EXHIBIT 1.1
$50,000,000 PRINCIPAL AMOUNT OF
9 1/8% SENIOR SUBORDINATED NOTES DUE 2004
ABC RAIL PRODUCTS CORPORATION
UNDERWRITING AGREEMENT
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JANUARY 28, 1997
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
c/o Robert W. Baird & Co. Incorporated
227 West Monroe Street
Chicago, Illinois 60606
Ladies and Gentlemen:
SECTION 1. INTRODUCTION. ABC Rail Products Corporation, a Delaware
corporation (the "Company"), proposes to sell the Company's 9 1/8% Senior
Subordinated Notes due 2004 (the "Notes"), to the several underwriters
identified in Schedule I annexed hereto (the "Underwriters"), who are acting
severally and not jointly. The Notes shall be issued under an Indenture, dated
as of January 15, 1997, as amended or supplemented from time to time (the
"Indenture"), between the Company and First Trust National Association, as
trustee (the "Trustee") in fully registered form pursuant to a book-entry system
only, in denomination of $1,000 and integral multiples thereof.
The Company hereby confirms its agreement with the Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters, and shall
be deemed to represent and warrant to the several Underwriters on the Closing
Date (as hereinafter defined), that:
(a) A registration statement on Form S-3 (Reg. No. 333-16241) with
respect to an aggregate of $100,000,000 of Common Stock and/or Subordinated
Debt Securities of the Company has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act") and the rules and regulations of the Securities and Exchange
Commission (the "Commission") and has been filed with the Commission. The
conditions for use of Form S-3, set forth in the General Instructions
thereto, have been satisfied. Such registration statement as amended has
been declared effective by the Commission. Such registration statement, as
amended and revised at the time such registration statement was declared
effective by the Commission and as thereafter amended by post-effective
amendment, if any, is herein referred to as the "Registration Statement."
The Prospectus relating to the Notes (as supplemented) in the form in which
it has most recently been transmitted for filing with the Commission
pursuant to Rule 424(b) under the Act is referred to herein as the
"Prospectus." The prospectus subject to completion in the form included in
the Registration Statement at the time of the initial filing of the
Registration Statement with the Commission, and each such prospectus as
amended and supplemented from time to time until the date of the
Prospectus, is referred to herein as the "Preliminary Prospectus."
Reference made herein to each Preliminary Prospectus or the Prospectus, as
amended or supplemented, shall include all documents and information
incorporated by reference therein and shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus
or Prospectus, as the case may be, and so incorporated by reference, under
the Securities and Exchange Act of 1934, as amended, and the regulations
thereunder (the "Exchange Act"). The Company has prepared and filed such
amendments to the Registration Statement since its initial filing with the
Commission, if any, as may have been required to the date hereof, and will
file such additional amendments thereto as may hereafter be required. There
have been delivered to the Underwriters one signed copy of the Registration
Statement and each amendment thereto, if any, including any document filed
under the Exchange Act and deemed to be incorporated by reference into the
Registration Statement, together with one copy of each exhibit filed
therewith or incorporated by reference therein, and such number of
conformed copies for each of the Underwriters of the Registration Statement
and each amendment thereto, if any (but without exhibits), and of each
Preliminary Prospectus and of the Prospectus as the Underwriters have
requested.
(b) Certain subsidiaries (as defined in the Rules and Regulations) of
the Company that conduct or are expected to conduct business include ABC
Deco Inc., ABC Rail European Holdings, Inc., ABC Rail Products China
Investment Corporation, and American Systems Technologies, Inc.
(individually, a "Significant Subsidiary" and, collectively, the
"Significant Subsidiaries"). The Company and each of its subsidiaries,
including the Significant Subsidiaries (each, individually, a "Subsidiary"
and, collectively, the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation and in good standing under the laws of
its jurisdiction of incorporation, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
presently conducted and described in the Prospectus and the Registration
Statement; each of the Company and the Significant Subsidiaries is duly
registered and qualified to do business as a foreign corporation under the
laws of, and is in good standing as such in,
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each jurisdiction in which such registration or qualification is required,
except where the failure to so register or qualify would not have a
material adverse effect on the condition (financial or other), business,
property, net worth, results of operations or prospects of the Company and
its Subsidiaries, taken as a whole ("Material Adverse Effect"); and no
proceeding has been instituted in any such jurisdiction revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. Complete and correct copies of the certificate
of incorporation and by-laws, as amended or restated ("Certificate of
Incorporation" and "By-laws," respectively), of the Company and each of the
Significant Subsidiaries as in effect on the date hereof have been
delivered to the Underwriters, and no changes thereto will be made on or
subsequent to the date hereof and prior to the Closing Date.
(c) Except as set forth in the Prospectus, the Company beneficially
owns all of the issued and outstanding capital stock of each Subsidiary,
free and clear of any and all liens, claims, encumbrances or security
interests, and all such capital stock has been duly authorized and validly
issued and is fully paid and nonassessable. There are no outstanding
options, warrants or other rights of any description, contractual or
otherwise, entitling any person to subscribe for or purchase any shares of
capital stock of any Subsidiary.
(d) The Notes have been duly and validly authorized and, when
authenticated by the Trustee and issued, delivered, and sold in accordance
with this Agreement and the Indenture, will have been duly and validly
executed, authenticated, issued, and delivered and will constitute valid
and binding obligations of the Company, entitled to the benefits provided
by the Indenture and enforceable against the Company in accordance with
their terms, subject as to the enforcement of remedies, to applicable laws
relating to or affecting enforcement of creditors' rights and to equitable
principles limiting the right to specific performance or other equitable
relief. The form of certificate used to evidence the Notes is in due and
proper form as contemplated by the Indenture. The terms and provisions of
the Notes conform in all material respects to the description thereof
contained in the Prospectus under the captions "Description of the Debt
Securities" and "Description of the Notes". Upon payment for and delivery
of the Notes pursuant to this Agreement, the Underwriters will acquire good
and marketable title to the Notes, free and clear of all liens,
encumbrances, or claims.
