EXHIBIT 1.2
VARITY CORPORATION
DEBT SECURITIES
STANDARD UNDERWRITING AGREEMENT PROVISIONS
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Varity Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell from time to time its
debt securities, consisting of (i) unsecured senior debt
securities (the "Senior Debt Securities") and (ii) unsecured
subordinated debt securities (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the
"Securities"). The Securities are registered under the
registration statement referred to in Section 1 hereof. The
Senior Debt Securities will be issued under an indenture (as
amended or supplemented, the "Senior Indenture") to be entered
into between the Company and Manufacturers and Traders Trust
Company, a New York banking corporation, as trustee (the
"Senior Trustee"). The Subordinated Debt Securities will be
issued under an indenture (as amended or supplemented, the
"Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures") between the Company and
Manufacturers and Traders Trust Company, a New York banking
corporation, as trustee (the "Subordinated Trustee" and,
together with the Senior Trustee, the "Trustees"). The
Securities may be issued in one or more series and may have
varying designations, denominations, interest rates and payment
dates, maturities, redemption provisions, selling prices and
other terms. The basic provisions set forth herein are
intended to be incorporated by reference in a terms agreement
of the type referred to below relating to the designation and
series of Securities to be issued and sold by the Company
pursuant thereto (the "Offered Securities") to the underwriter
or several underwriters named therein (the "Underwriters").
The Terms Agreement, which shall be in the form of Exhibit I
hereto relating to the Offered Securities (the "Terms Agree-
ment"), together with the provisions hereof incorporated
therein by reference (which provisions shall not become
effective until so incorporated by reference), is herein
referred to as this "Agreement." If the Underwriters consist
only of the firm or firms referred to in the Terms Agreement as
Representative or Representatives, then the terms "Underwriters" and
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"Representatives," as used herein, shall each be deemed to
refer to such firm or firms.
The obligations of the Underwriters to purchase, and
the Company to sell, the Offered Securities are evidenced by
the Terms Agreement delivered at the time the Company
determines to sell the Offered Securities. The Terms Agreement
specifies the firm or firms which will be Underwriters, the
amount of the Offered Securities to be purchased by each
Underwriter, the purchase price to be paid by the Underwriters
for the Offered Securities, the public offering price, if any,
of the Offered Securities and any terms of the Offered
Securities not otherwise specified in the applicable Indenture
(including, but not limited to, designations, denominations,
covenants, interest rates and payment dates, maturity,
redemption provisions and sinking fund requirements). The
Terms Agreement specifies any details of the terms of the
offering that should be reflected in a post-effective amendment
to the applicable Registration Statement or the Prospectus
Supplement (each as hereinafter defined).
1. Registration Statement and Prospectus. The
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Company and Kelsey-Hayes Company, a subsidiary of the Company,
have 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
rules and regulations of the Commission thereunder
(collectively, the "Act"), a joint registration statement on
Form S-3 (the "registration statement"), including a prospectus
relating to the Offered Securities. The term "Registration
Statement," as used in this Agreement, means the registration
statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, and as thereafter
amended by any post-effective amendment at the date of any
Terms Agreement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the
Registration Statement, as supplemented to reflect the terms of
the Offered Securities and the plan of distribution thereof, in
the form in which it shall be filed with the Commission
pursuant to Rule 424(b). Any reference in this Agreement to
the registration statement, the Registration Statement or any
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 date of the registration
statement, the Registration Statement or any Prospectus, as the
case may be, and any reference to any amendment or supplement
to the registration statement, the Registration Statement or
any Prospectus shall be deemed to
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refer to and include any documents filed after such date under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which, upon filing, are incorporated by reference therein, as required
by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are
incorporated by reference in the registration statement, the
Registration Statement, any Prospectus, or any amendment or supplement
thereto, but does not include any documents incorporated by reference
in the Registration Statement, any Prospectus, or any amendment or
supplement thereto subsequent to the Closing Date (as defined in
Section 2 hereof).
2. Sale and Delivery to the Underwriters; Closing.
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The obligation of the Underwriters to purchase the Offered
Securities will be evidenced by a Terms Agreement at the time
the Company determines to sell the Securities. The Terms
Agreement will incorporate by reference the provisions of this
Agreement, except as otherwise provided therein, and will
specify (1) the firm or firms which will be Underwriters,
(2) the names of any Representatives, (3) the principal amount
of Offered Securities to be purchased by each Underwriter and
the purchase price to be paid by the Underwriters, (4) the
terms of the Offered Securities not already specified in the
Indenture, (5) whether any of the Offered Securities may be
sold to institutional investors pursuant to Delayed Delivery
Contracts (as defined below), (6) the time and date on which
delivery of the Offered Securities will be made to the
Representatives for the accounts of the several Underwriters
against payment by the several Underwriters through the
Representatives of the purchase price in New York Clearing
House funds (such time and date, or such other time and date
not later than seven full business days thereafter as the
Representatives and the Company agree to as to time and date
for payment and delivery, being herein and in the Terms
Agreement referred to as the "Closing Date") and (7) the place
of delivery and payment.
The obligations of the Underwriters to purchase the
Offered Securities will be several and not joint. The Offered
Securities delivered to the Underwriters on the Closing Date
will be in definitive fully registered form, in such
denominations and registered in such names as the
Representatives may request.
Certificates for the Offered Securities shall be
registered in such names and in such denominations as the
Representatives shall request by written notice, it being understood
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that a facsimile transmission shall be deemed written notice for
such purpose, prior to 1:00 P.M., New York City time, on the third
business day preceding the Closing Date.
