date
is subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers contained in
this Agreement shall be true and correct on such Closing Date with the same
force and effect as if made on and as of such Closing Date. The Issuers
shall have performed or
-17-
complied with all of their agreements herein contained and required to be
performed or complied with by them at or prior to such Closing Date.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been commenced or shall be pending before or threatened by the
Commission, (ii) every request for additional information on the part of
the Commission shall have been complied with in all material respects, and
(iii) no stop order suspending the sale of the Securities in any
jurisdiction referred to in Section 6(g) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened which would, in your reasonable judgment, make it
impracticable or inadvisable to market the Securities or to enforce
contracts for the sale of the Securities.
(c) Subsequent to the execution and delivery of this Agreement and
prior to such Closing Date, there shall not have been 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 Issuer's debt by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Act.
(d) (i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of the Company and its subsidiaries taken as a
whole, (ii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus there shall not have been any
change, or any development involving a prospective material adverse change,
in the capital stock or in the long-term debt of the Company or any of its
subsidiaries from that set forth in the Registration Statement and
Prospectus and (iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is material to the
Company and its subsidiaries, taken as a whole, other than those reflected
in the Registration Statement and the Prospectus.
(e) You shall have received on such Closing Date a certificate dated
such Closing Date, signed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇▇, in their capacities as the Chairman of the Board, Chief
Executive Officer and President, and Chief Financial Officer of the
Company, respectively, confirming the matters set forth in paragraphs (a),
(b), (c) and (d) of this Section 8.
-18-
(f) You shall have received on such Closing Date an opinion
(satisfactory to you and counsel for the Underwriter), dated such Closing
Date, of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the Company, to
the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which its ownership
or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, operations or
financial condition of the Company and its subsidiaries taken as a
whole, and has all corporate power and authority necessary to own or
hold its properties and conduct its business as described in the
Prospectus.
(ii) To such counsel's knowledge and other than as described in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries is
the subject which is of a character which is required to be disclosed
in the Prospectus; and, to such counsel's knowledge, no such
proceedings are threatened by governmental authorities or by others.
(iii) The Registration Statement was declared effective under
the Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph
of Rule 424(b) under the Act on the date specified therein, and, to
such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for
that purpose is pending or threatened by the Commission.
(iv) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Closing Date (other than the financial data (and the related
notes thereto) and statistical data and the financial statements and
related schedules therein, as to which such counsel need express no
opinion) appear on their face to comply as to form in all material
respects with the requirements of the Act; the documents incorporated
by reference in the Prospectus and any further amendment or supplement
to any such incorporated document made by the Company prior to such
Closing Date (other than the financial data (and the related notes
thereto) and statistical data and the financial statements, and
related schedules therein, as to which such counsel need express no
opinion), when they were filed with
-19-
the Commission appear on their face to have been appropriately
responsive in all material respects to the requirements of the Act and
the Exchange Act.
(v) To such counsel's knowledge, there are no contracts or
other documents of a character which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement by
the Act which have not been described or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Act.
(vi) This Agreement has been duly authorized, executed and
delivered by the Issuers.
(vii) The execution, delivery and performance of this
Agreement, the Indenture and the Securities by the Issuers and the
compliance by the Issuers with all of the provisions of this Agreement
and the consummation by the Issuers of the transactions contemplated
hereby and thereby will not, to such counsel's knowledge, conflict
with or result in a material breach or violation of any of the terms
or provisions of, or constitute a material default under, any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument listed as an exhibit to its Annual Report on
Form 10-K for the fiscal year ended September 30, 2000 or to any
subsequent filing under the Exchange Act or the Act, nor will such
actions result in any violation of the provisions of the charter or
by-laws of any Issuer or any statute or, to such counsel's knowledge,
any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over any Issuer or any
of their property or assets; and, except for such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Act and applicable state or foreign securities laws in
connection with the purchase and distribution of the Securities by the
Underwriter, 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, the Indenture and the Securities by the Issuers and the
valid issuance and sale of the Securities by the Issuers.
(viii) The Notes delivered on such Closing Date are convertible
into the Underlying Shares in accordance with the terms of the
Indenture. The Underlying Shares issuable upon conversion of the Notes
delivered on such Closing Date have been duly authorized and reserved
for issuance upon such conversion and, when issued upon such
conversion in accordance with the terms of the Indenture, will be
validly issued, fully paid and nonassessable. The outstanding shares
of the capital stock of the Company have been duly
-20-
authorized and validly issued, are fully paid and nonassessable and
conform in all material respects to the description thereof in the
Prospectus. None of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or similar rights of
any securityholder of the Company under the certificate of
incorporation of the Company or any agreement or instrument to which
the Company is a party known to such counsel. The stockholders of the
Company have no preemptive or similar rights with respect to the
outstanding shares of capital stock of the Company, the Securities or
the Underlying Shares under the certificate of incorporation of the
Company or any other agreement or instrument to which the Company is a
party known to such counsel.
