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Exhibit 1.2
DRAFT 5/15/98
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___________ Shares
CAMELOT MUSIC HOLDINGS, INC.
(a Delaware corporation)
Common Stock
(Par Value $.01 Per Share)
INTERSYNDICATE AGREEMENT
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Agreement, dated July ______, 1998, among (A) Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Morgan Stanley & Co.
Incorporated and McDonald & Company Securities, Inc. (together, the "U.S.
Representatives") for the U.S. Underwriters (the "U.S. Underwriters") listed in
Schedule A to the U.S. Purchase Agreement (the "U.S. Purchase Agreement"), dated
July ______, 1998, among Camelot Music Holdings, Inc., a Delaware corporation
(the "Company"), Camelot Music, Inc., a Pennsylvania corporation ("CMI"), the
persons listed in Schedule B of the U.S. Purchase Agreement (the "Selling
Shareholders") and the U.S. Underwriters, and (B) Merrill Lynch International
("MLI"), Morgan Stanley & Co. International Limited and McDonald & Company
Securities, Inc. (collectively, the "Lead Managers") for the managers (the
"Managers") listed in Schedule A to the International Purchase Agreement (the
"International Purchase Agreement"), dated July ______, 1998, among the Company,
CMI, the Selling Shareholders and the Managers. The U.S. Purchase Agreement and
the International Purchase Agreement are together referred to herein as the
"Purchase Agreements." Terms not defined herein are used as defined in the
Purchase Agreements referred to above.
The U.S. Underwriters, pursuant to the U.S. Purchase
Agreement, have agreed to purchase the Initial U.S. Securities and have been
granted an option by the Company and the Selling Shareholders to purchase the
U.S. Underwriters' pro rata portion of the U.S. Option Securities to cover
over-allotments, and the Managers, pursuant to the International Purchase
Agreement, have agreed to purchase the Initial International Securities and have
been granted an option by the Company and the Selling Shareholders to purchase
the Managers' pro rata portion of the International Option Securities to cover
over-allotments. In connection with the foregoing, the U.S. Underwriters and the
Managers deem it necessary and advisable that certain of the activities of the
U.S. Underwriters and the Managers be coordinated pursuant to this Agreement.
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1. The U.S. Underwriters, acting through Merrill Lynch, and
the Managers, acting through MLI, agree that they will consult each other as to
the availability of the Initial U.S. Securities and the U.S. Option Securities
(the Initial U.S. Securities and the U.S. Option Securities are collectively
hereinafter called the "U.S. Securities") pursuant to the U.S. Purchase
Agreement and as to the availability of the Initial International Securities and
the International Option Securities (the Initial International Securities and
the International Option Securities are collectively hereinafter called the
"International Securities") pursuant to the International Purchase Agreement, in
either case, from time to time until the termination of the selling restrictions
applicable to the respective offerings by the U.S. Representatives and MLI.
Based upon information received from the Managers and the U.S. Underwriters,
respectively, MLI agrees to advise Merrill Lynch and Merrill Lynch agrees to
advise MLI from time to time upon request during the consultation period
contemplated above, of the respective number of International Securities
purchased pursuant to the International Purchase Agreement and U.S. Securities
purchased pursuant to the U.S. Purchase Agreement remaining unsold. From time to
time as mutually agreed upon between MLI and Merrill Lynch, (a) MLI will sell
for the account of one or more Managers to Merrill Lynch, for the account of one
or more U.S. Underwriters, such number of International Securities purchased
pursuant to the International Purchase Agreement and remaining unsold; and (b)
Merrill Lynch will sell for the account of one or more U.S. Underwriters to MLI
for the account of one or more Managers, such number of U.S. Securities
purchased pursuant to the U.S. Purchase Agreement and remaining unsold.