(e) The Indenture has been duly qualified under the Trust Indenture
Act of 1939 (the "1939 Act") and the rules and regulations promulgated by
the Commission, conforms in all material respects to the description
thereof contained in the Prospectus under the captions "Description of the
Debt Securities" and "Description of the Notes", has been duly and validly
authorized by the Company and, when executed and delivered by the
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Company and the Trustee, will constitute a valid and binding instrument of
the Company, enforceable against the Company in accordance with its terms,
subject, as to the enforcement of remedies, to applicable laws relating to
or affecting enforcement of remedies, to applicable laws relating to or
affecting enforcement of creditor's rights and to equitable principles
limiting the right to specific performance or other equitable relief.
(f) The Company has full corporate power and authority to enter into
and perform this Agreement and the Indenture, and the execution and
delivery by the Company of this Agreement and the Indenture and the
performance by the Company of its obligations hereunder and thereunder and
the consummation of the transactions described herein, have been duly
authorized with respect to the Company by all necessary corporate action
and will not: (i) violate any provisions of the Certificate of
Incorporation or By-laws of the Company or any Subsidiary; (ii) violate any
provisions of, or result in the breach, modification or termination of, or
constitute a default under, any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary, or any property owned or
leased by the Company or any Subsidiary, may be bound or affected; (iii)
violate any statute, ordinance, rule or regulation applicable to the
Company or any Subsidiary, or order or decree of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of
the United States or other country or jurisdiction having jurisdiction over
the Company or any Subsidiary; or (iv) result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary. No consent, approval, authorization or other
order of any court, regulatory or governmental body, arbitrator,
administrative agency or instrumentality of the United States or other
country or jurisdiction is required for the execution and delivery of this
Agreement and the Indenture by the Company, the performance of its
obligations hereunder and thereunder or the consummation of the
transactions contemplated hereby, except for compliance with the Act, the
Exchange Act, the Blue Sky Laws applicable to the public offering of the
Notes by the several Underwriters and the clearance of such offering and
the underwriting arrangements evidenced hereby with the National
Association of Securities Dealers, Inc. (the "NASD"). This Agreement has
been duly executed and delivered by and on behalf of the Company and is a
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms.
(g) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary
Prospectus, nor, to the knowledge of the Company, have any proceedings for
that purpose been initiated or threatened, and each Preliminary Prospectus
filed with the Commission as part of the Registration Statement as
originally filed or as part of any amendment or supplement
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thereto complied when so filed with the requirements of the Act and, as of
its date, did not include any 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; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with written information relating
to you furnished to the Company by you expressly for use therein. As of the
effective date of the Registration Statement, and at all times subsequent
thereto up to the Closing Date, the Registration Statement and the
Prospectus contained or will contain all statements that are required to be
stated therein in accordance with the Act and conformed or will conform in
all respects to the requirements of the Act, and neither the Registration
Statement nor the Prospectus included or will include any untrue statement
of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements, therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with written information relating to you furnished to the
Company by you expressly for use therein. Neither the Company, nor any
person that controls, is controlled by (including the Subsidiaries) or is
under common control with the Company, has distributed or will distribute
prior to the Closing Date any offering material in connection with the
offering and sale of the Notes other than a Preliminary Prospectus, the
Prospectus, the Registration Statement or other materials permitted by the
Act and provided to the Underwriters.
(h) The documents that are incorporated by reference in each
Preliminary Prospectus, the Prospectus or the Registration Statement or
from which information is so incorporated by reference, when they became
effective or were filed with the Commission, as the case may be, complied
in all material respects with the requirements of the Act or the Exchange
Act, as applicable, and any document so filed and incorporated by reference
subsequent to the effective date of the Registration Statement shall, when
it is filed with the Commission, comply with the requirements of the Act
and the Exchange Act, as applicable, and when read together with the other
information included in such Preliminary Prospectus, the Prospectus or the
Registration Statement, as the case may be, do 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
written information relating to you furnished to the Company by you
expressly for use therein.
(i) Arthur Andersen LLP, which has expressed its opinion with respect
to the consolidated financial statements and schedules filed with the
Commission or incorporated
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by reference and included as a part of each Preliminary Prospectus, the
Prospectus or the Registration Statement, are independent accountants as
required by the Act.
(j) The consolidated financial statements and the related notes
thereto included or incorporated by reference in each Preliminary
Prospectus, the Prospectus and the Registration Statement present fairly
the financial condition, results of operations and cash flows of the
Company as of their respective dates or for the respective periods covered
thereby, all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The financial
statement schedules, if any, included in the Registration Statement present
fairly the information required to be stated therein on a basis consistent
with the consolidated financial statements of the Company contained
therein. The Company had an outstanding capitalization as set forth in the
Registration Statement and under "Capitalization" in the Prospectus as of
the date indicated therein, and there has been no material change thereto
since such date except as disclosed in the Prospectus. The financial and
statistical information and data relating to the Company in each
Preliminary Prospectus, the Prospectus and the Registration Statement are
accurately presented and prepared on a basis consistent with the audited
consolidated financial statements and books and records of the Company. The
consolidated financial statements and schedules and the related notes
thereto included or incorporated by reference in each Preliminary
Prospectus, the Prospectus or the Registration Statement are the only such
financial statements and schedules required under the Act to be set forth
therein.
(k) Neither the Company nor any Subsidiary is, nor with the giving of
notice or passage of time or both, would be, in violation or in breach of:
(i) its respective Certificate of Incorporation or By-laws; (ii) any
statute, ordinance, order, rule or regulation applicable to the Company or
such Subsidiary; (iii) any order or decree of any court, regulatory body,
arbitrator, administrative agency or other instrumentality of the United
States or other country or jurisdiction having jurisdiction over the
Company or such Subsidiary; or (iv) any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or such Subsidiary is
a party or by which any property owned or leased by the Company or such
Subsidiary is bound or affected. Neither the Company nor any Subsidiary has
received notice of any violation of any applicable statute, ordinance,
order, rule or regulation applicable to the Company or any Subsidiary. The
Company and each Subsidiary have obtained and hold, and are in compliance
with, all permits, certificates, licenses, approvals, registrations,
franchises, consents and authorizations of governmental or regulatory
authorities required under all laws, rules and regulations in connection
with their businesses (hereinafter "permit" or "permits"), and all of such
permits are in full force and effect; and the Company and each Subsidiary
have fulfilled and performed all
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of their respective obligations with respect to each such permit and no
event has occurred which would result in, or after notice or lapse of time
would result in, revocation or termination of any such permit or result in
any other impairment of the rights of the holder of such permit. Neither
the Company nor any Subsidiary is or has been (by virtue of any action,
omission to act, contract to which it is a party or other occurrence) in
violation of any applicable foreign, federal, state, municipal or local
statutes, laws, ordinances, rules, regulations or orders (including those
relating to environmental protection, occupational safety and health and
equal employment practices) heretofore or currently in effect.