If the Terms Agreement provides for sales of
Securities pursuant to Delayed Delivery Contracts, the Company
authorizes the Underwriters to solicit offers to purchase
Securities pursuant to delayed delivery contracts substantially
in the form of Annex I attached hereto ("Delayed Delivery
Contracts") with such changes therein as the Company may
authorize or approve. Delayed Delivery Contracts are to be
with institutional investors, including commercial and savings
banks, insurance companies, pension funds, investment companies
and educational and charitable institutions. On the Closing
Date, the Company will pay, as compensation, to the
Representatives for the accounts of the Underwriters, the fee
(expressed as a discount) set forth in such Terms Agreement in
respect of the principal amount of Securities to be sold
pursuant to Delayed Delivery Contracts ("Contract Securities").
The Underwriters will not have any responsibility in respect of
the validity or the performance of any Delayed Delivery
Contract. If the Company executes and delivers a Delayed
Delivery Contract, the Contract Securities will be deducted
from the Securities to be purchased by the several Underwriters
and the aggregate principal amount of Securities to be
purchased by each Underwriter will be reduced pro rata in
proportion to the principal amount of Securities set forth
opposite each Underwriter's name in such Terms Agreement,
except to the extent that the Representatives determine that
such reduction shall be otherwise than pro rata and so advise
the Company. The Company will advise the Representatives not
later than the business day prior to the Closing Date of the
principal amount of Contract Securities.
3. Agreements of the Company. The Company agrees
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with each Underwriter as follows:
(a) If, at the time any Terms Agreement is executed
and delivered, it is necessary for a post-effective
amendment to the Registration Statement to be declared
effective before the offering of the Offered Securities
may commence, the Company will endeavor to cause such
post-effective amendment to become effective as soon as
possible and will advise the Underwriters promptly and, if
requested, will confirm such advice in writing, when the
Company receives notice (written or oral) that such
post-effective amendment has become effective.
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(b) The Company will advise the Underwriters
promptly and, if requested, will confirm such advice in
writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement
or any Prospectus or for additional information; (ii) upon
knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement or of the suspension of
qualification of the Offered Securities for offering or
sale in any jurisdiction or of the initiation of any
proceeding for such purpose; and (iii) within the period
of time referred to in paragraph (e) below, of any change
in the Company's financial condition, business, prospects,
properties, net worth or results of operations, or of the
happening of any event, including the filing of any
information, documents or reports pursuant to the Exchange
Act, that makes any statement 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 by the Act 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 the Commission shall issue any stop order
suspending the effectiveness of the Registration
Statement, the Company, upon knowledge thereof, will make
every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(c) The Company will furnish to each of the
Representatives and to counsel to the Representatives,
without charge (i) one signed copy of the registration
statement as originally filed with the Commission and of
each amendment thereto, including financial statements and
all exhibits to the Registration Statement, and (ii) such
number of conformed copies of the Registration Statement
as originally filed and of each amendment thereto, but
without exhibits, as the Representatives may reasonably
request.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement
to the Prospectus of which the Representatives shall not
previously have been advised or to which the
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Representatives shall reasonably object in writing after
being so advised.
(e) If during the period when the Prospectus is
required to be delivered under the Act any event shall
occur that in the judgment of the Company or in the
opinion of counsel for the Underwriters is required to be
set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to
make the statements therein, in the light of the
circumstances under which they were made, not misleading,
or if it is necessary to supplement or amend the
Prospectus in order to comply with the Act or any other
law, the Company will forthwith prepare and, subject to
the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto,
and will expeditiously furnish to the Underwriters and
dealers a reasonable number of copies thereof.
(f) The Company will cooperate with the Underwriters
and with counsel for the Underwriters in connection with
the registration or qualification of the Offered
Securities for offering and sale by the several
Underwriters and by dealers under the securities or Blue
Sky laws of such jurisdictions as the Representatives may
reasonably 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 that in no event shall the Company
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.
(g) The Company 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 effective date of the Registration
Statement and ending not later than 15 months thereafter,
as soon as reasonably 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.
(h) During the period of two years hereafter, the
Company will furnish to the Underwriters (i) as soon as
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available, a copy of each report of the Company mailed to
stockholders or filed with the Commission or the New York
Stock Exchange, and (ii) from time to time such other
information concerning the Company as the Underwriters may
reasonably request.
(i) Between the date of any Terms Agreement and the
Closing Date specified in such agreement, the Company will
not, without the Representatives' prior consent, offer,
sell, contract to sell or otherwise dispose of debt
securities of the Company having a maturity of more than
one year from the date of issue covered by the
Registration Statement or another registration statement
filed by the Company under the Act, except that the
Company may offer, sell, contract to sell or otherwise
dispose of obligations of the Company in respect of
industrial revenue bonds or similar securities exempt from
federal income taxes.
(j) The Company will apply the net proceeds from the
sale of the Offered Securities hereunder substantially in
accordance with the description set forth in the
Prospectus.
4. Representations and Warranties of the Company.
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The Company represents and warrants to each Underwriter that:
(a) The Registration Statement and any post-
effective amendment thereto have been declared effective
by the Commission and no stop order suspending the
effectiveness of such Registration Statement has been
issued and no proceeding for that purpose has been
initiated or threatened by the Commission.
(b) Each 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 and did
not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
except that this representation and warranty does not
apply to statements in or omissions from such Prospectus
(or any amendment or supplement thereto) made in reliance
upon and in conformity with information furnished to the
Company in writing by an Underwriter expressly for use
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therein. The Commission has not issued any order
preventing or suspending the use of any Prospectus.
(c) The Company and the transactions contemplated by
this Agreement meet the requirements for using Form S-3
under the Act. The registration statement in the form in
which it became effective and also in such form as it may
be when any post-effective amendment thereto shall become
effective and the Prospectus and any supplement or
amendment thereto when filed with the Commission under
Rule 424(b) under the Act, complied or will comply in all
material respects with the provisions of the Act and the
Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and will not at any such times contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading; except that
this representation and warranty does not apply to
statements in or omissions from the registration statement
or the Prospectus made in reliance upon and in conformity
with information furnished to the Company in writing by an
Underwriter expressly for use therein.