(ix) The Indenture has been duly qualified under the TIA and
has been duly authorized, executed and delivered by the Issuers and is
a valid and binding agreement of the Issuers, enforceable in
accordance with its terms except as (a) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting
creditors, rights generally and (b) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(x) The Notes have been duly authorized and executed by the
Company and, when authenticated in accordance with the provisions of
the Indenture and delivered to the Underwriter against payment
therefor as provided by this Agreement, will be entitled to the
benefits of the Indenture, and will be valid and binding obligations
of the Company, enforceable in accordance with their terms except as
(i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability.
(xi) The Guarantees have been duly authorized and endorsed on
the Notes by the Guarantors, and, upon execution and authentication of
the Notes in accordance with the provisions of the Indenture and
delivery thereof to the Underwriter against payment therefor as
provided by this Agreement, will be entitled to the benefits of the
Indenture, and will be valid and binding obligations of the
Guarantors, enforceable in accordance with their terms except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability.
-21-
(xii) The Securities and the Indenture conform in all material
respects to the descriptions thereof in the Prospectus.
(xiii) The Supplemental Indenture is (x) authorized and
permitted by the Indenture, (y) not inconsistent with the Indenture
and (z) valid and binding upon the Issuers an accordance with its
terms.
(xiv) The information in the Prospectus under the caption
"Material U.S. Federal Income Tax Consequences," insofar as such
statements constitute a summary of the legal matters or documents
referred to therein, fairly present the information called for with
respect to such legal matters and documents.
In rendering such opinion, such counsel may state that its opinion is
limited to the Federal laws of the United States of America, the laws of the
States of Texas and New York and the General Corporation Law of the State of
Delaware. Such counsel shall also have furnished to the Underwriter a written
statement, addressed to the Underwriter and dated such Closing Date, in form and
substance satisfactory to the Underwriter and counsel for the Underwriter, to
the effect that (x) such counsel has acted as special counsel to the Company in
connection with the preparation of the Registration Statement and during the
course of the preparation of the Registration Statement and Prospectus, such
counsel participated in conferences with representatives of the Company, the
Company's internal counsel, and its accountants and the representatives of the
Underwriter and at which conferences the contents of the Registration Statement
and the Prospectus and related matters were discussed, and (y) based on the
foregoing, no facts have come to the attention of such counsel which lead it to
believe that (I) the Registration Statement (except as to financial data (and
related notes thereto) and statistical data and the financial statements and
related schedules contained or incorporated by reference therein), as of the
date the Registration Statement became effective, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that the Prospectus (except as to financial data (and related notes thereto) and
statistical data and the financial statements and related schedules contained or
incorporated by reference therein) contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (II) any Incorporated Document or
any amendment or supplement thereto made by the Company prior to such Closing
Date, when they were filed with the Commission, as the case may be, contained
(except as to financial and data (and related notes thereto) and statistical
data and the financial statements and related schedules contained or
incorporated by reference therein) an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel has not inde-
-22-
pendently verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus or incorporated by
reference therein, and such counsel is not passing upon and such counsel does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus.
(g) You shall have received on such Closing Date, an opinion of ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq., Corporate Counsel for the Company, dated such
Closing Date and addressed to you, to the effect that:
Each Guarantor that is a corporation has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its state of incorporation, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of its property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, operations or financial condition of the Company and its
subsidiaries taken as a whole, and has all corporate power and
authority necessary to own or hold its properties and conduct its
business as described in the Prospectus. The outstanding shares of
capital stock of each such Guarantor are duly authorized, validly
issued, fully paid and nonassessable and (except for directors'
qualifying shares) are owned of record, directly or indirectly by the
Company. Each Guarantor that is a limited partnership has been duly
formed and is validly existing as a limited partnership in good
standing under the laws of the state of its organization, is duly
qualified to do business and is in good standing as a foreign limited
partnership in each jurisdiction in which its ownership or lease of
its property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, operation or financial
condition of the Company and its subsidiaries taken as a whole, and
has all partnership power and authority necessary to own or hold its
properties and conduct its business as described in the Prospectus.
(h) You shall have received on such Closing Date an opinion, dated
such Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, counsel for the
Underwriters, in form and substance satisfactory to the Underwriter.
(i) You shall have received a letter on and as of such Closing Date,
in form and substance satisfactory to you, from Ernst & Young, LLP,
independent public accountants, with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus and substantially in the
-23-
form and substance of the letter delivered to you by Ernst & Young, LLP, on
the date of this Agreement.