(l) There are no legal or governmental proceedings or investigations
pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary is or may be a party or to which any property
owned or leased by the Company or any Subsidiary is or may be subject,
including, without limitation, any such proceedings that are related to
environmental or employment discrimination matters, which are required to
be described in the Registration Statement or the Prospectus which are not
so described, or which question the validity of this Agreement or any
action taken or to be taken pursuant hereto. Except as described in the
Registration Statement or the Prospectus, neither the Company nor any
Subsidiary: (i) is in violation of any statute, ordinance, rule or
regulation, or any decision, order or decree of any court, regulatory body,
arbitrator, administrative agency or other instrumentality of the United
States or other country or jurisdiction having jurisdiction over the
Company or such Subsidiary relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environmental or human exposure to hazardous or toxic substances
(collectively, "environmental laws"); (ii) owns or operates any real
property contaminated with any substance that is subject to any
environmental laws; (iii) is liable for any off-site disposal or
contamination pursuant to any environmental laws; or (iv) is subject to any
claim relating to any environmental laws, which violation, contamination,
liability or claim could have a Material Adverse Effect.
(m) There is no transaction, relationship, obligation, agreement or
other document required to be described in the Registration Statement or
the Prospectus or to be filed or deemed to be filed as an exhibit to the
Registration Statement by the Act, which has not been described or filed as
required. All such contracts or agreements to which the Company or any
Subsidiary is a party have been duly authorized, executed and delivered by
the Company or such Subsidiary, constitute valid and binding agreements of
the Company or such Subsidiary, and are enforceable by and against the
Company or such Subsidiary, in accordance with the respective terms
thereof.
(n) The Company or a Subsidiary has good and valid title to all
property and assets reflected as owned by the Company or such Subsidiary in
the Company's consolidated
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financial statements included or incorporated by reference in the
Registration Statement (or elsewhere in the Registration Statement or the
Prospectus), free and clear of all liens, claims, mortgages, security
interests or other encumbrance of any kind or nature whatsoever, except
those, if any, reflected in such financial statements (or elsewhere in the
Registration Statement or the Prospectus). All property (real and personal)
held or used by the Company or a Subsidiary under leases, licenses,
franchises or other agreements is held by the Company or such Subsidiary
under valid, subsisting, binding and enforceable leases, franchises,
licenses or other agreements, with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of
such Prospectus by the Company or the Significant Subsidiaries.
(o) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in
the Registration Statement or the Prospectus and prior to the Closing Date:
(i) neither the Company nor any Subsidiary has or will have incurred any
liability or obligation, direct or contingent, or entered into any
transaction, that is material to the Company, except as in the ordinary
course of business; (ii) the Company has not and will not have paid or
declared any dividend or other distribution with respect to its capital
stock and neither the Company nor any Subsidiary is or will be delinquent
in the payment of principal or interest on any outstanding debt obligation;
and (iii) there has not been and will not have been any change in the
capital stock (other than shares issued pursuant to the exercise of
employees' or directors' stock options), any material change in the
indebtedness of the Company or any Subsidiary, or any change or development
involving or which could be expected to involve, a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business.
(p) Neither the Company nor any person that controls, is controlled by
(including the Subsidiaries) or is under common control with the Company
has, directly or indirectly: (i) made any unlawful contribution to any
candidate for political office, or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any federal,
state or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions.
(q) The Company and its Subsidiaries own, or are licensed or otherwise
have the right to use, all material trademarks and trade names which are
used in or necessary for the conduct of their respective businesses as
described in the Prospectus. No claims have been asserted by any person to
the use of any such trademarks or trade names or challenging or questioning
the validity or effectiveness or any such trademark or trade name which
singly or in the aggregate could reasonably be expected to have a material
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adverse effect on the business, properties, business prospects, condition
(financial or otherwise) or results of operation of the Company and its
Subsidiaries. The use in connection with the business and operations of the
Company and its Subsidiaries of such trademarks and trade names does not,
to the Company's knowledge, infringe on the rights of any person.
(r) The Company or a Subsidiary has in place and effective such
policies of insurance, with limits of liability in such amounts, as are
normal and prudent in the ordinary course of the business of the Company
and its Subsidiaries.
(s) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent. To the
knowledge of the Company, no union organizational attempts have occurred or
are pending. There has been no change in the relationship of the Company or
any Subsidiary with any of its principal suppliers, manufacturers,
contractors or customers resulting in or that could result in a Material
Adverse Effect.
(t) Neither the Company nor any Subsidiary is an "investment company",
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company
Act of 1940, as amended.
(u) All federal, state and local tax returns required to be filed by
or on behalf of the Company or any Subsidiary have been filed (or are the
subject of valid extension) with the appropriate federal, state and local
authorities, and all such tax returns, as filed, are accurate in all
material respects; all federal, state and local taxes (including estimated
tax payments) required to be shown on all such tax returns or claimed to be
due from or with respect to the business of the Company or such Subsidiary
have been paid or reflected as a liability on the financial statements of
the Company or such Subsidiary for appropriate periods; all deficiencies
asserted as a result of any federal, state or local tax audits have been
paid or finally settled, and no issue has been raised in any such audit
which, by application of the same or similar principles, reasonably could
be expected to result in a proposed deficiency for any other period not so
audited; no state of facts exists or has existed which would constitute
grounds for the assessment of any tax liability with respect to the periods
which have not been audited by appropriate federal, state or local
authorities; there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any federal, state or local
tax return of any period; and neither the Company nor any Subsidiary has
ever been a member of an affiliated group of corporations filing
consolidated federal income tax returns, other than a group of which the
Company is and has been the common parent.