(d) The Incorporated Documents heretofore filed,
when they were filed (or, if any amendment with respect to
any such document was filed, when such amendment was
filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and
regulations thereunder; any further Incorporated Documents
so filed will, when they are filed, conform in all
material respects with the requirements of the Exchange
Act and the rules and regulations thereunder; no such
document when it was filed (or, if any amendment with
respect to any such document was filed, when such
amendment was filed), contained an 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; and no such further
document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a
material fact required to be stated therein or necessary
in order to make the statements therein not misleading.
(e) The Company is a corporation duly organized and
validly existing in good standing under the laws of the
State of Delaware with full corporate power and authority
to own, lease and operate its properties and to conduct
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its business, and is duly registered and qualified to
conduct its business and is in good standing in each
jurisdiction where the nature of its properties or the
conduct of its business requires such registration or
qualification, except where the failure so to register or
qualify does not have a material adverse effect on the
financial condition, business, properties, net worth or
results of operations of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect").
(f) Each Material Subsidiary (as defined below) is a
corporation duly organized, validly existing and in good
standing in the jurisdiction of its organization, with
full corporate power and authority to own, lease and
operate its properties and to conduct its business, except
where the failure of a Material Subsidiary to be duly
organized and existing or to have full corporate power and
authority would not have a Material Adverse Effect; each
Material Subsidiary is duly registered, qualified or
licensed to conduct its business and is in good standing
in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such
registration or qualification, except where the failure so
to register, be licensed or qualify would not have a
Material Adverse Effect; all the outstanding shares of
capital stock of each Material Subsidiary have been duly
authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company directly, or
indirectly through one of its other subsidiaries, free and
clear of any lien, adverse claim, security interest,
equity, or other encumbrance; and there are no outstanding
rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, shares of capital
stock or other equity interests in any Material
Subsidiary. As used herein, the term "Material
Subsidiaries" means the following subsidiaries of the
Company: Varity Holdings Limited and Perkins Group
Limited, each a corporation organized under the laws of
the United Kingdom; Dayton Walther Corporation, an Ohio
corporation; K-H Corporation, a Delaware corporation; and
Kelsey-Hayes Company, a Delaware corporation.
(g) The Offered Securities have been duly authorized
by the Company and, when executed by the Company and
authenticated by the applicable Trustee in accordance with
the terms of the applicable Indenture (assuming the due
authorization, execution and delivery thereof by the
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Trustee thereunder), and delivered to and paid for by the
Underwriters in accordance with the terms of this
Agreement and the Terms Agreement and the applicable
Indenture, will constitute the valid and binding
obligations of the Company enforceable against the Company
in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies
generally and subject to general principles of equity
(regardless of whether enforcement is sought in a
proceeding in equity or at law).
(h) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened,
against the Company or any of its subsidiaries which are
reasonably likely to have a Material Adverse Effect, or to
which the Company or any of its subsidiaries, or to which
any of their respective properties, is subject which are
material to the Company and its subsidiaries, taken as a
whole, that are required to be described in the
Registration Statement or the Prospectus, but are not
described as required, and there are no agreements,
contracts, indentures, leases or other instruments
relating to the Company or its subsidiaries that are
required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that
are not described or filed as required by the Act or the
Exchange Act. The descriptions of the terms of any such
contracts or documents contained in the Registration
Statement, the Prospectus or any Incorporated Documents
are correct in all material respects.
(i) Neither the Company nor any of its subsidiaries
is (i) in violation of its certificate or articles of
incorporation or bylaws, or other organizational
documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation
applicable to the Company or any of its subsidiaries or of
any decree of any court or governmental agency or body
having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, or
(iii) in default in any material respect in the
performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture,
lease or instrument to which the Company or any of its
subsidiaries is a party or by which
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any of them or any of their respective properties may be
bound, and no condition or state of facts exists, which,
with the passage of time or the giving of notice or both,
would constitute such a default, except in the case of
clauses (i), (ii) and (iii) where any such violation or
default, or violations and defaults in the aggregate,
would not have a Material Adverse Effect.
(j) None of the issuance and sale of the Offered
Securities, the execution, delivery or performance of this
Agreement, the Terms Agreement, the Indenture relating to
the Offered Securities and any Delayed Delivery Contract
by the Company, or the consummation by the Company of the
transactions contemplated hereby and thereby to be
consummated by the Company (i) requires any consent,
approval, authorization or other order of or registration
or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official
(except such as may be required for the registration of
the Securities under the Act and the Exchange Act, and
compliance with the securities or Blue Sky laws of various
jurisdictions, all of which have been or will be effected
in accordance with this Agreement) or conflicts or will
conflict with or constitutes or will constitute a breach
of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational
documents, of the Company or any of its subsidiaries or
(ii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any
material agreement, indenture, lease or instrument to
which the Company or any of its subsidiaries is a party or
by which any of them or any of their respective properties
may be bound, or violates or will violate any statute,
law, regulation or filing or judgment, injunction, order
or decree applicable to the Company or any of its
subsidiaries or any of their respective properties, or
will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to the terms
of any agreement or instrument to which any of them is a
party or by which any of them may be bound or to which any
of the property or assets of any of them is subject,
except in the case of clauses (i) and (ii) where any such
conflict, breach, default or violation, or conflicts,
breaches, defaults or violations in the aggregate, would
not have a Material Adverse Effect.
