Exhibit 1.2
KANSAS CITY SOUTHERN INDUSTRIES, INC.
4,000,000 SHARES OF COMMON STOCK
Underwriting Agreement
June [ ], 2001
J.P. Morgan Securities Inc.
Deutsche Banc Alex. Brown Inc.
c/o J.P. Morgan Securities Inc.
New York, New York 10260
Ladies and Gentlemen:
Kansas City Southern Industries, Inc., a Delaware corporation (the
"Company"), proposes issue and sell to you, the several Underwriters listed in
Schedule I hereto (the "Underwriters"), an aggregate of 4,000,000 shares of
Common Stock, par value $.01 per share, of the Company (the "Underwritten
Shares") and, for the sole purpose of covering over-allotments in connection
with the sale of the Underwritten Shares, at the option of the Underwriters, up
to an additional 600,000 shares of Common Stock of the Company (the "Option
Shares"). The Underwritten Shares and the Option Shares are herein referred to
as the "Shares". The shares of Common Stock of the Company to be outstanding
after giving effect to the sale of the Shares are herein referred to as the
"Stock". The Stock, including the Shares, will have attached thereto rights (the
"Rights"). Each Right entitles the registered holder to purchase 1/1000th of a
share of the Company's Series A Preferred Stock, or in some circumstances,
Common Stock, other securities, cash or other assets, as the case may be, at a
price of $210 per share, subject to adjustment (the "Poison Pill Security"). The
Rights are to be issued pursuant to a Rights Agreement (the "Rights Agreement")
dated as of September 19, 1995 between the Company and Harris Trust and Savings
Bank.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement (registration no. 333-61006) on Form S-3, relating to certain
securities (the "Shelf Securities") to be issued from time to time by the
Company. The Company also has filed with the Commission pursuant to Rule 424
under the Securities Act a prospectus supplement specifically relating to the
Shares. The registration statement as amended to the date of this Agreement is
hereinafter referred to as the "Registration Statement" and the related
prospectus covering the Shelf Securities in the form first used to confirm sales
of the Shares is hereinafter referred to as the "Basic Prospectus". The Basic
Prospectus as supplemented by the prospectus supplement specifically relating to
the Shares in the form first used to confirm sales of the Shares is hereinafter
referred to as the "Prospectus". Any reference in this Agreement to the
Registration Statement, the Basic Prospectus, any preliminary form of Prospectus
(a "preliminary prospectus") previously filed with the Commission pursuant to
Rule 424 or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the date of this Agreement or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed under the Exchange Act after the date of this Agreement, or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be, which are deemed to be incorporated by reference therein.
As used herein, the term "Business Day" means any day other than a day on
which banks are permitted or required to be closed in New York City.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share equal
to the offering price less commission (the "Purchase Price") of $[ ].
In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as hereinafter provided, and the Underwriters on the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company up to an aggregate of 600,000 Option Shares at the
Purchase Price, for the sole purpose of covering over-allotments (if any) in the
sale of Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
number of Underwritten Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number increased as set forth in Section 9 hereof)
bears to the aggregate number of Underwritten Shares being purchased from the
Company by the several Underwriters, subject, however, to such adjustments to
eliminate any fractional Shares as the Underwriters in their sole discretion
shall make.
The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Underwriters to the Company.
Such notice shall set forth the aggregate number of Option Shares as to which
the option is being exercised and the date and time when the Option Shares are
to be delivered and paid for which may be the same date and time as the Closing
Date (as hereinafter defined) but shall not be earlier than the Closing Date nor
later than the tenth full Business Day (as hereinafter defined) after the date
of such notice (unless such time and date are postponed in accordance with the
provisions of Section 9 hereof). Any such notice shall be given at least two
Business Days prior to the date and time of delivery specified therein.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Underwriters is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Delivery and payment of the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Underwriters at the offices of Cravath, Swaine & Moore, New York, New York, or
at such other place as shall be agreed upon by the Underwriters and the Company,
at 10:00 A.M., New York City time, on the Closing Date (as defined below) or in
the case of the Option Shares, on the date and time specified by the
Underwriters in the written notice of the Underwriters' election to purchase
such Option Shares. As used herein, the term "Business Day" means any day other
than a day on which banks are permitted or required to be closed in New York
City. The time and date of such payment and delivery with respect to the
Underwritten Shares are referred to herein as the "Closing Date", and the time
and date for such payment for the Option Shares, if other than the Closing Date,
are herein referred to as the "Additional Closing Date".