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(v) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of consolidated financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorizations; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(w) Except as disclosed in the Prospectus, none of the Company, any
Subsidiary, any officer or director of the Company or any Subsidiary, or
any person who owns, of record or beneficially, any class of securities
issued by the Company is: (i) an officer, director or partner of any
brokerage firm, broker or dealer that is a member of the NASD ("NASD
Member"); or (ii) directly or indirectly, a "person associated with" an
NASD Member or an "affiliate", of an NASD Member, as such terms are used in
the NASD Rules of Fair Practice. In addition, neither the Company nor any
Subsidiary has issued or transferred any Common Stock, warrants, options or
other securities, or any other items of value, to any of the Underwriters
or any "related person" of any Underwriter, as such term is used in the
NASD Rules of Fair Practice, except as provided in this Agreement.
(x) All offers and sales of the securities of the Company since the
time of the Company's initial public offering were made in compliance with
the Act and all other applicable state and federal laws or regulations.
SECTION 3. PURCHASE, SALE AND DELIVERY OF NOTES.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to the Underwriters identified in Schedule I
annexed hereto the Notes, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company the respective principal
amounts of Notes set forth opposite each Underwriters name in Schedule I
hereto. The purchase price payable by the Underwriters to the Company for
each Note shall be 96.5% of the principal amount thereof. The respective
obligation of each Underwriter to the Company shall be to purchase from the
Company that principal amount of Notes set forth opposite the name of such
Underwriter in Schedule I hereto.
(b) On the Closing Date, the Company will deliver to the
Underwriters, at the offices of Robert W. Baird & Co. Incorporated,
Milwaukee, Wisconsin, or through the facilities of The Depository Trust
Company, for the accounts of the several Underwriters,
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certificates representing the Notes to be sold by them against payment in
Chicago, Illinois of the purchase price therefor by wire or certified or
official bank check or checks in Federal (same day) funds payable to the
order of the Company. As referred to in this Agreement, the "Closing Date"
shall be on the third full business day after the date of the Prospectus,
at 9:00 a.m., Chicago, Illinois time, or at such other date or time not
later than ten full business days after the date of the Prospectus as the
Underwriters and the Company may agree. The certificates for the Notes to
be so delivered will be in denominations and registered in such names as
the Underwriters request by notice to the Company prior to the Closing
Date, and such certificates will be made available for checking and
packaging at 9:30 a.m., Chicago, Illinois time on the first full business
day preceding the Closing Date at the facilities of The Depository Trust
Company in New York, New York, or at another location to be designated by
the Underwriters.
SECTION 4. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the several Underwriters that:
(a) The Company, at the earliest possible time, will furnish the
Underwriters with a copy of the Prospectus to be filed by the Company with
the Commission to comply with Rule 424(b) under the Act and, after giving
the Underwriters a reasonable opportunity to review such document, will
comply with such Rule. Upon compliance with such Rule, the Company will so
advise the Underwriters promptly. The Company will advise the Underwriters
and counsel to the Underwriters promptly of the issuance by the Commission
or any state securities commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, or of any notification of the suspension of
qualification of the Notes for sale in any jurisdiction or the initiation
or threatening of any proceedings for that purpose, and will also advise
the Underwriters and counsel to the Underwriters promptly of any request of
the Commission for amendment or supplement of the Registration Statement,
of any Preliminary Prospectus or of the Prospectus, or for additional
information, and the Company will not file any amendment or supplement to
the Registration Statement, to any Preliminary Prospectus or to the
Prospectus (including a prospectus filed pursuant to Rule 424(b)), or file
any document under the Exchange Act before the termination of the public
offering of the Notes by the Underwriters if such document would be deemed
to be incorporated by reference in the Registration Statement, if the
Underwriters have not been furnished with a copy prior to such filing (with
a reasonable opportunity to review such amendment or supplement).
(b) If, at any time when a prospectus relating to the Notes is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact, or would
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omit to state any 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, or if it is necessary at any time to
supplement the Prospectus to comply with the Act or to file under the
Exchange Act any document which would be deemed to be incorporated by
reference in the Registration Statement to comply with the Act or the
Exchange Act, the Company promptly will advise the Underwriters and counsel
to the Underwriters which will correct such statement or omission or an
amendment which will effect such compliance. If any Underwriter is required
to deliver a prospectus after the effective date of the Registration
Statement, the Company, upon request of the Underwriters, will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act. In case
any Underwriter is required to deliver a prospectus in connection with
sales of any of the Notes at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, the Company will prepare and deliver to such Underwriter as
many copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act. The Company consents to the
use, in accordance with the provisions of the Act and with the Blue Sky
Laws of the jurisdictions in which the Notes are offered by the several
Underwriters and by dealers, of each Preliminary Prospectus.
(c) The Company will make generally available to its security holders
and the Underwriters an earnings statement as soon as practicable, but in
no event later than 60 days after the end of its fiscal quarter in which
the first anniversary of the effective date of the Registration Statement
occurs, covering a period of twelve consecutive calendar months beginning
after the effective date of the Registration Statement, which will satisfy
the provisions of the last paragraph of Section 11(a) of the Act and Rule
158 promulgated thereunder.
(d) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company
will furnish to the Underwriters, at the expense of the Company, copies of
the Registration Statement, the Prospectus, any Preliminary Prospectus and
all amendments and supplements to any such documents, including any
document filed under the Exchange Act and deemed to be incorporated by
reference in the Registration Statement, in each case as soon as available
and in such quantities as the Underwriters may reasonably request.
(e) The Company will apply the net proceeds from the sale of the Notes
to be sold by it hereunder for the purposes set forth in the Prospectus.