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(k) The accountants who have certified or shall
certify the financial statements included or incorporated
by reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) were
or shall be, for the periods in which they certified or
certify such financial statements, independent public
accountants as required by the Act.
(l) The historical financial statements, together
with related schedules and notes, included or incorporated
by reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto),
present fairly the consolidated financial position,
results of operations, cash flows and changes in
stockholders' equity of the Company and its subsidiaries
on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which
they apply; such statements and related schedules and
notes have been prepared in accordance with United States
generally accepted accounting principles (as described in
the Prospectus) consistently applied throughout the
periods involved, except as disclosed therein; and the
other financial and statistical information and data
included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and
the books and records of the Company and its subsidiaries.
(m) The execution and delivery of, and the
performance by the Company of its obligations under, each
of this Agreement, the Terms Agreement, the Indenture
relating to the Offered Securities and any Delayed
Delivery Contract have been duly and validly authorized,
executed and delivered by the Company and constitutes the
valid and legally binding agreement of the Company
enforceable against the Company, in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and
remedies generally and subject to general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). The Indenture has been
duly qualified under the Trust Indenture Act.
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(n) Except as disclosed in the Registration
Statement and the Prospectus (or any amendment or
supplement thereto), subsequent to the respective dates as
of which such information is given in the Registration
Statement and the Prospectus (or any amendment or
supplement thereto), neither the Company nor any of its
subsidiaries has incurred any liability or obligation,
direct or contingent, or entered into any transaction, not
in the ordinary course of business, that is material to
the Company and its subsidiaries taken as a whole, and
there has not been any material change in the capital
stock of the Company, or material increase in the
short-term debt or long-term debt of the Company and any
of its subsidiaries taken as a whole, or any Material
Adverse Effect.
(o) The Company and each of its subsidiaries has
good and marketable title to all property (real and
personal) described in the Prospectus as being owned by
it, free and clear of all liens, claims, security
interests or other encumbrances, except such as are
described in the Registration Statement and the Prospectus
or in a document filed as an exhibit to the Registration
Statement and all the property described in the Prospectus
as being held under lease by each of the Company and its
subsidiaries is held by it under valid, subsisting and
enforceable leases, in each case with only such exceptions
as in the aggregate would not have a Material Adverse
Effect.
(p) The Company and each of its subsidiaries has
such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("Permits") as are
necessary to own its respective properties and to conduct
its business in the manner described in the Prospectus,
except where the failure to have any such Permit would not
have a Material Adverse Effect and subject to such
qualifications as may be set forth in the Prospectus; the
Company and each of its subsidiaries has fulfilled and
performed all its material obligations with respect to
such Permits and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or
termination thereof or results in any other material
impairment of the rights of the holder of any such Permit,
except where such action would not have a Material Adverse
Effect and subject in each case to such qualification as
may be set forth in the Prospectus; and, except as
described in the Prospectus, none of such Permits contains
any
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restriction that is materially burdensome to the Company and
its subsidiaries, taken as a whole.
(q) The Company and its subsidiaries own or possess
all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any
of them or necessary for the conduct of their respective
businesses, except where the lack of such ownership or
possession would not have a Material Adverse Effect, and
the Company is not aware of any claim to the contrary or
any challenge by any other person to the rights of the
Company or any of its subsidiaries with respect to the
foregoing.
5. Indemnification and Contribution. (a) The
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Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims,
damages, liabilities, judgments and expenses (including
reasonable costs of investigation) arising out of or based upon
any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus
or in any amendment or supplement thereto, or arising out of or
based upon 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, judgments or
expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in
conformity with the information furnished in writing to the
Company by or on behalf of any Underwriter; provided, however,
that the indemnification contained in this paragraph (a) with
respect to any Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage,
liability, judgment or expense arising from the sale of the
Offered Securities by such Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations
thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact
contained in any preliminary prospectus was corrected in the
Prospectus.
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The foregoing indemnity agreement shall be in addition to any
liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be
brought against any Underwriter or any person controlling any
Underwriter in respect of which indemnity may be sought against
the Company, such Underwriter or such controlling person shall
promptly notify the Company, and the Company shall assume the
defense thereof, including the employment of counsel and
payment of all reasonable fees and expenses of such counsel.
Any such Underwriter or any such controlling person shall have
the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but
the reasonable fees and expenses of such counsel shall be at
the expense of such Underwriter or such controlling person,
rather than the Company, unless (i) the Company has agreed in
writing to pay such fees and expenses, (ii) the Company has
failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including
any impleaded parties) include both such Underwriter or such
controlling person and the Company and such Underwriter or such
controlling person shall have been advised by its counsel that
representation of such indemnified party and the Company by the
same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by
the same counsel has been proposed) due to actual or potential
differing interests between them (in which case the Company
shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the
Company shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of only one separate firm
of attorneys (in addition to any local counsel, not more than
one per jurisdiction) at any time for all such Underwriters and
controlling persons, which firm shall be designated in writing
by the Underwriters, and that all such fees and expenses shall
be reimbursed promptly as they are incurred. The Company shall
not be liable for any settlement of any such action, suit or
proceeding effected without its written consent, but if settled
with such written consent, or if there be a final judgment for
the plaintiff in any such action, suit or proceeding, the
Company agrees to indemnify and hold harmless any Underwriter,
to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage,
-16-
liability, judgment or expense by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any
time an Underwriter or any person controlling an Underwriter is
entitled to employ separate counsel pursuant to the second
sentence of this Section 5(b) and shall have requested the
Company in writing to reimburse such Underwriter or such
controlling person for fees and expenses of counsel, the
Company agrees that it shall be liable for any settlement of
any proceeding effected by such Underwriter or such controlling
person and for which the Company is liable pursuant to Section
5(a) without its written consent if (i) such settlement is
entered into more than ten (10) business days after receipt by
the Company of the aforesaid request or (ii) the Company shall
not have reimbursed such Underwriter or such controlling person
in accordance with such request prior to the date of such
settlement. The Company shall not, without the prior written
consent of such Underwriter or such controlling person, effect
any settlement of any pending or threatened proceeding in
respect of which any Underwriter or any person controlling an
Underwriter is or could have been a party and indemnity could
have been sought hereunder by such Underwriter or such
controlling person, unless such settlement includes an
unconditional release of such Underwriter or such controlling
person from all liability on claims that are subject matter of
such proceeding.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its
directors, officers who sign the Registration Statement, and
any person who controls the Company 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 Company to each
Underwriter, but only with respect to information relating to
such Underwriter furnished in writing by or on behalf of such
Underwriter through the Representative(s) expressly for use in
the Registration Statement, the Prospectus or any amendment or
supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, officers, or
any such controlling person based on the Registration
Statement, the Prospectus or any amendment or supplement
thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company
shall have assumed the defense thereof such 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 such
Underwriter), and the
-17-
Company, its directors, officers, and any such controlling
person shall have the rights and duties given to the Underwriters
by paragraph (b) above. The foregoing indemnity agreement shall
be in addition to any liability which the Underwriters may
otherwise have.