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Underwriters for the respective accounts of the several Underwriters of the
Shares to be purchased on such date registered in such names and in such
denominations as the Underwriters shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Underwriters at the office of J.P. Morgan Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter that:
(a) the Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) comply, or will comply, as the case
may be, in all material respects with the Securities Act and do not and
will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the date of the Prospectus
and any amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented, if applicable, at the Closing Date
or Additional Closing Date, as the case may be, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; except that the foregoing representations and
warranties shall not apply to statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Underwriters expressly for use therein (the
"Underwriters' Information");
(b) the documents incorporated by reference in the Prospectus, when
they become effective or were filed with the Commission as the case may be
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such documents
are filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act, and will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(c) the financial statements, and the related notes thereto, included
or incorporated by reference in the Registration Statement and the
Prospectus present fairly the consolidated financial position of the
Company and its consolidated subsidiaries and, to the Company's knowledge,
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. ("Grupo TFM") and
TFM, S.A. de C.V. ("TFM"), as of the dates indicated and the results of
their operations and changes in their consolidated cash flows for the
periods specified; and said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included or incorporated by
reference in the Registration Statement present fairly the information
required to be stated therein;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
change in the capital stock (except for issuances by KCSI of Common Stock
pursuant to existing stock incentive plans of which the Underwriters have
previously been advised in writing (the "Stock Incentive Plans")), any
change in the long-term debt of the Company or any of its subsidiaries or,
to the Company's knowledge, Grupo TFM or TFM, or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries and, to the Company's knowledge, Grupo TFM and
TFM, taken as a whole, otherwise than as set forth in the Prospectus; and
except as set forth in the Prospectus neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, Grupo TFM or TFM has entered
into any transaction or agreement (whether or not in the ordinary course of
business) material to the Company and its subsidiaries and Grupo TFM and
TFM, taken as a whole;
(e) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(f) each of the Company's subsidiaries and, to the Company's
knowledge, Grupo TFM and TFM has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each jurisdiction in
which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect on the Company
and its subsidiaries and Grupo TFM and TFM, taken as a whole; and all the
outstanding shares of capital stock of each subsidiary of the Company have
been duly authorized and validly issued, are fully-paid and non-assessable,
and (except, in the case of foreign subsidiaries, for directors' qualifying
shares and except as described in the Prospectus) are owned by the Company,
directly or indirectly, free and clear of all liens, encumbrances, security
interests and claims;
(g) this Agreement has been duly authorized, executed and delivered by
the Company;
(h) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock conforms as to legal matters
to the description thereof set forth in the Prospectus, and all of the
outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully-paid and non-assessable and are
not subject to any pre-emptive or similar rights; and, except as set forth
in or expressly contemplated by the Prospectus and the Rights Agreement,
there are no outstanding rights (including, without limitation, pre-emptive
rights), warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
the Company or any of its subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company or any such subsidiary, any
such convertible or exchangeable securities or any such rights, warrants or
options;
(i) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be duly
issued and will be fully paid and non-assessable and will conform to the
descriptions thereof in the Prospectus; and the issuance of the Shares is
not subject to any preemptive or similar rights;
(j) [the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the
Company and, when issued upon issuance of the Shares, will be validly
issued, and the Poison Pill Security has been duly authorized by the
Company and validly reserved for issuance and, upon the exercise in
accordance with the terms of the Rights Agreement, will be validly issued,
fully paid and non-assessable; ]
(k) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, Grupo TFM or TFM is, or with the giving of notice or
lapse of time or both would be, in violation of or in default under its
Certificate of Incorporation or By-Laws or any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company
or any of its subsidiaries or Grupo TFM or TFM is a party or by which it or
any of them or any of their respective properties is bound, except for
violations and defaults which individually and in the aggregate are not
material to the Company and its subsidiaries and Grupo TFM and TFM, taken
as a whole; the issue and sale of the Shares and the performance by the