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(f) The Company will cooperate with the Underwriters and counsel to
the Underwriters in qualifying or registering the Notes for sale under the
Blue Sky Laws of such jurisdictions as the Underwriters designate, and will
continue such qualifications or registrations in effect so long as
reasonably requested by the Underwriters to effect the distribution of the
Notes. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified. In each jurisdiction
where any of the Notes shall have been qualified as provided above, the
Company will file such reports and statements as may be required to
continue such qualification for a period of not less than one year from the
date of the Prospectus. The Company shall promptly prepare and file with
the Commission, from time to time, such reports as may be required to be
filed by the Act and the Exchange Act, and the Company shall comply in all
respects with the undertakings given by the Company in connection with the
qualification or registration of the Notes for offering and sale under the
Blue Sky Laws.
(g) During the period of three years from the date of the Prospectus,
the Company will furnish to each of the Underwriters and to each of the
other Underwriters who may so request, as soon as available, each report,
statement or other document of the Company or its Board of Directors mailed
to its shareholders or filed with the Commission, and such other
information concerning the Company as the Underwriters may reasonably
request.
SECTION 5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective, or
if this Agreement is terminated for any reason, the Company will pay the costs,
fees and expenses incurred in connection with the public offering of the Notes.
Such costs, fees and expenses to be paid by the Company include, without
limitation:
(a) All costs, fees and expenses (excluding the expenses incurred by
the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in
subsection (b) of this section 5 incurred in connection with the
performance of the Company's obligations hereunder, including without
limiting the generality of the foregoing: the registration fees related to
the filing of the Registration Statement with the Commission; the fees and
expenses of the Company's counsel, accountants, transfer agent and
registrar; the costs and expenses incurred in connection with the
preparation, printing, shipping and delivery of the Registration Statement,
each Preliminary Prospectus and the Prospectus (including all exhibits and
financial statements) and all agreements and supplements provided for
herein, this Agreement and the Preliminary and Supplemental Blue Sky
Memoranda, including, without limitation, shipping expenses via overnight
delivery and/or courier service to comply with applicable prospectus
delivery requirements; and the costs and expenses
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associated with the production of materials related to, and travel expenses
incurred by the management of the Company in connection with, the various
meetings to be held between the Company's management and prospective
investors.
(b) All registration fees and expenses, including legal fees and
disbursements of counsel for the Underwriters incurred in connection with
qualifying or registering all or any part of the Notes for offer and sale
under the Blue Sky Laws and the clearing of the public offering and the
underwriting arrangements evidenced hereby with the NASD.
(c) All fees and expenses related to printing of the certificates for
the Notes, and all transfer taxes, if any, with respect to the sale and
delivery of the Notes.
SECTION 6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters under this Agreement shall be subject to
the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the Closing Date, to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions, unless waived in writing
by the Underwriters:
(a) The Registration Statement shall have been declared effective by
the Commission prior to the date of this Agreement; all filings required by
Rules 424(b) and 430A under the Act shall have been timely made; no stop
order suspending the effectiveness of the Registration Statement shall have
been issued by the Commission or any state securities commission nor, to
the knowledge of the Company, shall any proceedings for that purpose have
been initiated or threatened; and any request of the Commission or any
state securities commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to the
reasonable satisfaction of the Underwriters.
(b) Since the dates as of which information is given in the
Registration Statement and Prospectus:
(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a Material Adverse
Effect, whether or not arising from transactions in the ordinary
course of business; and
(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court
or governmental action, order or decree, the effect of which on the
Company, in any such case described in clause (i) or (ii)
-14-
above, is in the judgment of the Underwriters so material and adverse
as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Notes on the terms and in the manner
contemplated in the Registration Statement and the Prospectus.
(c) The Underwriters shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the opinion of the Underwriters or counsel for the
Underwriters, is material, or omits to state a fact that, in the opinion of
the Underwriters or such counsel, is material and is required to be stated
therein or necessary to make the statements therein not misleading.
(d) The Underwriters shall have received an opinion of Jones, Day,
Reavis & Pogue, counsel for the Company addressed to the Underwriters and
dated the Closing Date substantially 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, and is qualified to do business and is in good standing
in Alabama, Colorado, Illinois, Indiana, Kansas, Maryland,
Pennsylvania, Texas, Washington and Wisconsin, which are the only
jurisdictions in which the Company owns or leases any material
property;
(ii) Each Significant Subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus and
the Registration Statement; each Significant Subsidiary is duly
registered or qualified to do business as a foreign corporation under
the laws of, and is in good standing as such in, each jurisdiction in
which such registration or qualification is required, except where the
failure to so register or qualify would not have a Material Adverse
Effect; all the shares of common stock of each of the Significant
Subsidiaries as of the Closing Date are validly issued and are owned
by the Company of record and to the knowledge of such counsel (A)
beneficially and (B) free and clear of any security interest, adverse
claim or encumbrance except as disclosed in the Prospectus;
(iii) The Notes to be issued and sold by the Company under this
Agreement have been duly authorized by the Company and, when duly
executed, authenticated and delivered to and paid for by the
Underwriters, will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and
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enforceable in accordance with their terms, except to the extent that
such validity, binding effect and enforceability may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights
generally, or (B) general principles of equity, or the possible
unavailability of the remedy of specific performance or injunctive
relief, regardless of whether issues of validity, binding effect or
enforceability are considered in a proceeding in equity or at law;
(iv) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid, legally binding and
enforceable obligation of the Company (a) except as rights and
obligations under Section 8 hereof may be limited by applicable law,
including securities laws, public policy considerations underlying
such laws, and equitable principles, and (b) except to the extent that
such validity, binding effect and enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights
generally, or (ii) general principles of equity, or the possible
unavailability of the remedy of specific performance or injunctive
relief, regardless of whether issues of validity, binding effect or
enforceability are considered in a proceeding in equity or at law;
(v) The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture
Act of 1939 and constitutes a valid, legally binding and enforceable
instrument of the Company, except to the extent that such validity,
binding effect and enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors' rights generally, or
(b) general principles of equity, or the possible unavailability of
the remedy of specific performance or injunctive relief, regardless of
whether the issues of validity, binding effect or enforceability are
considered in a proceeding in equity or at law;
(vi) The Company has corporate power and authority to execute and
deliver and perform its obligations under this Agreement and the
Indenture;
(vii) The statements contained in the Prospectus, insofar as they
purport to summarize the provisions of the Notes and the Indenture,
present fair summaries of such provisions;
(viii) The performance of this Agreement and the Indenture by the
Company and the consummation by the Company of the transactions
contemplated herein will not (a) result in a breach or default by the
Company under any
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indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument known to us by which the Company is bound or