(d) If the indemnification provided for in this
Section 5 is unavailable to, or insufficient to hold harmless,
an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities, judgments
or expenses referred to therein, then an 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, judgments
or expenses (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
Offered 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 the Underwriters on
the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities,
judgments or expenses, 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 shall be
deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. 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 on the one hand or by the Underwriters
on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to
this Section 5 were determined by a 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
-18-
paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities, judgments and expenses referred to in paragraph
(d) above 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 any claim or defending any such action, suit
or proceeding. Notwithstanding the provisions of this
Section 5, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the
Offered Securities underwritten by it and distributed to the
public exceeds the amount of any damages which 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 Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 5 are several in proportion
to their underwriting obligations and not joint.
(f) Any losses, claims, damages, liabilities,
judgments or expenses for which an indemnified party is
entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the
indemnified party promptly as such losses, claims, damages,
liabilities, judgments or expenses are incurred. The indemnity
and contribution agreements contained in this Section 5 and the
representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the
Company, its directors or officers, or any person controlling
the Company, (ii) acceptance of any Offered Securities and
payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Company, its directors
or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 5.
6. Conditions of Underwriters' Obligations. The
---------------------------------------
several obligations of the Underwriters to purchase the Offered
Securities hereunder are subject to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement
-19-
or a post-effective amendment thereto to be declared
effective before the offering of the Offered Securities
may commence, the registration statement or such post-
effective amendment shall have become effective not later
than 5:30 P.M., New York City time, on the first business
day following the date of the applicable Terms Agreement,
or at such later date and time as shall be consented to in
writing by the Representatives, and all filings, if any,
required by Rule 424 under the Act shall have been timely
made; no stop order suspending the effectiveness of the
registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or,
to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the
Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise)
shall have been complied with.
(b) Subsequent to the execution of any applicable
Terms Agreement, there shall not have occurred (i) any
change, or any development involving a prospective change,
in or affecting the financial condition, business,
properties, net worth, or results of operations of the
Company and its subsidiaries taken as a whole, from the
date of the latest balance sheet included or incorporated
by reference in the Prospectus in each case not
contemplated by the Prospectus, which is material and
adverse; (ii) any downgrading in, or notice of any
proposal to downgrade, the rating of the Company's debt
securities by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule
436(g) under the Act) or any public announcement that any
such organization has under surveillance or review with
negative implications the rating of the Company's debt
securities; (iii) any suspension or limitation of trading
in securities generally on or by the New York Stock
Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board
Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, or any setting of minimum prices
for trading on such exchange; (iv) any suspension of
trading of any securities of the Company on any exchange;
(v) any banking moratorium declared by Federal or New York
authorities; or (vi) the outbreak or escalation of
hostilities involving the United States or the declaration
by the United States of a national emergency or war, if
the effect of any such event set forth in (i) through
(vi), in the judgment of the
-20-
Representatives, makes it impractical or inadvisable to
proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated
by the Prospectus.