Company of its obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, nor will any such action result in any violation of the provisions
of the Certificate of Incorporation or the By-Laws of the Company or any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, its
subsidiaries or any of their respective properties; and no consent,
approval, authorization, order, license, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and as may be
required under state securities or Blue Sky Laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(l) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries or, to the Company's
knowledge, Grupo TFM or TFM or any of their respective properties or to
which the Company or any of its subsidiaries or Grupo TFM or TFM is or may
be a party or to which any property of the Company or any of its
subsidiaries or Grupo TFM or TFM is or may be the subject which, if
determined adversely to the Company or any of its subsidiaries or Grupo TFM
or TFM, could individually or in the aggregate have, or reasonably be
expected to have, a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries and Grupo TFM
and TFM, taken as a whole, and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others; and there are no statutes, regulations, contracts
or other documents that are required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required either as an exhibit
to the Registration Statement or as an exhibit to a document incorporated
by reference therein;
(m) immediately after any sale of Shares by the Company hereunder, the
aggregate amount of Shares which have been issued and sold by the Company
hereunder and of any securities of the Company (other than the Shares) that
shall have been issued and sold pursuant to the Registration Statement will
not exceed the amount of securities registered under the Registration
Statement (including the amount carried forward from the Company's earlier
shelf registration);
(n) the Company and its subsidiaries and, to the Company's knowledge,
Grupo TFM and TFM have good and marketable title in fee simple to all items
of real property and good and marketable title to all personal property
owned by them, in each case free and clear of all liens, encumbrances and
defects except such as are described or referred to in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company and its subsidiaries and Grupo TFM and TFM, except as would not,
individually or in the aggregate, have a material adverse effect on the
Company and its subsidiaries and Grupo TFM and TFM, taken as a whole; and
any real property and buildings held under lease by the Company and its
subsidiaries and, to the Company's knowledge, Grupo TFM and TFM are held by
them under valid, existing and enforceable leases with such exceptions as
are not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company or its subsidiaries or,
to the Company's knowledge, Grupo TFM or TFM;
(o) no relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries or, to the Company's knowledge, Grupo
TFM or TFM, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries or Grupo
TFM or TFM on the other hand, which is required by the Securities Act to be
described in the Registration Statement and the Prospectus which is not so
described;
(p) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Shares;
(q) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(r) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Securities Act;
(s) the Company and its subsidiaries and, to the Company's knowledge,
Grupo TFM and TFM have filed all federal, state, local and foreign tax
returns which have been required to be filed and have paid all taxes shown
thereon and all assessments received by them or any of them to the extent
that such taxes have become due and are not being contested in good faith,
except as would not, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries and Grupo TFM and TFM,
taken as a whole; and, except as disclosed in the Registration Statement
and the Prospectus, there is no tax deficiency which has been or might
reasonably be expected to be asserted or threatened against the Company or
any subsidiary or Grupo TFM or TFM, except as would not, individually or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries and Grupo TFM and TFM, taken as a whole;
(t) the Company has not taken, nor will it take in connection with the
offering of the Shares, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Common Stock;
(u) except as would not, individually or in the aggregate, have a
material adverse efect on the Company and its subsidiaries and Grupo TFM
and TFM, taken as a whole, (i) each of the Company and its subsidiaries
and, to the Company's knowledge, Grupo TFM and TFM owns, possesses or has
obtained all licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, (ii) neither the Company
nor any such subsidiary nor, to the Company's knowledge, Grupo TFM or TFM
has received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the Registration
Statement and the Prospectus; and (iii) each of the Company and its
subsidiaries and, to the Company's knowledge, Grupo TFM and TFM is in
compliance with all laws and regulations relating to the conduct of its
business as conducted as of the date hereof;
(v) there are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
subsidiaries or, to the Company's knowledge, Grupo TFM or TFM which are
likely to have a material adverse effect on the Company and its
subsidiaries and Grupo TFM and TFM, taken as a whole;
(w) the Company and its subsidiaries and, to the Company's knowledge,
Grupo TFM and TFM (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries and Grupo TFM and TFM, taken as a whole;
(x) in the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded
that such associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(y) except as otherwise disclosed in the Prospectus, there has been no
storage, generation, transportation, handling, treatment, disposal,