Unless otherwise determined by mutual agreement of Merrill
Lynch and MLI, the price of any shares of Common Stock so purchased or sold
shall be the initial public offering price less the selling concession in each
case as set forth in the U.S. Prospectus. Settlement between Merrill Lynch and
MLI with respect to any Common Stock transferred hereunder at least three
business days prior to the Closing Time shall be made at Closing Time and, in
the case of purchases and sales made thereafter, as promptly as practicable but
in no event later than three business days after the transfer date. Certificates
representing the Common Stock so purchased shall be delivered on or about the
respective settlement dates. The liability for payment to the Company and the
Selling Shareholders of the purchase price of the Common Stock being purchased
by the U.S. Underwriters and the Managers under the Purchase Agreements shall
not be affected by the provisions of this Agreement.
Each U.S. Underwriter, acting through the U.S.
Representatives, agrees that, except for purchases and sales pursuant to this
Agreement and stabilization transactions contemplated hereunder conducted by it,
it will offer, sell or deliver Common Stock, directly or indirectly, only to
persons whom it believes may be a United States Person or a Canadian Person (as
such terms are defined below) and persons
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whom it believes intend to reoffer, resell or deliver directly or indirectly the
same to a United States Person or a Canadian Person, and any dealer to whom such
U.S. Underwriter may sell Common Stock will agree that it will only offer,
resell or deliver Common Stock directly or indirectly to persons whom such
dealer believes may be a United States Person or a Canadian Person or at a
reallowance only to other dealers who so agree.
Each International Manager, acting through MLI, agrees that,
except for purchases and sales pursuant to this Agreement and stabilization
transactions contemplated hereunder, it will not offer, sell or deliver Common
Stock, directly or indirectly, to any person whom it believes may be a United
States Person or a Canadian Person or any person whom it believes may intend to
reoffer, resell or deliver directly or indirectly the same to any United States
Person or any Canadian Person, and any dealer, bank or broker to whom such
International Manager may sell Common Stock will agree that it will not offer,
resell or deliver any Common Stock directly or indirectly to any person whom
such dealer, bank or broker believes may be a United States Person or a Canadian
Person nor at a reallowance to other dealers, bankers or brokers who do not so
agree.
For purposes of this Agreement, "United States Person" shall
mean any individual who is resident in the United States, or any corporation,
pension, profit-sharing or other trust or entity organized under or governed by
the laws of the United States or any political subdivision thereof (other than
the foreign branch or office of any United States Person), and shall include any
United States branch of a person other than a United States Person. "United
States" shall mean the United States of America, its territories, its
possessions and all areas subject to its jurisdiction. "Canadian Person" shall
mean any individual who is resident in Canada, or any corporation, pension,
profit-sharing or other trust or entity organized under or governed by the laws
of Canada or any political subdivision thereof (other than the foreign branch or
office of any Canadian Person), and shall include any Canadian branch or office
of a person other than a Canadian Person. "Canada" shall mean Canada, its
territories, its possessions and all areas subject to its jurisdiction.
2. All stabilization transactions shall be conducted at the
direction and subject to the control of Merrill Lynch as hereinafter provided,
so that stabilization activities worldwide shall be coordinated and conducted in
compliance with any applicable laws and regulations. From time to time upon the
request of MLI, Merrill Lynch will inform MLI of stabilization transactions
effected pursuant to this Section.
a. The Lead Managers undertake, and agree to cause all
Managers to undertake, that in connection with the distribution of Common Stock
they will comply: with the applicable rules and regulations of the United States
National
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Association of Securities Dealers, Inc.; with the prohibitions against trading
by persons interested in a distribution; and with the requirements for the
filing of all notices and reports relating thereto set forth in Regulation M and
Rule 17a-2 under the United States Securities Exchange Act of 1934 and the
Agreement Among Managers entered into by the Managers (the "AAM"). The Lead
Managers will cause each dealer which has agreed to participate or is
participating in the distribution to give a similar undertaking.
b. Merrill Lynch shall have sole responsibility with
respect to any action which they may take to make over-allotments in arranging
for sales of U.S. Option Securities and International Option Securities and
shall have direction and control of any action taken for stabilizing the market
price of the Common Stock, whether in the United States or on European stock
exchanges or otherwise. All stabilization transactions by Merrill Lynch shall be
for the respective accounts of the several U.S. Underwriters and Managers in the
proportions set forth in Section 4 hereof. The net commitment for long or short
accounts of the U.S. Underwriters or the Managers pursuant to such over
allotment and stabilization transactions shall not exceed 20% of the number of
U.S. Securities or International Securities, as the case may be, to be purchased
by the U.S. Underwriters, or the Managers, respectively, as set forth in the
U.S. Purchase Agreement or the International Purchase Agreement, respectively.