(c) The Underwriters shall have received on the
Closing Date, an opinion of Cahill Gordon & Reindel (a
partnership including a professional corporation), counsel
for the Company, dated the Closing Date and addressed to
the Underwriters, to the effect that:
(i) The Company is a corporation duly
incorporated and validly existing in good standing
under the laws of the State of Delaware with full
corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Prospectus;
(ii) Any Delayed Delivery Contract has been duly
authorized, executed and delivered by the Company;
(iii) The Indenture relating to the Offered
Securities has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed
and delivered by the Company and is a valid and
binding agreement of the Company, enforceable in
accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, fraudulent
transfer and similar laws affecting creditors' rights
generally and by general equitable principles
(regardless of whether enforcement is sought in a
proceeding in equity or at law);
(iv) The Offered Securities have been duly
authorized and, when executed and authenticated in
accordance with the Indenture and delivered to the
Underwriters against payment therefor in accordance
with the terms of this Agreement, will be valid and
binding obligations of the Company, enforceable in
accordance with their terms, except as limited by
bankruptcy, insolvency, reorganization, fraudulent
transfer and similar laws affecting creditors' rights
generally and by general equitable principles
(regardless of whether enforcement is sought in a
proceeding in equity or at law) and will be entitled
to the benefits of the Indenture;
-21-
(v) The Registration Statement and all post-
effective amendments, if any, have become effective
under the Act and, to the best knowledge of such
counsel after reasonable inquiry, no stop order
suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) has been made in accordance
with Rule 424(b);
(vi) The Company has all requisite corporate
power and authority to enter into this Agreement, the
Terms Agreement, the Indenture relating to the
Offered Securities, and any Delayed Delivery Contract
to which it is a party and to issue and deliver the
Offered Securities to the Underwriters;
(vii) This Agreement has been duly authorized,
executed and delivered by the Company and is a valid,
legal and binding agreement of the Company,
enforceable against the Company in accordance with
its terms, except (A) as limited by bankruptcy,
insolvency, reorganization, fraudulent transfer and
similar laws affecting creditors' rights generally
and by general equitable principles (regardless of
whether enforcement is sought in a proceeding in
equity or at law) and (B) that rights to indemnity
and contribution hereunder may be limited by Federal
or state securities laws or the public policy
underlying such laws;
(viii) The Offered Securities and the Indenture
conform in all material respects to the descriptions
thereof contained in the Registration Statement and
the Prospectus;
(ix) None of the offer, sale, or delivery of the
Offered Securities, or the execution, delivery or
performance of this Agreement, the Indenture relating
to the Offered Securities, and any Delayed Delivery
Contract, nor compliance by the Company with all the
provisions of this Agreement and the Indenture
applicable to it, nor consummation by the Company of
the transactions contemplated hereby conflicts or
will conflict with or constitutes or will constitute
a breach of, or a default under, the certificate of
-22-
incorporation or bylaws of the Company or any
indenture or other debt instrument or any other
material agreement or lease, known to such counsel,
to which the Company is a party or by which any
of them or any of their respective properties is
bound or that is an exhibit to the Registration
Statement or to any Incorporated Document, which
conflict, breach or default would have a Material
Adverse Effect, or, except as disclosed in the
Registration Statement, will result in the creation
or imposition of any lien, charge or encumbrance upon
any property or assets of the Company under any such
indenture, debt instrument, agreement or lease which
lien, charge or encumbrance would have a Material
Adverse Effect, nor will any such action result in
any violation of any existing law, regulation,
ruling (assuming compliance with all applicable
state securities and Blue Sky laws), judgment,
injunction, order or decree known to such counsel
after reasonable inquiry, applicable to the
Company or any of its properties, which violation
would have a Material Adverse Effect;
(x) No consent, approval, authorization or
other order of, or registration or filing with, any
Delaware, New York State or Federal court, regulatory
body, administrative agency or other governmental
body, agency, or official is required on the part of
the Company (except as have been obtained or made
under the Act and the Exchange Act or such as may be
required under state securities or Blue Sky laws
governing the purchase and distribution of the
Securities) for the valid issuance and sale of the
Offered Securities to the Underwriters as
contemplated by this Agreement; and
(xi) The Registration Statement and the
Prospectus and any supplements or amendments thereto
(except for the financial statements, schedules and
notes thereto and other financial and statistical
data included therein, as to which such counsel need
not express any opinion) comply as to form in all
material respects with the requirements of the Act;
and each of the Incorporated Documents (except for
the financial statements, schedules and notes thereto
and other financial and statistical data included
therein, as to which such counsel need not express
any opinion), when they were filed (or, if an
amendment with respect to any Incorporated Document was
-23-
filed, when such amendment was filed) complied as to
form in all material respects with the Exchange Act.
In addition, such counsel shall state that such
counsel participated in conferences with officers and
other representatives of the Company, representatives of
the independent public accountants and representatives of
the Underwriters at which the contents of the Registration
Statement and Prospectus 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 Prospectus (except as otherwise indicated above) on
the basis of the foregoing (relying as to materiality to a
large extent upon the opinions of officers and
representatives of the Company), no facts have come to the
attention of such counsel which lead them to believe that
either the Registration Statement or any amendment
thereto, at the time the Registration Statement or
amendment became effective, contained an untrue statement
of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading or
that the Prospectus as of its date or any supplement
thereto as of its date, or the Registration Statement or
the Prospectus and any amendment or supplement thereto as
of the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits 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
(it being understood that such counsel need express no
opinion with respect to the financial statements and
schedules and other financial and statistical data
included in the Registration Statement or the Prospectus).
The opinion of such counsel may be limited to the
laws of the State of New York, the General Corporation Law
of the State of Delaware and the Federal laws of the
United States. In rendering their opinion as aforesaid,
such counsel may, as to factual matters, rely upon written
certificates or statements of officers of the Company and
public officials.
(d) The Underwriters shall have received letters
dated the date of the Terms Agreement and the Closing Date
from KPMG Peat Marwick LLP, independent certified public
accountants, substantially in the forms heretofore
approved by the Underwriters.
-24-
(e) The Underwriters shall have received on the
Closing Date, an opinion of Andrews & Kurth L.L.P.,
counsel for the Underwriters, dated the Closing Date and
addressed to the Underwriters, in form and substance
satisfactory to the Underwriters.
(f) (i) No stop order suspending the effectiveness
of the Registration Statement shall have been issued and
no proceedings for that purpose shall be pending or, to
the knowledge of the Company, shall be contemplated by the
Commission at the Closing Date; (ii) there shall not have
been any material change in the capital stock of the
Company nor any material increase in the short-term or
long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any
amendment or supplement thereto); (iii) there shall not
have been, since the respective dates as of which
information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto),
except as may otherwise be stated in the Registration
Statement and the Prospectus (or any amendment or
supplement thereto), any material adverse change in the
financial condition, business, prospects, properties, net
worth or results of operations of the Company and its
subsidiaries taken as a whole; and (iv) all the
representations and warranties of the Company contained in
this Agreement shall be true and correct on and as of the
date of the Terms Agreement and on and as of the Closing
Date as if made on and as of the Closing Date, and the
Underwriters shall have received a certificate, dated the
Closing Date and signed by the chief executive officer and
the chief financial officer of the Company (or such other
officers as are acceptable to the Underwriters), to the
effect set forth in this Section 6(f) and in Section 6(g)
hereof.