to which the Company is a party or by which any material properties of
the Company are bound, (b) conflict with or result in any default
under the Certificate of Incorporation or the By-laws, in each case as
amended, of the Company; or (c) result in the violation by the Company
of any statute, order, rule or regulation of any court of governmental
agency or body, in each case known to us, by which the Company is
bound (except that with respect to the Act and the rules and
regulation promulgated thereunder, such counsel's opinion is limited
to the matters expressed in paragraphs ix, x, xi, xii, xiii and xiv
below, and it being understood that you have not requested and such
counsel is not expressing any opinion as to any state securities or
"Blue Sky" laws);
(ix) No consent, approval, authorization or order of, or
registration or qualification with, any governmental agency or body or
other regulatory authority is required for the performance by the
Company of the transactions contemplated by this Agreement, except
such as have been obtained under the Act and such as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Notes by the Underwriters;
(x) The Registration Statement has become effective under the
Act, and to the best of 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;
(xi) The conditions for use of Form S-3, set forth in the
General Instructions thereto, have been satisfied;
(xii) Such counsel has participated in the preparation of the
Registration Statement and the Prospectus. From time to time in
connection therewith, such counsel has had discussions with the
officers, directors and employees of the Company and Arthur Andersen
LLP, the independent accountants who examined certain of the financial
statements of the Company and its consolidated Subsidiaries included
in the Registration Statement and the Prospectus, and the Underwriters
concerning the information contained in the Registration Statement and
the Prospectus and the proposed responses to various items in Form
S-3. Based thereupon, such counsel is of the opinion that the
Registration Statement and the Prospectus (except for the operating
statistics, financial statements, financial schedules and other
financial data included therein or omitted therefrom, and except for
the information referred to under the caption "Experts" as having been
-17-
included in the Prospectus on the authority of Arthur Andersen LLP as
experts, as to which such counsel expresses no opinion), as of their
respective effective and issue dates complied as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder.
(xiii) Such counsel has not independently verified and is not
passing upon, and does not assume any responsibility for the accuracy,
completeness or fairness of the information contained in the
Registration Statement and the Prospectus. Based on the participation
and discussions described above, however, no facts have come to such
counsel's attention that cause such counsel to believe that the
Registration Statement (except for the operating statistics, financial
statements, financial schedules, and other financial data included
therein or omitted therefrom, and except for the information referred
to under the caption "Experts" as having been included in the
Registration Statement and the Prospectus on the authority of Arthur
Andersen LLP as experts), at the time it became effective contained
any untrue statement of 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 (with the
foregoing exceptions) on the Closing Date 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;
(xiv) Based upon the participation and discussions described
above, such counsel does not know of any litigation or governmental
proceedings, pending or threatened, required to be described in the
Prospectus that are not described as required, or of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or
described as required. With respect to the statements set forth in the
preceding sentence regarding litigation and governmental proceedings,
such counsel has with your consent relied on a review of litigation
summaries furnished by the Company to Arthur Andersen LLP in
connection with its audit of the Company's financial statements for
the fiscal year ended July 31, 1996, and on inquiries of lawyers
presently in such counsel's firm who, according to such counsel's
records, have been engaged in legal services on behalf of the Company
subsequent to July 31, 1996, but such counsel has neither examined nor
requested an examination of the indices or records of any court, or
any governmental or other agency, authority, instrumentality or entity
or made any inquiries of public officials;
-18-
(xv) Neither the Company nor any Significant Subsidiary is, nor
with the giving of notice or passage of time or both would be, in
violation of its respective Certificate of Incorporation or By-laws;
and
(xvi) Neither the Company nor any Significant Subsidiary is an
"investment company", an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended.
In rendering their opinion, such counsel may rely, to the extent
deemed advisable by such counsel, (a) upon certificates of state officials,
and (b) on opinions of counsel (provided, however, that you shall have
received a copy of each of such opinion which shall be dated the Closing
Date addressed to you or otherwise authorizing you to rely thereon; and
that Jones, Day, Reavis & Pogue, in its opinion to you delivered pursuant
to this subsection, shall state that such counsel are satisfactory to them
and Jones, Day, Reavis & Pogue has no reason to believe that you and they
are not entitled to so rely).
(e) The Underwriter shall have received an opinion of McDermott, Will
& Emery, counsel for the Underwriters, dated the Closing Date, with respect
to the issuance and sale of the Notes by the Company, the Registration
Statement and other related matters as the Underwriters may require, and
the Company shall have furnished to such counsel such documents and shall
have exhibited to them such papers and records as they request for the
purpose of enabling them to pass upon such matters.
(f) The Underwriters shall have received on the Closing Date, a
certificate of Donald W. Grinter, Chairman of the Board and Chief Executive
Officer, and D. Chisholm MacDonald, Senior Vice President and Chief
Financial Officer, of the Company, to the effect that:
(i) The representations and warranties of the Company set forth
in section 2 hereof are true and correct as of the date of this
Agreement and as of the date of such certificate, and the Company has
complied with all the agreements and satisfied all the conditions to
be performed or satisfied by it at or prior to the date of such
certificate;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to
the knowledge of the respective signatories, no
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proceedings for that purpose have been initiated or are pending or
contemplated under the Act or under the Blue Sky Laws of any
jurisdiction;
(iii) Each of the respective signatories has carefully examined
the Registration Statement and the Prospectus, and any amendment or
supplement thereto, including any documents filed under the Exchange
Act and deemed to be incorporated by reference in the Registration
Statement, and such documents contain all statements required to be
stated therein, and do not include any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and since
the date on which the Registration Statement was initially filed, no
event has occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration
Statement that has not been so set forth, and there has been no
document required to be filed under the Exchange Act that upon such
filing would be deemed to be incorporated by reference in the
Registration Statement that has not been so ordered; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there shall not have occurred any
change or development involving, or which could be expected to
involve, a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as disclosed
in the Prospectus and the Registration Statement as heretofore amended
or (but only if the Underwriters expressly consent thereto in writing)
as disclosed in an amendment or supplement thereto filed with the
Commission and delivered to the Underwriters after the execution of
this Agreement; since such date and except as so disclosed or in the
ordinary course of business, the Company has not incurred any
liability or obligation, direct or indirect, or entered into any
transaction which is material to the Company; since such date and
except as so disclosed, there has not been any change in the
outstanding capital stock of the Company, or any change that is
material to the Company in the short-term debt or long-term debt of
the Company; since such date and except as so disclosed, the Company
has not acquired any of the Common Stock or other capital stock of the
Company nor has the Company declared or paid any dividend, or made any
other distribution, upon its outstanding Common Stock payable to
shareholders of record on a date prior to the Closing Date; since such
date and except as so disclosed, the Company has not incurred any
material contingent obligations, and no material litigation is pending
or threatened against the Company; and, since such date and except as
so disclosed, the Company has not sustained any material loss or
interference from any strike, fire, flood, windstorm, accident or
other calamity
-20-
(whether or not insured) or from any court or governmental action,
order or decree.