(j) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii) since such date
there shall not have been any change in the capital stock, net revenues,
per share or total amounts of income before extraordinary income or of net
income or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in clause (i) or (ii), is, in the judgment of
the Underwriter, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered on such Closing Date on the terms and in the
manner contemplated in the Prospectus.
(k) The Notes and the shares into which the Notes are convertible
shall have been listed on the New York Stock Exchange.
(l) The Company has furnished or will furnish to you the executed
"lock-up" letters from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the form of Exhibit A hereto.
(m) The Issuers shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement or the Prospectus as you reasonably may request.
(n) You shall have been furnished with such additional documents and
certificates as you or counsel for the Underwriter may reasonably request.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Issuers and
delivered to you or to your counsel shall be deemed a representation and
warranty by the Issuers to the Underwriter as to the statements made therein.
-24-
9. Termination.
This Agreement may be terminated at any time prior to the First
Closing Date by you by written notice to the Issuers if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and its subsidiaries or the earnings,
affairs, or business prospects of the Company and any of its subsidiaries taken
as a whole, whether or not arising in the ordinary course of business, which
would, in your judgment, make it impracticable to market the Securities on the
terms and in the manner contemplated in the Prospectus, (ii) any outbreak or
escalation of hostilities or other national or international calamity or crisis
or change in economic conditions or in the financial markets of the United
States or elsewhere that, in your judgment, is material and adverse and would,
in your judgment, make it impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus, (iii) the suspension or
material limitation of trading in securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market or limitation on prices
for securities on any such exchange, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business or
operations of the Company and its subsidiaries taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Issuers, to ▇.▇. ▇▇▇▇▇▇,
Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and (b) if to the
Underwriter, to them c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors (in
their capacities as such) and of the Underwriter set forth in or made pursuant
to this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Securities, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter or by or on behalf of the Company, the officers or directors of
the Company or any controlling person of the Company (in their capacities as
such), (ii) acceptance of the Securities and payment for them hereunder and
(iii) termination of this Agreement.
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If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of any Issuer to perform any of its
agreements in this Agreement or to fulfill any of the conditions of Section 8 of
this Agreement, the Issuers, jointly and severally, agree to reimburse the
Underwriter for all out-of-pocket expenses (including the fees and disbursements
of counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers, the
Underwriter, any controlling persons referred to herein, the other indemnitees
referred to herein and their respective successors and assigns, all as and to
the extent provided in this Agreement, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Securities from the
Underwriter merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
[Signature Pages Follow]
Exhibit A
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LOCK-UP LETTER
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May 4, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I understand that you (the "Underwriter") propose to enter into an
Underwriting Agreement (the "Underwriting Agreement") providing for the purchase
by you of $381,113,000 in aggregate principal amount at maturity of Zero Coupon
Convertible Senior Notes Due 2021 (the "Notes") of ▇.▇. ▇▇▇▇▇▇, Inc. (the
"Company") , convertible into shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), and that the Underwriter proposes to
reoffer the Notes to the public.
In consideration of the execution of the Underwriting Agreement by the
Underwriter, and for other good and valuable consideration, I hereby irrevocably
agree that, for a period of 45 days following the date of the final prospectus
relating to the sale of the Notes (the "Restriction Period"), without the prior
written consent of the Underwriter, I will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock,
enter into a transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of Common Stock, whether any such
aforementioned transaction is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise, or publicly disclose the intention to
make any such offer, sale, pledge or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of the Underwriter; provided that the foregoing should not
restrict the sale of up to 1,000,000 shares of Common Stock. In addition, I
agree that, without the prior written consent of the Underwriter, I will not,
during the Restriction Period, make any demand for or exercise any right with
respect to, the registration of any Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
Any Common Stock received upon exercise of options granted to me will
also be subject to the restrictions contained in this letter agreement. Any
Common Stock I acquire in the open market will not be subject to the
restrictions contained in this letter agreement. A
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transfer of Common Stock may be made without the prior written consent of the
Underwriter (i) to a family member or trust or a family partnership or (ii) by
gift, will or intestacy, provided in each such case the transferee agrees, prior
to the receipt of such Common Stock, to be bound in writing by the terms of this
letter agreement.
I agree that the provisions of this letter agreement shall be binding
also upon my assigns, heirs and personal representatives.
In furtherance of the foregoing, the Company and American Stock
Transfer & Trust Company, the transfer agent and registrar for the Common Stock,
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this letter agreement.
It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Notes, I will be released from my obligations under this
letter agreement.
Very truly yours,
________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