(g) The Company shall not have failed at or prior to
the Closing Date to have performed or complied with any of
its agreements herein contained and required to be
performed or complied with by them hereunder at or prior
to the Closing Date.
(h) The Company shall have furnished or caused to be
furnished to the Underwriters such further certificates
and documents as the Underwriters shall have reasonably
requested.
-25-
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 the Underwriters and their counsel.
Any certificate or document signed by any officer of
the Company and delivered to the Underwriters or to
counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each
Underwriter as to the statements made therein. Any
certificate delivered by the Company to its counsel for
purposes of enabling such counsel to render the opinions
referred to in this Section 6 will also be furnished to
the Underwriters and counsel for the Underwriters.
7. Expenses. The Company agrees to pay the
--------
following costs and expenses and all other costs and expenses
incident to the performance by it of its obligations hereunder:
(i) the preparation, printing (or reproduction), and filing
with the Commission of the registration statement (including
financial statements and exhibits thereto), each Prospectus and
each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies
of the registration statement, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as
may be reasonably requested for use in connection with the
offering and sale of the Offered Securities, (iii) the
preparation, printing, authentication, issuance and delivery of
certificates for the Offered Securities, including any stamp
taxes in connection with the original issuance and sale of the
Offered Securities; (iv) the printing (or reproduction) and
delivery of this Agreement, the Indenture, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection
with the offering of the Offered Securities; (vi) the
registration or qualification of the Offered Securities for
offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 3(f) hereof (including
the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing (or
reproduction), and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification);
(vii) the filing fees of the Underwriters in connection with
any filings required to be made with the National Association
of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of the Company
-26-
representatives (other than the Underwriters) in connection
with presentations to prospective purchasers of the Offered
Securities; and (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including
local and special counsel) for the Company.
8. Defaulting Underwriters. If any one or more of
-----------------------
the Underwriters shall fail or refuse to purchase the Offered
Securities which it or they have agreed to purchase under the
Terms Agreement, and the aggregate principal amount of Offered
Securities which such defaulting Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Offered Securities, each non-
defaulting Underwriter shall be obligated, severally, in the
proportion which the aggregate principal amount of Offered
Securities set forth opposite its name in the Terms Agreement
bears to the aggregate principal amount of Offered Securities
set forth opposite the names of all non-defaulting
Underwriters, to purchase the Offered Securities that such
defaulting Underwriter or Underwriters agreed, but failed or
refused, to purchase. If any Underwriter or Underwriters shall
fail or refuse to purchase Offered Securities and the aggregate
principal amount of Offered Securities with respect to which
such default occurs is more than one-tenth of the total
principal amount of Offered Securities and arrangements
satisfactory to the Representatives and the Company for the
purchase of such Offered Securities by one or more non-
defaulting Underwriters or other party or parties are not made
within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting
Underwriters or the Company. In any such case that does not
result in termination of this Agreement, either the
Underwriters 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 the Prospectus or 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 such default of any such
Underwriter under this Agreement.
The agreements set forth in this Section will not
apply if the Terms Agreement specifies that such agreements
will not apply.
9. Survival of Certain Representations and
---------------------------------------
Obligations. The respective indemnities, agreements,
- -----------
representations, warranties and other statements of the
Company or its
-27-
officers and of the several Underwriters set forth in or
made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the
result thereof, made by or on behalf of any Underwriter, the
Company, or any of its representatives, officers or directors
or any controlling person, and will survive delivery of and
payment for the Offered Securities. If the Terms Agreement is
terminated pursuant to Section 8 or if for any reason the
purchase of the Offered Securities by the Underwriters under
the Terms Agreement is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by
it pursuant to Section 7 and the respective obligations of the
Company and the Underwriters pursuant to Section 5 shall remain
in effect. If the purchase of the Offered Securities by the
Underwriters is not consummated for any reason other than the
termination of the Terms Agreement pursuant to Section 8 or the
occurrence of any event specified in clause (iii), (iv), (v),
or (vi) of Section 6(b), the Company will reimburse the Under-
writers for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) reasonably incurred by them
in connection with the offering of the Offered Securities.
10. Miscellaneous. All notices and other
-------------
communications hereunder shall be in writing and shall be
deemed to have been given if mailed or transmitted by any
standard form of telecommunication. Notices to the Company
shall be directed to Varity Corporation, 672 Delaware Avenue,
Buffalo, New York 14209, Attention: Corporate Secretary;
notices to the Underwriters shall be directed to the
Underwriters at the address set forth in the Terms Agreement.
11. Parties. This Agreement and the Terms Agreement
-------
shall each inure to the benefit of and be binding upon each
Underwriter, the Company and their respective successors, heirs
and legal representatives. Nothing expressed or mentioned in
this Agreement or the Terms Agreement is intended or shall be
construed to give any person, firm or corporation, other than
the Underwriters, the Company and their respective successors,
heirs and legal representatives and the controlling persons and
officers and directors referred to in Section 5 and their heirs
and legal representatives, any legal or equitable right, remedy
or claim under, by virtue of or in respect of this Agreement or
the Terms Agreement or any provision herein or therein
contained. This Agreement and the Terms Agreement and all
conditions and provisions hereof and thereof are intended to be
for the sole and exclusive benefit of the Underwriters, the
Company and their respective successors, heirs and legal
-28-
representatives, and said controlling persons and officers and
directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No
purchaser of Offered Securities from an Underwriter shall be
deemed to be a successor or assign by reason merely of such
purchase.