(g) At the time this Agreement is executed and also on the Closing
Date, there shall be delivered to the Underwriters a letter addressed to
the Underwriters from Arthur Andersen LLP, the Company's independent
accountants, the first letter to be dated the date of this Agreement and
the second letter to be dated the Closing Date, which shall be in form and
substance satisfactory to the Underwriters and shall contain information as
of a date within five days of the date of such letter. There shall not have
been any change or decrease set forth in any of the letters referred to in
this subsection (g) which makes it impracticable or inadvisable in the
judgment of the Underwriters to proceed with the public offering or
purchase of the Notes as contemplated hereby.
(h) The Notes shall have been qualified or registered for sale under
the Blue Sky Laws of such jurisdictions as shall have been specified by the
Underwriters, the underwriting terms and arrangements for the offering
shall have been approved by the NASD, and the Notes shall have been
registered under the Exchange Act.
(i) Such further certificates and documents as the Underwriters may
reasonably request (including certificates of officers of the Company).
(j) Transactions contemplated by the Amended Credit Agreement (as
defined in the Prospectus) shall have been consummated prior to or
simultaneously with the consummation of the transactions contemplated by
this Agreement.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriters and to McDermott, Will & Emery, counsel for the
Underwriters. The Company shall furnish the Underwriters with such manually
signed or conformed copies of such opinions, certificates, letters and documents
as the Underwriters may reasonably request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the Closing Date is not so satisfied, this Agreement, at the
election of the Underwriters, will terminate upon notification to the Company
without liability on the part of any Underwriter, and the Company will reimburse
the Underwriters for all out-of-pocket expenses (including the fees,
disbursements and other charges of counsel to the Underwriters) reasonably
incurred by them in connection therewith.
SECTION 7. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
will use its best efforts to prevent the issuance of any stop order suspending
the effectiveness of the
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Registration Statement, and, if such stop order is
issued, to obtain as soon as possible the lifting thereof.
SECTION 8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
the Act or the Exchange Act, from and against any losses, claims, damages,
expenses, liabilities or actions in respect thereof ("Claims"), joint or
several, to which such Underwriter or each such controlling person may
become subject under the Act, the Exchange Act, Blue Sky Laws or other
federal or state statutory laws or regulations, at common law or otherwise
(including payments made in settlement of any litigation), insofar as such
Claims arise out of or are based upon any breach of any representation,
warranty or covenant made by the Company in this Agreement, or any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or in any application filed under any Blue
Sky Law or other document executed by the Company for that purpose or based
upon written information furnished by the Company and filed in any state or
other jurisdiction to qualify any or all of the Notes under the securities
laws thereof (any such document, application or information being
hereinafter called a "Blue Sky Application") or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading. The Company agrees to reimburse each Underwriter and each
such controlling person for any legal fees or other expenses incurred by
such Underwriter or any such controlling person in connection with
investigating or defending any such Claim; provided, however, that the
Company will not be liable in any such case to the extent that any such
Claim arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or supplement thereto
or in any Blue Sky Application in reliance upon and in conformity with the
written information furnished to the Company by the Underwriters; and
provided, further, that the indemnity agreement contained in this Section
8(a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any persons controlling such Underwriter) on
account of any losses, claims, damages, liabilities or litigation arising
from the sale of Notes to any person, if such Underwriter fails to send or
give a copy of the Prospectus, as the same may be then supplemented or
amended, to such person, within the time required by the Act and the untrue
statement or alleged untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus,
unless such failure is the result of noncompliance by the Company with
Section 4(b) hereof. The indemnity agreement in Section 8(a) and 8(b) shall
be in addition to any liability which the Company and the
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Underwriters may otherwise have and shall extend upon the same terms and
conditions to each person, if any, who controls the Company and any
Underwriter within the meaning of the Act or the Exchange Act.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its officers
who signs the Registration Statement, and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act, against any
Claim to which the Company, or any such director, officer, or controlling
person may become subject under the Act, the Exchange Act, Blue Sky Laws or
other federal or state statutory laws or regulations, at common law or
otherwise (including payments made in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter),
insofar as such Claim arises out of or is based upon any untrue or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, or arises out of or is
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or in
any Blue Sky Application, in reliance solely upon and in conformity with
the written information furnished by the Underwriters to the Company. Each
Underwriter will severally reimburse any legal fees or other expenses
incurred by the Company, or any such director, officer, controlling person
in connection with investigating or defending any such Claim, and from any
and all Claims solely resulting from failure of an Underwriter to deliver a
Prospectus, if the person asserting such Claim purchased Notes from such
Underwriter and a copy of the Prospectus (as then amended if the Company
shall have furnished any amendments thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Notes to such person, and if the Prospectus (as so amended) would have
cured the defect giving rise to such Claim.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action in respect of a Claim, such
indemnified party will, if a Claim in respect thereof is to be made against
an indemnifying party under this section, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve an indemnifying party from any
liability it may have to any indemnified party under this section or
otherwise. In case any such action is brought against any indemnified
party, and such indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled
-23-
to participate in and, to the extent that he, she or it may wish, jointly
with all other indemnifying parties, similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include both
the indemnified party and any indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to the indemnified party and/or other indemnified parties which are
different from or additional to those available to any indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. In
no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to local counsel) for all indemnified
parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same set of
allegations or circumstances.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will not
be liable to such indemnified party under this section for any legal fees
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel in
connection with the assumption of legal defenses in accordance with
the proviso to the penultimate sentence of subsection (c) of this
section;
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the
action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(e) If the indemnification provided for in this section is unavailable
to an indemnified party under subsection (a) or (b) hereof in respect of
any Claim referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
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(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Underwriters from the
offering of the Notes; 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, and the
Underwriters in connection with the statements or omissions which
resulted in such Claim, as well as any other relevant equitable
considerations.