discharge, emission or other release of any kind of toxic or other wastes
or other hazardous substances by, due to or caused by the Company or any of
its subsidiaries (or, to the Company's knowledge, any other entity
(including any predecessor) for whose acts or omissions the Company or any
of its subsidiaries is or could reasonably be expected to be liable) upon
any of the property now or previously owned or leased by the Company or any
of its subsidiaries, or upon any other property, in violation of any
statute or ordinance, rule, regulation, order, judgment, decree or permit
or which would, under any statute or any ordinance, rule (including rule of
common law), regulation, order, judgment, decree or permit, give rise to
any liability, except for any violation or liability that could not
reasonably be expected to have, singularly or in the aggregate with all
such violations and liabilities, a material adverse effect on the Company
and its subsidiaries, taken as a whole; and there has been no disposal,
discharge, emission or other release of any kind onto such property or into
the environment surrounding such property of any toxic or other wastes or
other hazardous substances with respect to which the Company or each of the
Guarantors has knowledge, except for any such disposal, discharge, emission
or other release of any kind which could not reasonably be expected to
have, singularly or in the aggregate with all such discharges and other
releases, a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(z) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, ("ERISA")
that is maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and its
affiliates has been maintained in compliance with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986,
as amended, ("Code"). No prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA no
"accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeded the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions; and
(aa) none of the Company's subsidiaries is currently prohibited,
directly or indirectly, from paying dividends to the Company, from making
any other distribution on such subsidiary's capital stock, from repaying to
the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company.
5. The Company covenants and agrees with each of the several Underwriters
as follows:
(a) to file the Prospectus in a form approved by the Underwriters
pursuant to Rule 424 under the Securities Act not later than the
Commission's close of business on the second Business Day following the
date of determination of the offering price of the Shares or, if
applicable, such earlier time as may be required by Rule 424(b);
(b) to deliver, at the expense of the Company, to the Underwriters
four signed copies of the Registration Statement (as originally filed) and
each amendment thereto, in each case including exhibits, and to each other
Underwriter a conformed copy of the Registration Statement (as originally
filed) and each amendment thereto, in each case without exhibits and,
during the period mentioned in paragraph (e) below, to each of the
Underwriters as many copies of the Prospectus (including all amendments and
supplements thereto) and documents incorporated by reference therein as the
Underwriters may reasonably request;
(c) from the date hereof and prior to the Closing Date, to furnish to
the Underwriters a copy of any proposed amendment or supplement to the
Registration Statement or the Prospectus, for review, and not to file any
such proposed amendment or supplement to which the Underwriters reasonably
object;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Shares, and during such same period, to
advise the Underwriters promptly, and to confirm such advice in writing,
(i) when any amendment to the Registration Statement shall have become
effective (except an amendment deemed to occur as a result of filing
reports under the Exchange Act which are incorporated by reference
therein), (ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or the initiation or threatening of any proceeding for that purpose, (iv)
of the occurrence of any event, within the period referenced in paragraph
(e) below, as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, and (v) of the receipt by the Company of
any notification with respect to any suspension of the qualification of the
Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and to use its best efforts
to prevent the issuance of any such stop order or notification and, if
issued, to obtain as soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addresses
the Underwriters will furnish to the Company) to which Shares may have been
sold by the Underwriters on behalf of the Underwriters and to any other
dealers upon request, such amendments or supplements to the Prospectus as
may be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Underwriters shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; PROVIDED that the
Company shall not be required to file a general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject;
(g) to make generally available to its security holders and to the
Underwriters as soon as practicable an earnings statement covering a period
of at least twelve months beginning with the first fiscal quarter of the
Company occurring after the effective date of the Registration Statement,
which shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder;
(h) for a period of 90 days after the offering of the Shares, to
furnish to the Underwriters copies of all reports or other communications
(financial or other) furnished to Holders of the Shares, and copies of any
reports and financial statements furnished to or filed with the Commission
or any national securities exchange;
(i) except as contemplated by the underwriting agreement dated as of
June [19], 2001, between the Company and the Underwriters named therein