The exercise by the U.S. Underwriters and the Managers of their respective
options to purchase U.S. Option Securities and International Option Securities
shall be at the direction of Merrill Lynch.
3. Merrill Lynch and MLI shall consult with each other as to
the reservations for sale of the Common Stock made under the AAM, and upon
reaching agreement with respect thereto, MLI shall reserve for sale and sell to
the U.S. Underwriters, dealers, bankers, brokers and others indicated by Merrill
Lynch, for the account of the respective Managers, International Securities to
be purchased by such Managers, in the manner and at the price contemplated by
Section 1 hereof.
4. Merrill Lynch and MLI shall agree as to the expenses which
will constitute expenses of the underwriting and distribution of the Common
Stock to the U.S. Underwriters and the Managers, which expenses, as well as any
stabilizing profits or losses, shall be allocated among the U.S. Underwriters
and the Managers in the same proportion as the number of U.S. Securities
purchased under the U.S. Purchase Agreement, and the number of International
Securities purchased under the International Purchase Agreement bear to the
aggregate number of shares of Common Stock purchased under the Purchase
Agreements. Except with respect to such common expenses, the Managers will pay
the aggregate expenses incurred in connection with the purchase, carrying or
sale of the International Securities purchased by the Managers from the Company
and the Selling Shareholders and the U.S. Underwriters will pay the aggregate
expenses incurred in connection with the purchase, carrying or sale of the
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U.S. Securities purchased by the U.S. Underwriters from the Company and the
Selling Shareholders.
5. The U.S. Representatives and MLI agree that:
a. if the Closing Time is not on the day provided in the
Purchase Agreements, Merrill Lynch and MLI will mutually agree on a postponed
date within the time permitted by the Purchase Agreements and the settlement
dates herein provided shall be adjusted accordingly;
b. changes in the offering price to the public or in the
concession and reallowance to dealers, bankers or brokers will be made only
after consultation, but in accordance with the direction of Merrill Lynch,
during the consultation period specified in the first sentence of Section 1
hereof;
c. Merrill Lynch and MLI will each keep the other fully
informed of the progress of the offering and distribution of the Common Stock;
d. MLI agrees that it will cause the termination of the AAM
at such time as Merrill Lynch shall determine; and
e. advertising with respect to the offering shall be as
mutually agreed upon by Merrill Lynch and MLI.
6. This Agreement may be amended prior to the Closing Time by
mutual written consent.
7. This Agreement may be signed in various counterparts, which
together shall constitute one and the same instrument.
8. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
9. The U.S. Underwriters and MLI hereby (a) submit to the
jurisdiction of any New York State or Federal court sitting in the City of New
York with respect to any actions and proceedings arising out of or relating to
this Agreement, (b) agree that all claims with respect to such actions or
proceedings may be heard and determined in such New York State or Federal court,
(c) waive the defense of an inconvenient forum, (d) consent to the service of
process upon it by mailing or delivering such service to it by registered mail
addressed as specified pursuant to the U.S. Purchase Agreement and the
International Purchase Agreement, as the case may be, and (e) agree that a final
judgment in any such action or proceeding shall be
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conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
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IN WITNESS WHEREOF, this Agreement has been executed as of the
date and year first above written.
Acting on behalf of themselves and the other U.S. Underwriters:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
McDonald & Company Securities, Inc.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:___________________________________________
Acting on behalf of themselves and the other Managers:
Merrill Lynch International
Morgan Stanley & Co. International Limited
McDonald & Company Securities, Inc.
By: Merrill Lynch International
By:___________________________________________
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