The relative benefits received by each of the Company and the Underwriters
shall be deemed to be in such proportion so that the Underwriters are
responsible for that portion represented by the percentage that the amount
of the underwriting discount appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon, and the Company
(including its officers and directors and controlling persons), is
responsible for the remaining portion. The relative fault of the Company
and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable
by a party as a result of the Claims referred to above shall be deemed to
include, subject to the limitations set forth in subsections (c) and (d) of
this section, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or
claim.
(f) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this section were determined by
pro rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method or allocation which
does not take into account the equitable considerations referred to in
subsection (d) of this section. Notwithstanding the other provisions of
this section, no Underwriter shall be required to contribute any amount
that is greater than the amount by which the total price at which the Notes
underwritten by it and distributed to the public were offered 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 are several in proportion to their respective
underwriting commitments and not joint.
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SECTION 9. DEFAULT OF UNDERWRITERS. It shall be a condition to the
obligations of each Underwriter to purchase the Notes in the manner as described
herein, that, except as hereinafter provided in this section, each of the
Underwriters shall purchase and pay for all the Notes agreed to be purchased by
such Underwriter hereunder upon tender to the Underwriters of all such Notes in
accordance with the terms hereof. If any Underwriter or Underwriters default in
their obligations to purchase Notes hereunder on the Closing Date and the
aggregate principal amount of Notes which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the aggregate
principal amount of Notes which the Underwriters are obligated to purchase on
the Closing Date, the Underwriters may make arrangements for the purchase of
such Notes by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Notes which such defaulting Underwriters agreed but failed to
purchase on the Closing Date. If any Underwriter or Underwriters so default and
the aggregate principal amount of Notes with respect to which such default or
defaults occur is greater than 10% of the aggregate principal amount of Notes
which the Underwriters are obligated to purchase on the Closing Date, and
arrangements satisfactory to the Underwriters for the purchase of such Notes by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Company except for the expenses to be paid by the Company pursuant to
section 5 hereof and except to the extent provided in section 8 hereof.
In the event that Notes to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the Underwriters
shall have the right to postpone the Closing Date for not more than seven
business days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
SECTION 10. EFFECTIVE DATE. This Agreement shall become effective upon the
execution and delivery of this Agreement by the parties hereto. Such execution
and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
SECTION 11. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Underwriters prior to or on the Closing Date, if in the
judgment of the Underwriters, payment for and delivery of the Notes is rendered
impracticable or inadvisable because:
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(a) additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or the American Stock Exchange,
or trading in securities generally shall have been suspended or materially
limited on either such exchange or on The Nasdaq Stock Market or a general
banking moratorium shall have been established by either federal or state
authorities in New York or Illinois; and
(b) an outbreak or material escalation of hostilities or other
national or international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have
accelerated to such extent, in the judgment of the Underwriters, as to make
it impracticable or inadvisable to proceed with completion of the sale of
and payment for the Notes as provided in this Agreement.
Any termination pursuant to this section shall be without liability on the
part of any Underwriter to the Company, or on the part of the Company to any
Underwriter, except for expenses to be paid by the Company pursuant to section 5
hereof or and except as to indemnification to the extent provided in section 8
hereof.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company 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 made by or on behalf of any Underwriter or the Company or
any of its or their partners, officers, directors or any controlling person, as
the case may be, and will survive delivery of and payment for the Notes sold
hereunder.
SECTION 13. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered, telecopied (with receipt
confirmed) or telegraphed and confirmed to Robert W. Baird & Co. Incorporated at
227 West Monroe Street, Chicago, Illinois 60606, Attention: Paul J. Carbone,
with a copy to McDermott, Will & Emery, 227 West Monroe Street, Chicago,
Illinois 60606, Attention: Thomas J. Murphy, and if sent to the Company, will be
mailed, delivered, telecopied (with receipt confirmed) or telegraphed and
confirmed to the Company at 200 South Michigan Avenue, Chicago, Illinois 60604,
Attention: D. Chisholm MacDonald with a copy to Jones, Day, Reavis & Pogue, 77
West Wacker Drive, Chicago, Illinois 60601, Attention: Gary T. Johnson.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in section 8 hereof and no other person will
have any right or obligation hereunder. The term "successors" shall not
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include any purchaser of the Notes as such from any of the Underwriters merely
by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
SECTION 16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of Illinois
without reference to conflict of law principles thereunder. This Agreement may
be signed in various counterparts which together shall constitute one and the
same instrument, and shall be effective when at least one counterpart hereof
shall have been executed by or on behalf of each party hereto.
SECTION 17. TIME OF ESSENCE. Time shall be of the essence of this
Agreement.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters all in
accordance with its terms.
Very truly yours,
ABC RAIL PRODUCTS CORPORATION
By:
D. Chisholm MacDonald, Senior Vice President
and Chief Financial Officer
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
ROBERT W. BAIRD & CO. INCORPORATED
By:
----------------------------
Its:
----------------------
PIPER JAFFRAY INC.
By:
----------------------------
Its:
----------------------
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ABC RAIL PRODUCTS CORPORATION
SCHEDULE I
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Principal Amount of Notes
Name of Underwriter to be Purchased
- ------------------- ---------------
Robert W. Baird & Co. Incorporated $35,000,000
Piper Jaffray Inc. $15,000,000
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