relating to the sale by the Company of its Mandatory Convertible Units
consisting of its Notes and contracts to purchase Common Stock, for a
period of 90 days after the date of the initial public offering of the
Shares not to (i) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any shares of
Stock or any securities convertible into or exercisable or exchangeable for
Stock or (ii) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the
Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Stock or such other securities, in cash or
otherwise, without the prior written consent of the Underwriters, other
than (1) the Shares to be sold hereunder, (2) any shares of Common Stock
issued upon the exercise of outstanding options granted under the Stock
Incentive Plans, (3) any additional options granted under the Stock
Incentive Plans, PROVIDED that any such additional options are not
exercisable during such 90-day period, and (4) any additional shares of
restricted Common Stock awarded under the Stock Incentive Plans, PROVIDED
that any such shares of restricted Common Stock are not transferable during
such 90-day period;
(j) to use the net proceeds received from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds";
(k) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution and
delivery of the Shares, (ii) incident to the preparation, printing and
filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification of the Shares under the laws of such
jurisdictions as the Underwriters may designate (including fees of counsel
for the Underwriters and its disbursements), (iv) incurred in connection
with the listing of the Shares on the New York Stock Exchange, (v) related
to any filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc., (vi) incurred in connection with
the printing (including word processing and duplication costs) and delivery
of this Agreement, the preliminary and supplemental Blue Sky Memoranda and
the furnishing to the Underwriters and dealers of copies of the
Registration Statement and the Prospectus, including mailing and shipping,
as herein provided, (vii) incurred by the Company in connection with a
"road show" presentation to potential investors, (viii) related to the
preparation of stock certificates and (ix) the cost and charges of any
transfer agent and any registrar.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company of its obligations hereunder and
to the following additional conditions:
(a) the Prospectus shall have been filed with the Commission pursuant
to Rule 424 within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; and all requests for additional information
on the part of the Commission shall have been complied with to the
satisfaction of the Underwriters;
(b) the representations and warranties of the Company contained herein
are true and correct on and as of the Closing Date or the Additional
Closing Date, as the case may be, as if made on and as of the Closing Date
or the Additional Closing Date, as the case may be, and the Company shall
have complied with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date or the
Additional Closing Date, as the case may be;
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Additional Closing Date, as the case may
be, there shall not have occurred any downgrading, nor shall any notice
have been given of (i) any downgrading, (ii) any intended or potential
downgrading or (iii) any review or possible change that does not indicate
an improvement, in the rating accorded any securities of or guaranteed by
the Company by any "nationally recognized statistical rating organization",
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act;
(d) since the respective dates as of which information is given in the
Prospectus there shall not have been any material change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth in the Prospectus, the effect of which in the
judgment of the Underwriters makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus; and neither the
Company nor any of its subsidiaries has sustained since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth in the Prospectus;
(e) the Underwriters shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, a certificate of the
chief executive officer and the chief financial officer of the Company,
with specific knowledge about the Company's financial matters, satisfactory
to the Underwriters to the effect set forth in subsections (a) through (d)
(with respect to the respective representations, warranties, agreements and
conditions of the Company) of this Section and to the further effect that
there has not occurred any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole from that set forth in the Registration
Statement;
(f) Jay M. Nadlman, Associate General Counsel to the Company, and
Sonnenschein Nath & Rosenthal, counsel for the Company, shall have
furnished to the Underwriters their written opinions, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, collectively 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 its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus as amended or supplemented;
(ii) the Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a material adverse effect on the Company and its subsidiaries
taken as a whole;
(iii) each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws
of its jurisdiction of incorporation with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified and in
good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; and all of the outstanding
shares of capital stock of each subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable, and (except,
in the case of foreign subsidiaries, for directors' qualifying shares
and except as otherwise set forth in the Prospectus) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iv) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the best of such counsel's knowledge,
threatened against or affecting the Company or any of its subsidiaries
or any of their respective properties or to which the Company or any
of its subsidiaries is or may be a party or to which any property of
the Company or its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its subsidiaries could
individually or in the aggregate have, or reasonably be expected to
have, a material adverse effect on the general affairs, business,
prospects, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole; to the best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others; and such counsel does not know of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement that are not described or
filed as required;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus;
(vii) the shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be sold by the Company have
been duly authorized and are validly issued, fully paid and
non-assessable;
(viii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when delivered to and paid for the
Underwriters in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable and the issuance of the
Shares is not subject to any preemptive or similar rights;
(ix) the statements in the Prospectus under "Legal Matters",
"Material United States Tax Consequences to Non-U.S. Holders of Our
Common Stock", "Description of Common Stock", "Description of KCS
Credit Facilities and Other Indebtedness" and "Underwriting", in the
Prospectus and in the Registration Statement in Item 15, insofar as
such statements constitute a summary of the terms of the Stock, legal
matters, documents or proceedings referred to therein, fairly present
in all material respects the information called for with respect to
such terms, legal matters, documents or proceedings;
(x) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements
thereto (other than the financial statements, the notes thereto and
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and believes that (other than the
financial statements, the notes thereto and related schedules therein,
as to which such counsel need express no belief) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective did not contain 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, and that the Prospectus, as amended or supplemented, if
applicable, does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(xi) neither the Company nor any of its subsidiaries is, or with
the giving of notice or lapse of time or both would be, in violation
of or in default under, its Certificate of Incorporation or By-Laws or
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which it or any of them or
any of their respective properties is bound, except for violations and
defaults which individually and in the aggregate are not material to
the Company and its subsidiaries, taken as a whole; the issue and sale
of the Shares being delivered on the Closing Date or the Additional
Closing Date, as the case may be, and the performance by the Company
of its obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its is subject, nor will any such action result
in any violation of the provisions of the Certificate of Incorporation
or the By-Laws of the Company or any applicable law or statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, its subsidiaries or any of their
respective properties;
(xii) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation of the other transactions contemplated by this Agreement,
except such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the
Securities Act and as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(xiii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
or entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act;
(xiv) the documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by the Company
prior to the Closing Date or the Additional Closing Date, as the case
may be, (other than the financial statements, the notes thereto and
related schedules therein, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and they have no reason to believe that any of such
documents, when such documents became effective or were so filed, as
the case may be, contained, in the case of a registration statement
which became effective under the Securities Act, an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or, in the case of other documents which were filed under
the Exchange with the Commission, an untrue statement of a material
fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made when such documents were so filed, not misleading;
(xv) [the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the
Company and, when issued upon issuance of the Shares, will be validly
issued, and the Poison Pill Security has been duly authorized by the
Company and validly reserved for issuance upon the exercise of the
Rights and, when issued upon such exercise in accordance with the
terms of the rights Agreement, will be validly issued, fully paid and
non-assessable;]
(xvi) except as would not, individually or in the aggregate, have
a material adverse effect on the Company and its subsidiaries, taken
as a whole, each of the Company and its subsidiaries owns, possesses
or has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations
and filings with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be,
and to operate its properties and to carry on its business as
conducted as of the date hereof; neither the Company nor any such
subsidiary has received any actual notice of any proceeding relating
to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except
as described in the Registration Statement and the Prospectus; and
each of the Company and its is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of
the date of the Prospectus;
(xvii) any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, existing
and enforceable leases with such exceptions as except as would not,
individually or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a WHOLE and do not
interfere with the use made or proposed to be made of such property
and buildings by the Company or its subsidiaries; and
(xviii) each of the Company and its subsidiaries is in compliance
with all Environmental Laws, except, in each case, where
noncompliance, individually or in the aggregate, would not have a
material adverse effect on the Company and its, taken as a whole;
there are no legal or governmental proceedings pending or, to the
knowledge of such counsel, threatened against or affecting the Company
or any of its subsidiaries which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the State of Delaware and, to the extent such counsel deems proper and
to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the Underwriters'
counsel, familiar with the applicable laws; (B) as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. The opinion of such
counsel for the Company shall state that the opinion of any such other
counsel upon which they relied is in form satisfactory to such counsel and,
in such counsel's opinion, the Underwriters and they are justified in
relying thereon. With respect to the matters to be covered in subparagraphs
(x) and (xiv) above counsel may state their opinion and belief is based
upon their participation in the preparation of the Registration Statement
and the Prospectus and any amendment or supplement thereto and review and
discussion of the contents thereof (including the documents incorporated by
reference therein) but is without independent check or verification except
as specified.
The opinions of Jay M. Nadlman and Sonnenschein Nath & Rosenthal
described above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(g) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing
Date, as the case may be, PricewaterhouseCoopers LLP shall have furnished
to you letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, containing statements and information of the
type customarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus;
(h) the Underwriters shall have received on and as of the Closing Date
or Additional Closing Date, as the case may be, an opinion of Cravath,
Swaine & Moore, counsel to the Underwriters, with respect to the due
authorization and valid issuance of the Shares, the Registration Statement,
the Prospectus and other related matters as the Underwriters may reasonably
request, and such counsel shall have received such papers and information
as they may reasonably request to enable them to pass upon such matters;
(i) on or prior to the Closing Date or Additional Closing Date, as the
case may be, the Company shall have furnished to the Underwriters such
further certificates and documents as the Underwriters shall reasonably
request; and
(j) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Stock or certain other securities, delivered to you on or
before the date hereof, shall be in full force and effect on the Closing
Date or Additional Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter, each
affiliate of any Underwriter which assists such Underwriter in the distribution
of the Shares and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with the
Underwriters' Information.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Company's subsidiaries, its directors, its officers
who sign the Registration Statement and each person who controls the Company
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Underwriters expressly for use in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Shares and such control persons of Underwriters shall be
designated in writing by J.P. Morgan Securities Inc. and any such separate firm
for the Company, the Company's subsidiaries, its directors, its officers who
sign the Registration Statement and such control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the Indemnifying Person agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company and the total underwriting
discounts and the commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities 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 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies that may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Underwriters, by notice given to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (or, in the case of the Option Shares, prior to the Additional
Closing Date) (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange or the
American Stock Exchange, the National Association of Securities Dealers, Inc.,
the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of or guaranteed by the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Underwriters, is material and adverse and which, in the judgment of the
Underwriters, makes it impracticable to market the Shares being delivered at the
Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any
post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Underwriters
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-tenth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Underwriters and the Company
for the purchase of such Shares are not made within 36 hours after such default,
this Agreement (or the obligations of the several Underwriters to purchase the
Option Shares, as the case may be) shall terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date (or, in the case
of the Option Shares, the Additional Closing Date), but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of its counsel)
reasonably incurred by the Underwriter in connection with this Agreement or the
offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, each affiliate of any Underwriter which assists such
Underwriter in the distribution of the Shares, any controlling persons referred
to herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Underwriters jointly or by J.P. Morgan Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Underwriters jointly or by J.P.
Morgan Securities Inc. alone shall be binding upon the Underwriters. All notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Underwriters, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260 (telefax:_(212) 834-6648); Attention: Syndicate Department. Notices
to the Company shall be given to it at Kansas City Southern Industries, Inc.,
114 West 11th Street, Kansas City, Missouri 64105 (telefax: (816) 983-1459);
Attention: Corporate Secretary.
13. This Agreement may be signed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same instrument.
14. The parties hereto acknowledge and agree that for all purposes of this
Agreement, the Underwriters' Information consists solely of the statements
concerning the Underwriters contained under the heading "underwritering" in the
Prospectus.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
Very truly yours,
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By:
--------------------------------
Name:
Title:
Accepted as of the date hereof.
J.P. MORGAN SECURITIES INC.
DEUTSCHE BANC ALEX. BROWN INC.
By: J.P. MORGAN SECURITIES INC.
By:
--------------------------------
Name:
Title:
SCHEDULE I
NUMBER OF SHARES
UNDERWRITER TO BE PURCHASED
J.P. Morgan Securities Inc.
Deutsche Banc Alex. Brown Inc.
Total ================
SCHEDULE II
Title of Securities: 4,000,000 Shares Common Stock
Registration Statement
No.: 333-61006
Number of Shares 4,000,000
Price to Public: $[ ] Per Share
Closing Date and
Time of Delivery: June [25], 2001, 10:00 A.M.
Closing Location: New York, New York
Address for Notices
to Underwriters: J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 12060
EXHIBIT A
[FORM OF LOCK-UP AGREEMENT]
J.P. Morgan Securities Inc.
Deutsche Banc Alex. Brown Inc.
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
In order to induce you to act as underwriters in the public offering (the
"Offering") of Common Stock (the "Shares") of Kansas City Southern Industries,
Inc. (the "Company"), the undersigned hereby irrevocably agrees that he will
not, directly or indirectly, sell, announce the intention to sell, offer,
contract to sell, transfer (in whole or in part) the economic risk of ownership
in, make any short sale, pledge or otherwise dispose of any (i) shares of the
Company's Common Stock, (ii) purchase contracts for the purchase of the
Company's Common Stock ("Purchase Contracts") or (iii) any securities
convertible into or exchangeable or exercisable for Common Stock, Purchase
Contracts or any other rights to purchase or acquire such securities, without
the prior written consent of J.P. Morgan Securities Inc., acting on behalf of
the underwriters, for a period from the date hereof until 90 days after the date
of the final prospectus pursuant to which the Shares are sold in the Offering
(the "Prospectus").
Notwithstanding the foregoing, the undersigned may transfer any shares of Common
Stock, Purchase Contracts, or securities convertible into or exchangeable or
exercisable for Common Stock or Purchase Contracts either during his lifetime or
on death by will or intestacy to his immediate family or to a trust the
beneficiaries of which are exclusively the undersigned and/or a member or
members of his immediate family; PROVIDED, HOWEVER, that prior to any such
transfer each transferee shall execute an agreement, satisfactory to J.P. Morgan
Securities Inc., pursuant to which each transferee shall agree to receive and
hold such shares of Common Stock and/or Purchase Contracts, or securities
convertible into or exchangeable or exercisable for Common Stock and/or Purchase
Contracts, subject to the provisions hereof, and there shall be no further
transfer except in accordance with the provisions hereof. For the purposes of
this paragraph, "immediate family" shall mean spouse, lineal descendant, father,
mother, brother or sister of the transferor.
The undersigned hereby waives any rights of the undersigned to sell any
securities of the Company pursuant to the Registration Statement on Form S-3
filed with the Securities and Exchange Commission in connection with the
Offering, and acknowledges and agrees that for a period of 90 days from the date
of the Prospectus the undersigned has no right to require the Company to
register under the Securities Act of 1933, as amended, any securities of the
Company.
The undersigned understands that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns. The undersigned agrees and consents to
the entry of stop transfer instructions with the applicable party against the
transfer of securities of the Company held by the undersigned except in
compliance with this agreement.
Very truly yours,
Dated:
----------------------- Signature:
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Printed Name and Title