12. Applicable Law; Counterparts. This Agreement
----------------------------
shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts made and to be
performed entirely within the State of New York. This
Agreement may be executed in counterparts and the executed
counterparts shall together constitute a single instrument.
EXHIBIT I
VARITY CORPORATION
DEBT SECURITIES
TERMS AGREEMENT
---------------
[Date]
Varity Corporation
672 Delaware Avenue
Buffalo, New York 14209
Attention: [ ]
Ladies and Gentlemen:
Referring to the Debt Securities of Varity
Corporation (the "Company") covered by the joint Registration
Statement on Form S-3 (No. 33- ) (the "Registration
Statement") filed by the Company and Kelsey-Hayes Company, a
subsidiary of the Company, with the Securities and Exchange
Commission, on the basis of the representations, warranties
and agreements contained or incorporated by reference in this
Agreement, and subject to the terms and conditions herein set
forth, the Underwriters named in the list attached hereto
agree to purchase, severally and not jointly, and the Company
agrees to sell to the Underwriters, $_______ aggregate
principal amount of the Company's ___% __________ Due _______
(the "Securities") in the respective principal amounts set
forth opposite the names of the Underwriters on the list
attached hereto.
The price at which the Securities shall be purchased
from the Company by the Underwriters shall be ___% of the
principal amount thereof. The Closing Date shall be _________,
199_, at ___ A.M., at the offices of ____________________.
The Securities will have the following terms:
Title:
Maturity:
Interest Rate:
Interest Payment Dates:
Additional Terms:
All provisions contained in the Varity Corporation
Standard Underwriting Agreement Provisions ("Standard
Provisions"), a copy of which you have previously received, are
-2-
herein incorporated by reference in their entirety and shall be
deemed to be a part of this Terms Agreement to the same extent
as if the Standard Provisions had been set forth in full herein
[except that the obligations and agreements set forth in
Section 8 ("Default of Underwriters") of the Underwriting
Agreement shall not apply to the obligations of the
Underwriters to purchase the above Securities]. Terms defined
in the Standard Provisions are used herein as therein defined.
The Securities will be made available for checking
and packaging at the office of ________________________ at
least 24 hours prior to the Closing Date.
We represent that we are authorized to act for the
several Underwriters named in Schedule A hereto in connection
with this financing and any action under this Agreement by any
of us will be binding upon all the Underwriters.
If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return to us
the enclosed duplicate hereof, whereupon it will become a
binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
[Names of Representatives]
On behalf of themselves and
as Representatives of the
Several Underwriters
By:__________________________
Name:
Title:
The foregoing Terms Agreement
is hereby confirmed as of the
date first above written
VARITY CORPORATION
By__________________________
Name:
Title:
ANNEX I
DELAYED DELIVERY CONTRACT
-------------------------
, 199
Varity Corporation
672 Delaware Avenue
Buffalo, New York 14209
Attention: [ ]
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from Varity
Corporation, a Delaware corporation (the "Company"), and the
Company agrees to sell to the undersigned,
$
principal amount of the Company's [insert title of securities]
(the "Securities") offered by the Company's Prospectus dated
, 1995 and a Prospectus Supplement dated
, 199 relating thereto, receipt of copies of which
is hereby acknowledged, at % of the principal amount
thereof plus accrued interest, if any, from , 199 ,
and on the further terms and conditions set forth in this
Delayed Delivery Contract ("Contract").
The undersigned will purchase from the Company as of
the date hereof, for delivery on the dates set forth below,
Securities in the principal amounts set forth below:
Delivery Date Principal Amount
------------- ----------------
Each of such delivery dates is hereinafter referred to as a
"Delivery Date."
Payment for the Securities that the undersigned has
agreed to purchase for delivery on each Delivery Date shall be
made to the Company or its order by certified or official bank
check in New York Clearing House (next day) funds at the office
of at 10:00 A.M. on such
Delivery Date upon delivery to the undersigned of the
Securities to be purchased by the undersigned on such Delivery
Date in definitive fully registered form and in such denominations
-2-
and registered in such names as the undersigned shall designate
by written or telegraphic communication addressed to the Company
not less than five business days prior to such Delivery Date.
It is expressly agreed that the provisions for
delayed delivery and payment are for the sole convenience of
the undersigned; that the purchase hereunder of Securities is
to be regarded in all respects as a purchase as of the date of
this Contract subject to the first paragraph hereof with
respect to the accrual of interest; that the obligation of the
Company to make delivery of and accept payment for, and the
obligation of the undersigned to take delivery of and make
payment for, Securities on each Delivery Date shall be subject
only to the conditions that (1) investment in the Securities
shall not at such Delivery Date be prohibited under the laws of
any jurisdiction in the United States to which the undersigned
is subject and (2) the Company shall have sold to the
Underwriters the principal amount of the Securities less the
principal amount thereof covered by this and other similar
Contracts. The undersigned represents that its investment in
the Securities is not, as of the date hereof, prohibited under
the laws of any jurisdiction to which the undersigned is
subject and which governs such investment.
Promptly after completion of the sale to the
Underwriters, the Company will mail or deliver to the
undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.
This Contract will inure to the benefit of and be
binding upon the parties hereto and their respective successors
and permitted assigns, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that the acceptance of any such
Contract is in the Company's sole discretion and, without
limiting the foregoing, need not be on a first-come, first-
served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance
below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a
binding contract between the Company and the undersigned when
such counterpart is so mailed or delivered.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable
-3-
to contracts made and to be performed entirely within the State
of New York.
Very truly yours,
___________________________
(NAME OF PURCHASER)
By_________________________
Name:
Title:
___________________________
___________________________
(Address of Purchaser)
Accepted, as of the above date
VARITY CORPORATION
By____________________________
Name:
Title: