SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 1994
CLARK EQUIPMENT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-5646 38-0425350
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification Number)
100 North Michigan Street
P. O. Box 7008
South Bend, Indiana
(Address of principal 46634
executive offices) (Zip Code)
Registrant's telephone number (219) 239-0100
including area code
Total Number of Pages: 78
Exhibit Index at Page: 10
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 13, 1994, Registrant completed an initial public offering of
10,000,000 Shares of Common Stock of its indirect wholly-owned subsidiary,
Clark Automotive Products Corporation ("CAPCO"). On that date, Automotive
Products Company ("APC"), a wholly-owned subsidiary of the Registrant,
sold a total of 9,174,194 Shares of Common Stock of CAPCO as follows: (1)
7,339,355 Shares were sold in a public offering in the United States and
Canada pursuant to an Underwriting Agreement dated May 6, 1994
("Underwriting Agreement") among APC, CAPCO and Registrant and CS First
Boston Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as representatives of the underwriters, and (2) 1,834,839 Shares were sold
in a public offering outside of the United States and Canada pursuant to a
Subscription Agreement dated May 6, 1994 ("Subscription Agreement") among
APC, CAPCO, Registrant, CS First Boston Limited, Merrill Lynch
International Limited, ABN AMRO Bank N.V., Banque Bruxelles Lambert S.A.,
Cazenove & Co., Dresdner Bank Aktiengesellschaft and UBS Limited. In
addition to the Shares sold by APC, CAPCO sold 660,645 Shares pursuant to
the Underwriting Agreement and 165,161 Shares pursuant to the Subscription
Agreement.
The Shares were sold at a price of $11.28 per share (representing the
$12.00 offering price to the public less an underwriting discount of $.72
per share), resulting in aggregate sale proceeds received by APC of
$103,484,908.32 and aggregate sale proceeds received by CAPCO of
$9,315,091.68.
APC also retained ownership of 1,000,000 Shares of CAPCO stock which are
subject to an overallotment option which can be exercised by the
underwriters until June 5, 1994.
Copies of the Underwriting Agreement and Subscription Agreement are
attached hereto as Exhibits (2)(a) and (2)(b) respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
The following pro-forma financial information required pursuant to Article
11 of Regulation S-X is being filed as a part of this report:
Included in Pages 4 through 6 are pro-forma income statements of the
Registrant for the years ended December 31, 1993, 1992, and 1991
which reflect the deconsolidation of CAPCO. In these statements
CAPCO is treated as a discontinued operation in accordance with
Accounting Principles Bulletin No. 30. The CAPCO amounts
deconsolidated are identical to the audited CAPCO income statements
included in CAPCO's Registration Statement on Form S-1.
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Included on Page 7 is a pro-forma balance sheet of the Registrant as
of March 31, 1994 which reflects the anticipated impact of the
transaction. Explanations of pro-forma adjustments are included on
Page 8.
Information on the interim results for 1994 and 1993, which include
CAPCO presented on a deconsolidated basis, have been included in the
Registrant's Form 10-Q for the first quarter of 1994. The March 31,
1994 balance sheet accounts of CAPCO have also been deconsolidated in
the 10-Q Financial Statements and the net assets have been included
in the caption "Investment in Discontinued Operations." No pro-forma
income statement information as of March 31, 1994 is provided in this
Form 8-K since interim results included in the 10-Q fully reflect
CAPCO as a discontinued operation.
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CLARK EQUIPMENT COMPANY
RESTATEMENT OF INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(AMOUNTS IN THOUSANDS EXCEPT FOR EARNINGS PER SHARE)
Adjusted
Clark as Less Income
Reported CAPCO Statement
Net Sales $874.9 $182.9 $692.0
Operating Costs and Expenses:
Cost of Goods Sold 700.3 143.2 557.1
Selling, General and 118.5 15.8 102.7
Administrative Expenses 818.8 159.0 659.8
Operating Income 56.1 23.9 32.2
Other Income and Expense:
Other Income - Net 11.9 (3.1) 15.0
Interest Expense (21.5) (0.1) (21.4)
Pre-Tax Income from
Consolidated Operations 46.5 20.7 25.8
Provision for Income Taxes 12.4 8.2 4.2
Income from Consolidated Operations 34.1 12.5 21.6
Equity in Net Income of
Associated Companies 7.8 - 7.8
Income from Continuing Operations $41.9 $12.5 $29.4
Income Per Share $2.41 $1.69
Average Number of Shares 17,421 17,421
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CLARK EQUIPMENT COMPANY
RESTATEMENT OF INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(AMOUNTS IN THOUSANDS EXCEPT FOR EARNINGS PER SHARE)
Adjusted
Clark as Less Income
Reported CAPCO Statement
Net Sales $802.7 $144.2 $658.5
Operating Costs and Expenses:
Cost of Goods Sold 663.6 119.4 544.2
Selling, General and 99.8 11.9 87.9
Administrative Expenses 763.4 131.3 632.1
Operating Income 39.3 12.9 26.4
Other Income and Expense:
Other Income - Net 16.9 2.0 14.9
Interest Expense (25.6) (2.1) (23.5)
Pre-Tax Income from
Consolidated Operations 30.6 12.8 17.8
Provision for Income Taxes 10.4 4.6 5.8
Income from Consolidated Operations 20.2 8.2 12.0
Equity in Net Loss of
Associated Companies (48.1) - (48.1)
Income (Loss) from
Continuing Operations ($27.9) $8.2 ($36.1)
Loss Per Share ($1.60) ($2.08)
Average Number of Shares 17,334 17,334
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CLARK EQUIPMENT COMPANY
RESTATEMENT OF INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(AMOUNTS IN THOUSANDS EXCEPT FOR EARNINGS PER SHARE)
Adjusted
Clark as Less Income
Reported CAPCO Statement
Net Sales $721.4 $132.2 $589.2
Operating Costs and Expenses:
Cost of Goods Sold 637.7 112.9 524.8
Selling, General and 103.2 15.0 88.2
Administrative Expenses 740.9 127.9 613.0
Operating Income (loss) (19.5) 4.3 (23.8)
Other Income and Expense:
Other Income - Net 14.6 2.4 12.2
Interest Expense (25.7) (1.8) (23.9)
Pre-Tax Income (loss) from
Consolidated Operations (30.6) 4.9 (35.5)
Provision (Credit) for Income
Taxes (1.1) 3.9 (5.0)
Income (loss) from
Consolidated Operations (29.5) 1.0 (30.5)
Equity in Net Loss of
Associated Companies (23.1) - (23.1)
Income (Loss) from
Continuing Operations ($52.6) $1.0 ($53.6)
Loss Per Share ($3.04) ($3.10)
Average Number of Shares 17,293 17,293
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CLARK EQUIPMENT COMPANY
PRO-FORMA BALANCE SHEET
MARCH 31, 1994
(AMOUNTS IN THOUSANDS)
Pro-Forma
As Adjustments
Reported Debit Credit Adjusted
Current Assets:
Cash and Equivalents $245.4 $103.5 (2) $6.2 (1) $342.7
Accounts and Notes Receivable 86.4 86.4
Inventories 80.2 80.2
Investment in Discontinued Operations 65.9 6.2 (1) 65.6 (2) 6.5
Deferred Tax Assets - Net 27.9 27.9
Other Current Assets 5.8 1.1 (2) 4.7
Total Current Assets 511.6 109.7 72.9 548.4
Investment and Advances -
Associated Companies 135.2 135.2
Deferred Tax Assets - Net 101.0 101.0
Property, Plant and Equipment-Net 161.9 161.9
Assets Held for Sale 8.7 8.7
Goodwill 68.8 68.8
Other Assets 41.8 41.8
Total Assets $1,029.0 $109.7 $72.9 $1,065.8
Current Liabilities:
Notes Payable $27.7 $27.7
Accounts Payable and Accruals 134.7 134.7
Other Current Liabilities 26.6 5.2 (2) 31.8
Current Portion of Long-Term Debt 9.8 9.8
Total Current Liabilities 198.8 5.2 204.0
Long-Term Borrowings 204.6 204.6
Other Non-Current Liabilities 92.9 92.9
Accrued Postretirement Benefits 234.7 234.7
Total Liabilities 731.0 5.2 736.2
Stockholders' Equity:
Capital Stock 323.7 323.7
Retained Earnings 119.6 31.6 (2) 151.2
Cumulative Translation Account (64.5) (64.5)
Treasury Stock (49.5) (49.5)
LESOP Shares (31.3) (31.3)
Total Stockholders' Equity 298.0 31.6 329.6
Total Liabilities and
Stockholders' Equity $1,029.0 $36.8 $1,065.8
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Explanation of Pro-Forma Adjustments
(1) Represents the increase in investment from March 31, 1994 to the sale
date. Increase relates principally to pay down of CAPCO debt.
(2) Represents entry to record the net proceeds from the sale of CAPCO and to
record liabilities for expenses and taxes related to the sale. The entry
also reflects the write-off of 91 percent of the investment in CAPCO sold in
the Offerings and reflects the gain on the sale.
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Exhibits
See attached Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CLARK EQUIPMENT COMPANY
/s/ John J. Moran, Jr.
John J. Moran, Jr.
Assistant Secretary
Date: May 27, 1994
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EXHIBITS LIST AND INDEX
Exhibit Filed Herewith Unless
Number Description Otherwise Indicated
(2)(a) Underwriting Agreement Page 11
dated May 6, 1994 among
Automotive Products
Company, Clark Automotive
Products Corporation, and
Clark Equipment Company
and CS First Boston
Corporation and Merrill
Lynch, Pierce, Fenner &
Smith Incorporated as
representatives of the
Underwriters.
(2)(b) Subscription Agreement dated Page 44
May 6, 1994 among Automotive
Products Company, Clark
Automotive Products Corporation,
Clark Equipment Company, CS
First Boston Limited, Merrill
Lynch International Limited,
ABN AMRO Bank N.V., Banque
Bruxelles Lambert S.A.,
Cazenove & Co., Dresdner Bank
Aktiengesellschaft and UBS
Limited.
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8,000,000 Shares
CLARK AUTOMOTIVE PRODUCTS CORPORATION
Common Stock
UNDERWRITING AGREEMENT
May 6, 1994
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation
Park Avenue Plaza,
New York, N.Y. 10055
Dear Sirs:
1. Introductory. Clark Automotive Products Corporation, a Michigan
corporation ("Company"), proposes to issue and sell 660,645 shares of its
common stock, par value $.01 per share ("Common Stock"), in the United States
and Canada, and Automotive Products Company, a Delaware corporation (the
"Selling Stockholder"), proposes to sell in the United States and Canada an
aggregate of 7,339,355 outstanding shares of the Common Stock of the Company
(such 8,000,000 shares of Common Stock being hereinafter referred to
collectively as the "Firm Shares"). The Company and the Selling Stockholder
propose to sell the Firm Shares to the several Underwriters named in Schedule
A hereto ("Underwriters"). The Selling Stockholder also proposes to grant an
option, exercisable by CS First Boston Corporation for the Underwriters and
the Managers (as defined below) to purchase up to an aggregate of not more
than 1,000,000 additional shares of Common Stock as set forth below (such
additional shares being hereinafter referred to as the "Optional Shares").
The Firm Shares and the Optional Shares which the Underwriters elect to
purchase ("U.S. Optional Shares"), if purchased, are herein collectively
called the "U.S. Stock." The sale of the U.S. Stock in the United States and
Canada is referred to herein as the "U.S. Offering." This Underwriting
Agreement, as amended, supplemented or modified from time to time, is
referred to herein as "this Agreement."
It is understood that the Company and the Selling Stockholder are
concurrently herewith entering into a Subscription Agreement ("Subscription
Agreement") dated the date hereof with certain Managers listed in Schedule B
hereto "Managers") relating to the concurrent offering and sale of 2,000,000
shares of Common Stock ("International Stock") by the Company and the Selling
Stockholder outside the United States and Canada ("International Offering").
The U.S. Offering and the International Offering are collectively referred to
herein as the "Offerings" and the U.S. Stock and the International Stock are
collectively referred to herein as the "Stock." To provide for coordination
of their activities, the Underwriters and the Managers have entered into an
Agreement Between U.S. Underwriters and Managers which permits them, among
other things, to sell Stock to each other for purposes of resale.
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The Company, the Selling Stockholder and Clark Equipment Company, a
Delaware corporation ("Clark"), hereby agree with the several Underwriters as
follows:
2. Representations and Warranties of the Company and the Selling
Stockholder. A. The Company, the Selling Stockholder and Clark jointly and
severally represent and warrant to, and agree with, the several Underwriters
that:
(i) A registration statement (No. 33-75626), including a form of
prospectus relating to the U.S. Stock to be sold in the U.S. Offering and a
form of prospectus relating to the International Stock to be sold in the
International Offering, has been filed with the Securities and Exchange
Commission ("Commission") and either (A) has been declared effective under
the Securities Act of 1933 ("Act") and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment. If the
Company does not propose to amend such registration statement and if any
post-effective amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the
most recent such amendment has been declared effective by the Commission.
For purposes of this Agreement, "Effective Time" means (A) if the Company has
advised you that it does not propose to amend such registration statement,
the date and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission, or (B)
if the Company has advised you that it proposes to file an amendment or post-
effective amendment to such registration statement, the date and time as of
which such registration statement, as amended by such amendment or post-
effective amendment, as the case may be, is declared effective by the
Commission. "Effective Date" means the date of the Effective Time. Such
registration statement, as amended at the Effective Time, including all
information (if any) deemed to be a part of such registration statement as of
the Effective Time pursuant to Rule 430A(b) under the Act, is hereinafter
referred to as the "Registration Statement," and the form of prospectus
relating to the U.S. Stock to be sold in the U.S. Offering and the form of
prospectus relating to the International Stock to be sold in the
International Offering, each as first filed with the Commission pursuant to
and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no
such filing is required) as included in the Registration Statement are
hereinafter respectively referred to as the "U.S. Prospectus" and the
"International Prospectus" and collectively referred to as the
"Prospectuses." No stop order suspending the effectiveness of such
Registration Statement or any part thereof has been issued and no proceeding
for that purpose has been instituted or, to the best knowledge of the
Company, the Selling Stockholder and Clark, threatened by the Commission.
(ii) If the Effective Time is prior to the execution and delivery of
this Agreement: (A) on the Effective Date, the Registration Statement
conformed in all material respects to the requirements of the Act and the
rules and regulations of the Commission ("Rules and Regulations") and did not
include 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 (B) on the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the
Prospectuses pursuant to Rule 424(b), the Registration Statement and each of
the Prospectuses will conform in all material respects to the
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requirements of the Act and the Rules and Regulations, and none of such
documents includes, or will include, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading (in the
light of the circumstances under which they were made in the case of each of
the Prospectuses.) If the Effective Time is subsequent to the execution and
delivery of this Agreement: on the Effective Date, the Registration Statement
and each of the Prospectuses will conform in all material respects to the
requirements of the Act and the Rules and Regulations, and none of such
documents will include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. The two preceding sentences do not
apply to statements in or omissions from any of such documents based upon
written information furnished to the Company by any Underwriter through you
specifically for use therein.
(iii) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Michigan with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectuses; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, except where failure to be so qualified or be in
good standing would not reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole.
(iv) Each subsidiary of the Company has been duly incorporated and is
validly existing as a company under the laws of the jurisdiction of its
incorporation, has all corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, except where failure to
be so qualified or be in good standing would not reasonably be expected to
have a material adverse effect on the condition, financial or otherwise, or
in the earnings of the Company and its subsidiaries, taken as a whole; all
capital of such subsidiaries has been established as provided in their
respective Articles of Organization, has been fully paid in, is
nonassessable, other than the ability of Brazilian tax, labor and similar
authorities to make assessments against shares of capital stock for tax,
labor and similar claims (of which there currently are none) and (with the
exception of directors' qualifying shares) is owned by the Company, directly
or through subsidiaries, and, to the extent owned directly or indirectly by
the Company, is free and clear of any mortgage, pledge, lien, encumbrance or
claim.
(v) This Agreement and the Subscription Agreement have each been duly
authorized, executed and delivered by the Company.
(vi) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectuses
under "Capitalization"; all of the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Selling Stockholder, a
wholly-owned subsidiary of Clark; and the capital stock of the Company
(including, without limitation, the Stock) conforms to all statements
relating thereto (including, without limitation, statements relating to
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dividend, voting, conversion and exchange features) contained in the
Registration Statement and the Prospectuses. Except as set forth in the
Prospectuses, there are no outstanding (A) securities or obligations of the
Company convertible into or exchangeable for any shares of capital stock of
the Company, (B) warrants, rights or options to subscribe for or purchase
from the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations for the Company to
issue such shares, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or obligations.
(vii) Except as set forth in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any natural person,
corporation, partnership, trust, firm, association or other entity, whether
acting in an individual, fiduciary or other capacity (a "Person") granting
such Person the right to require the Company to file a registration statement
under the Act with respect to any securities of the Company owned or to be
owned by such Person or to require the Company to include such securities in
the securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(viii) The Company and its subsidiaries own or possess all licenses or
other rights to use the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and proprietary knowledge (hereinafter
collectively referred to as "Proprietary Rights") presently employed by them
in connection with the operation of their businesses, except in each case
where the failure to own, possess or have rights to use such Proprietary
Rights, singly or in the aggregate, would not reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings of the Company and its subsidiaries, taken as a
whole. Neither the Company nor any of its subsidiaries (A) has received any
notice of infringement of or conflict with asserted rights of others with
respect to any Proprietary Rights, (B) is aware of the assertion by others of
any rights inconsistent with the Company's Proprietary Rights, and (C) is
aware of any facts which it believes would render any of its Proprietary
Rights invalid, in each case for clauses (A), (B), or (C), which singly or in
the aggregate, would reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings of the
Company and its subsidiaries, taken as a whole.
(ix) The financial statements included in the Registration Statement
and the Prospectuses comply in all material respects with the requirements of
the Act and the Rules and Regulations, present fairly the financial position
of the Company and its consolidated subsidiaries as of the dates indicated
and the consolidated results of their operations for the periods specified
and have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis; and the related
supporting schedules included in the Registration Statement present fairly
the information required to be stated therein in compliance with the
applicable Rules and Regulations. The financial information and statistical
data set forth in the Prospectuses under the captions "Summary Selected
Combined Financial Data," "Capitalization," "Selected Combined Financial
Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Supplementary Quarterly Financial Data"
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and the table labeled "Product Line Sales" under the caption
"Business-Principal Products" are fairly stated in all material respects in
relation to the consolidated financial statements of the Company from which
they have been derived.
(x) Since the respective dates as of which information is given in the
Registration Statement and the Prospectuses, except as otherwise stated
therein, (A) there has been no material adverse change, or any development
involving a prospective material adverse change, in the condition, financial
or otherwise, or in the earnings of the Company and its subsidiaries, taken
as a whole, (B) there have been no transactions entered into by the Company
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the condition, financial or
otherwise, or the earnings of the Company and its subsidiaries, taken as a
whole, (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on its capital stock other than the dividend
declared by the board of directors of the Company on April 14, 1994, and (D)
there has not been any change in the capital stock of the Company or any of
its subsidiaries or any material change in the long-term debt of the Company
and its subsidiaries, taken as a whole.
(xi) Neither the Company nor any of its subsidiaries is (A) in
violation of its charter (or other equivalent instrument), or (B) in
violation of any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or other authority applicable
to it (including, without limitation, any law, administrative regulation,
ordinance or order relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants), where such violation would reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or in the
earnings of the Company and its subsidiaries, taken as a whole, or (C) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by which
it or its property are bound which defaults, singly or in the aggregate,
would reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole; and the performance of this Agreement and the
Subscription Agreement and the consummation of the transactions contemplated
herein and therein have been duly and validly authorized by all necessary
corporate action and will not conflict with or constitute or result in a
breach or violation of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or any
of them are bound, or to which any of the property or assets of the Company
or any of its subsidiaries is subject, which, singly or in the aggregate,
would reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole, nor will such action result in any violation
of the provisions of the charter (or other equivalent instrument) or by-laws
of the Company or of any of its subsidiaries or any applicable law, any rule,
regulation or order of any governmental agency or authority or any decree or
order of any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, the violation of
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which, singly or in the aggregate, would reasonably be expected to result in
any material adverse change in the condition, financial or otherwise, or in
the earnings of the Company and its subsidiaries, taken as a whole; and the
Company has full corporate power and authority to authorize, issue and sell
the U.S. Stock as contemplated by this Agreement.
(xii) The Company and its subsidiaries have good and marketable title
to all real property and good title to all personal property owned by them,
in each case that is material to the condition, financial or otherwise, or
the earnings of the Company and its subsidiaries, taken as a whole, in each
case free and clear of all liens, charges, encumbrances, and restrictions
except such as do not materially affect the value of such property and do not
interfere in any material respect with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries that are
material to the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material in
relation to the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole and do not interfere in any
material respect with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries taken as a whole.
(xiii) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, the Selling
Stockholder and Clark, is imminent which, singly or in the aggregate, could
be material to the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole; and the Company is not aware
of any existing or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers, contractors or customers which would
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole.
(xiv) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, the Selling Stockholder and Clark, threatened,
against or affecting the Company or any of its subsidiaries, which is
required to be disclosed in the Registration Statement or the Prospectuses
which have not been so disclosed, or which would reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings of the Company and its subsidiaries, taken as a
whole, or which would reasonably be expected to materially and adversely
affect the properties or assets thereof or which would reasonably be expected
to materially and adversely affect the consummation of this Agreement or the
Subscription Agreement; all pending legal or governmental proceedings to
which the Company or any subsidiary is a party or of which any of their
property is the subject, including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not material to condition,
financial or otherwise, or the earnings of the Company and its subsidiaries,
taken as a whole; and there are no contracts or documents of the Company or
any of its subsidiaries which are required to be described in the
Prospectuses or the Registration Statement or filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which have
not been so described or so filed as exhibits thereto.
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(xv) No authorization, approval or consent of, or registration or
qualification with, any Person or any court or governmental authority or
agency is necessary in connection with the issuance or sale of the Stock by
the Company or the consummation of the other transactions contemplated by
this Agreement, except such as have been or will be obtained prior to the
First Closing Date or the Option Closing Date (as applicable).
(xvi) The Company and the Company's subsidiaries possess all licenses,
certificates, authorities or permits (collectively, "permits") issued by the
appropriate governmental or regulatory agencies or authorities that are
necessary to enable them to own, lease and operate their respective
properties and to carry on their respective businesses as presently conducted
except for permits the lack of which would not reasonably be expected to have
a material adverse effect on the condition, financial or otherwise, or the
earnings of the Company and its subsidiaries, taken as a whole; neither the
Company nor any of its subsidiaries has received any notice of proceedings,
nor to the knowledge of the Company and its subsidiaries, the Selling
Stockholder and Clark is any proceeding threatened, relating to the
revocation or modification of any such permit which, singly or in the
aggregate, would reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings of the
Company and its subsidiaries, taken as a whole; and, such permits contain no
restrictions that are materially burdensome to the Company or any of its
subsidiaries.
(xvii) (A) All United States Federal income tax returns of the Company
and each of its subsidiaries required by law to be filed have been filed and
all taxes shown by the said returns or otherwise assessed which are due and
payable have been paid, except assessments against which appeals have been or
will be promptly taken and (B) the Company and its subsidiaries have filed
all other tax returns which are required to have been filed by them pursuant
to applicable state, local or other law, except, as to each of the foregoing
clauses (A) and (B), insofar as the failure to file such returns,
individually and in the aggregate, would not reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole, and have paid
all taxes due pursuant to said returns or pursuant to any assessment received
by the Company or its subsidiaries, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been
provided in accordance with United States generally accepted accounting
principles or if the failure to make any or all such payments, singly or in
the aggregate, would not be material to the condition, financial or
otherwise, or the earnings of the Company and its subsidiaries, taken as a
whole. The charges, accruals and reserves on the consolidated books of the
Company in respect of any income and corporation tax liability for any years
not finally determined are adequate to meet any assessments or re-assessments
for additional income tax for any years not finally determined, except to the
extent of any inadequacy which would not reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole.
(xviii) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A) all
material transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in
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conformity with United States generally accepted accounting principles
appropriate in the circumstances to reflect in all material respects the
substance of events and transactions that should be included and to maintain
accountability for assets; (C) irregularities or material errors do not occur
or would be detected within a timely period by employees in the normal course
of performing their assigned functions; and (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(xix) The Stock has been duly authorized, and, in the case of the Stock
being issued by the Company, when issued, and, in the case of all the Stock,
when delivered and paid for pursuant to this Agreement and the Subscription
Agreement, will be fully paid and nonassessable, and the stockholders of the
Company have no preemptive rights with respect to the Stock.
(xx) In the past five years the Company has not received from its
independent accountants any communication that such accountants have noted
any matter involving the Company's internal control structure and its
operation that such accountants considered to be a material weakness in the
Company's internal control structure or its operation.
(xxi) When the Registration Statement was or is initially declared
effective, the Company will have complied with all provisions of Section
517.075 of Florida Statutes, 1987, as amended, requiring disclosure in the
U.S. Prospectus by the Company if the Company or any of its affiliates
conducted or will conduct any business with the government of Cuba or with
any person or affiliate located in Cuba.
(xxii) The Company has obtained a Certificate of Investment from the
Central Bank of Brazil reflecting the U.S. dollar amount of the Company's
investment in CAPCO do Brasil Empreendimentos e Participacoes Ltda. ("CAPCO
do Brasil") as necessary to permit the Company to repatriate under current
Brazilian law up to the U.S. dollar registered amount shown in such
Certificate of Investment free and clear of any tax, duty, withholding or
deduction in Brazil and to permit CAPCO do Brasil to remit profits to the
Company in U.S. dollars under current Brazilian law (after payment of
Brazilian withholding income tax), and such Certificate of Investment is in
full force and effect; at present, no other permits, licenses, authorization,
certificates or approvals from any Brazilian governmental authority are
necessary to permit remittances of profits to the Company; and CAPCO do
Brasil at present has access to the floating commercial rate currency market
in Brazil for purchasing U.S. dollars to make remittances of profits to the
Company.
(xxiii) The descriptions in the Registration Statement and the
Prospectuses of the Company's charter and by-laws, statutes, decrees, legal
and governmental proceedings and contracts and such other documents as are
described therein are accurate and fairly present the information required to
be shown.
(xxiv) Assuming appropriate personal jurisdiction and subject matter
jurisdiction, none of the Company's subsidiaries nor any of their properties
or assets has any immunity from the jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).
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(xxv) Other than this Agreement, the Subscription Agreement and the
engagement letter dated December 1, 1993 between Clark and CS First Boston
Corporation, there are no contracts, agreements or understandings between the
Company or the Selling Stockholder and any person that would give rise to a
valid claim against the Company, the Selling Stockholder or any Underwriter
for a brokerage commission, finder's fee or other like payment.
(xxvi) Except for the capital stock of CAPCO do Brasil, receivables
owed to the Company by Eaton Corporation and contract rights described in the
Registration Statement and the Prospectuses, the Company owns no real or
personal property located in the United States that is material to the
condition, financial or otherwise, or the earnings of the Company and its
subsidiaries, taken as a whole.
(xxvii) The Company and each of its subsidiaries maintains adequate
insurance, based on the types of business in which the Company and its
subsidiaries are engaged and the geographic location of the assets of the
Company and its subsidiaries.
(b) The Selling Stockholder represents and warrants to, and agrees
with, the several Underwriters that:
(i) The Selling Stockholder has and, on the First Closing Date (as
hereinafter defined) and each Option Closing Date (as hereinafter
defined), if any, will have good and marketable title to the shares of
the Stock to be sold by the Selling Stockholder free and clear of any
adverse claims and full corporate right, power and authority to enter
into this Agreement and the Subscription Agreement and to sell, assign,
transfer and deliver the shares of the Stock to be sold by the Selling
Stockholder hereunder and thereunder; and upon the delivery of and
payment for the Stock hereunder and thereunder the several Underwriters
and Managers will acquire good and marketable title to the shares of the
U.S. Stock and the International Stock, respectively, free and clear of
any adverse claims to be sold by such Selling Stockholder.
(ii) This Agreement and the Subscription Agreement have each been
duly authorized, executed and delivered by the Selling Stockholder.
(iii) No authorization, approval or consent of, or registration or
qualification with, any Person or any court or governmental authority or
agency is necessary in connection with the sale of the Stock sold by the
Selling Stockholder or the consummation of the other transactions
contemplated by this Agreement or the Subscription Agreement, except
such as have been or will be obtained prior to the First Closing Date.
(iv) The execution, delivery and performance of this Agreement and
the Subscription Agreement and the consummation of the transactions
contemplated herein and therein have been authorized by all necessary
action by the Selling Stockholder and Clark, as appropriate, and will
not (A) conflict with or constitute or result in a breach or violation
of any of the terms or provisions of, or any default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
of the Selling Stockholder's properties or assets pursuant to, any
contract, indenture, mortgage, loan
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agreement, note, lease or other agreement or instrument to which the
Selling Stockholder is a party or by which the Selling Stockholder is
bound or to which any of the Selling Stockholder's properties is
subject, or (B) result in a breach or violation of any applicable law or
any rule, regulation or order of any governmental agency or authority or
any court having jurisdiction over the Selling Stockholder or any of its
respective properties or of the charter or by-laws of the Selling
Stockholder which, in the case of either clause (A) or (B), would
interfere with the ability of the Selling Stockholder to sell to the
Underwriters the Common Stock proposed to be sold by it pursuant to this
Agreement and the Subscription Agreement free and clear of any adverse
claims.
3. Purchase, Sale and Delivery of Stock. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company and the Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company and the Selling Stockholder, at a purchase price of $11.28 per share,
the respective number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A hereto.
The Company and the Selling Stockholder will deliver the Firm Shares to
you for the accounts of the Underwriters, at the office of CS First Boston
Corporation, Park Avenue Plaza, New York, New York 10055, against payment of
the purchase price by certified or official bank check or checks in New York
Clearing House (next day) funds drawn to the order of the Company in the case
of 660,645 Firm Shares and of the Selling Stockholder in the case of
7,339,355 Firm Shares, at the offices of White & Case, 1155 Avenue of the
Americas, New York, New York 10036 at 10:00 A.M., New York time, on May 13,
1994, or at such other time not later than five full business days thereafter
as you and the Company determine, such time being herein referred to as the
"First Closing Date." The certificates for the Firm Shares so to be
delivered will be in such denominations and registered in such names as you
request and will be made available for checking and packaging at the above
office of CS First Boston Corporation at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CS First Boston Corporation given
to the Selling Stockholder from time to time not more than 30 days subsequent
to the date of the commencement of the U.S. Offering, the Selling Stockholder
agrees to sell to the Underwriters and the Underwriters agree, severally and
not jointly, to purchase from the Selling Stockholder up to 80% of the number
of Optional Shares specified in such notice at the purchase price per share
set forth in the first paragraph of this Section 3 (it being understood that
the Managers, severally and not jointly, are agreeing to purchase up to 20%
of the number of Optional Shares specified in such notice pursuant to Section
3 of the Subscription Agreement). Such Optional Shares that are purchased by
the Underwriters, if any, shall be purchased from the Selling Stockholder for
the account of each Underwriter in the same proportion as the number of Firm
Shares set forth opposite such Underwriter's name in Schedule A hereto bears
to the total number of Firm Shares (subject to adjustment by CS First Boston
Corporation in its discretion to eliminate fractions). Such Optional Shares
may be purchased by the Underwriters only for the purpose of covering over-
allotments made in connection with the sale of the Firm Shares and/or the
sale of the Stock pursuant to the Subscription Agreement. No Optional Shares
shall be sold or delivered unless the Firm Shares and the International Stock
previously
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have been, or simultaneously are, sold and delivered. The right to purchase
the Optional Shares or any portion thereof may be surrendered and terminated
at any time upon notice by CS First Boston Corporation to the Selling
Stockholder.
The time for delivery of and payment for any U.S. Optional Shares, being
each herein referred to as an "Option Closing Date" (which may be the First
Closing Date), shall be determined by mutual agreement between CS First
Boston Corporation and the Selling Stockholder but shall be not later than
five days after written notice of election to purchase Optional Shares is
given. The Selling Stockholder will deliver the U.S. Optional Shares being
purchased on an Option Closing Date to you, for the accounts of the
Underwriters, at the above office of CS First Boston Corporation against
payment of the purchase price therefor by certified or official bank check or
checks in New York Clearing House (next day) funds drawn to the order of the
Selling Stockholder, at the above office of White & Case, on each Option
Closing Date. The certificates for the Optional Shares so to be delivered
will be in such denominations and registered in such names as you request and
will be made available for checking and packaging at the above office of CS
First Boston Corporation at a reasonable time in advance of each Option
Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the U.S. Stock for sale to the public as set
forth in the U.S. Prospectus.
5. Certain Agreements of the Company and the Selling Stockholder. (a)The
Company agrees with the several Underwriters and the Selling Stockholder
that:
(i) If the Effective Time is prior to the execution and delivery
of this Agreement, the Company will file the Prospectuses with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by you, which consent shall not be
unreasonably withheld, subparagraph (4)) of Rule 424(b) not later than
the second business day following the execution and delivery of this
Agreement. The Company will advise you promptly of any such filing
pursuant to Rule 424(b).
(ii) The Company will advise you promptly of any proposal to amend
or supplement the registration statement as filed or either or both of
the related prospectuses or the Registration Statement or either or both
of the Prospectuses and will not effect such amendment or
supplementation without your prior consent, which consent shall not be
unreasonably withheld; and the Company will also advise you promptly of
the effectiveness of the Registration Statement (if the Effective Time
is subsequent to the execution and delivery of this Agreement) and of
any amendment or supplementation of the Registration Statement or the
Prospectuses and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(iii) If, at any time when a prospectus relating to the Stock is
required to be delivered under the Act, any event occurs as a result of
which either or both of the Prospectuses as then amended or supplemented
would include an untrue statement of a material fact or omit to state
any material fact necessary to make the statements
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therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend either or
both of the Prospectuses to comply with the Act, the Company promptly
will prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance. Neither your consent to, nor the Underwriters'
delivery of, any such amendment or supplement shall constitute a waiver
of any of the conditions set forth in Section 6 of this Agreement.
(iv) As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally available to
its security holders an earnings statement (which need not be audited)
covering a period of at least 12 months beginning after the Effective
Date which will satisfy the provisions of Section 11(a) of the Act. For
the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes the Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter. It is understood by the parties hereto that the
foregoing covenant shall not be deemed to require any action or other
filing by the Company other than the filing with the Commission of the
Company's periodic reports on Forms 10-K and 10-Q.
(v) The Company will furnish to you copies of the Registration
Statement (three of which will be signed and will include all exhibits),
each related preliminary prospectus relating to the U.S. Stock, the U.S.
Prospectus and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as you request.
(vi) The Company will take all reasonable action to arrange for
the qualification of the Stock for sale under the laws of such
jurisdictions as you designate; provided, however, that the Company
shall not be obligated thereby to qualify as a foreign corporation, or
to become subject to taxes, in any jurisdiction in which it is not
currently so qualified or so subject; and the Company will continue such
qualifications in effect so long as required for the distribution
thereof.
(vii) During the period of three years hereafter, the Company will
furnish to you and, upon request, to each of the other Underwriters, a
copy of its annual report to stockholders for such year at the time such
report is sent to the stockholders of the Company; and the Company will
furnish to you (A) as soon as available, a copy of each report or
definitive proxy statement of the Company filed with the Commission
under the Securities Exchange Act of 1934 or mailed to stockholders, and
(B) from time to time, such other information concerning the Company as
you may reasonably request.
(viii) Except as set forth in or as contemplated by this
Agreement, the Company will not, without the prior written consent of CS
First Boston Corporation, offer, sell, contract to sell or otherwise
dispose of any additional shares of its Common Stock or any other
capital stock (or any securities convertible into or exchangeable for
Common Stock or any other capital stock), or file with the Commission a
registration statement under the Act relating
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to, any shares of its capital stock, or any security convertible into or
exchangeable for such capital stock, for a period of 180 days after the
date of the commencement of the public offering for the U.S. Stock.
(b) The Company and the Selling Stockholder agree with the several
Underwriters that the Company and the Selling Stockholder will pay all
expenses incident to the performance of the obligations of the Company and
the Selling Stockholder, as the case may be, under this Agreement, and will,
jointly and severally, reimburse the Underwriters for any expenses (including
reasonable fees and disbursements of counsel) incurred by them in connection
with the qualification of the Stock for sale under the laws of such
jurisdictions as you designate and the printing of memoranda relating
thereto, for the filing fee of the National Association of Securities
Dealers, Inc. (the "NASD") relating to the review by the NASD pursuant to its
Corporate Financing Rule, for fees and expenses relating to the listing of
the Stock on the New York Stock Exchange and for expenses incurred in
distributing to the Underwriters preliminary prospectuses relating to the
U.S. Stock and the U.S. Prospectus (including any amendments and supplements
thereto).
(c) The Company and the Selling Stockholder, as applicable, will notify
the Underwriters promptly upon becoming aware of any material change
affecting any of their respective representations, warranties, agreements or
indemnities herein at any time prior to payment being made to the Company or
the Selling Stockholder on the First Closing Date or any Option Closing Date,
as applicable, and will take such steps as you may reasonably request to
remedy the same.
(d) The Selling Stockholder agrees with the several Underwriters that,
except as set forth in or as contemplated by this Agreement, the Selling
Stockholder will not, without the prior written consent of CS First Boston
Corporation, offer, sell, contract to sell or otherwise dispose of any
additional shares of Common Stock or any other capital stock of the Company
(or any securities convertible into or exchangeable for Common Stock or any
other capital stock of the Company) for a period of 180 days after the date
of the commencement of the public offering for the U.S. Stock.
6. Conditions to the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the U.S. Stock will be
subject to the accuracy of the representations and warranties of the Company,
the Selling Stockholder and Clark herein, to the accuracy of the statements
of Company officers and the Selling Stockholder made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholder of their obligations hereunder and to the following additional
conditions precedent:
(a) You shall have received a letter, dated the date of delivery
thereof (which, if the Effective Time is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the registration statement to
be filed shortly prior to the Effective Time), of Price Waterhouse
confirming that they are independent public accountants within the
meaning of the Act and the applicable published Rules and Regulations
thereunder and stating in effect that:
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(i) in their opinion the financial statements and schedules
and summary of earnings examined by them and included in the
Registration Statement comply in form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) on the basis of a reading of the latest available
interim financial statements of the Company, inquiries of officials
of the Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) the information set forth under "Summary Selected
Combined Financial Data," "Selected Combined Financial Data"
or "Capitalization" in the Prospectuses does not agree with
the amounts set forth in the audited consolidated financial
statements from which it was derived or was not determined on
a basis substantially consistent with that of the
corresponding amounts in the audited financial statements
included in the Registration Statement;
(B) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than five days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and
its consolidated subsidiaries or, at the date of the latest
available balance sheet read by such accountants, there was
any decrease in consolidated total assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectuses; or
(C) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period
of corresponding length ended the date of the latest income
statement included in the Prospectuses, in consolidated net
sales, gross income, operating income, income from continuing
operations or income per common share from continuing
operations;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectuses disclose
have occurred or may occur or which are described in such letter;
and
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statement (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the internal
controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results
obtained from inquiries, a reading of such
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general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results, except
as otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent to
the execution and delivery of this Agreement, "Registration Statement"
shall mean the registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectuses" shall mean the prospectuses included
in the Registration Statement.
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not
later than 10:00 A.M., New York time, on the date of this Agreement or
such later date as shall have been consented to by you. If the
Effective Time is prior to the execution and delivery of this Agreement,
each of the Prospectuses shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5 of this
Agreement. The Stock shall have been approved for listing, subject to
official notice of issuance, on the New York Stock Exchange not later
than 10:00 A.M., New York time, on the date of this Agreement or such
later time and date as shall have been consented to by you. On or prior
to the First Closing Date and each Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company, the Selling Stockholder,
Clark or you, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting particularly the business or properties of the Company or its
subsidiaries which, in the reasonable judgment of a majority in interest
of the Underwriters including you, materially impairs the investment
quality of the Stock; (ii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the over-
the-counter market; (iii) any banking moratorium declared by Federal,
New York or Brazilian authorities; or (iv) any outbreak or escalation of
major hostilities in which the United States or Brazil is involved, any
declaration of war by Congress or by Brazilian authorities or any other
substantial national (with respect to the United States or Brazil) or
international calamity or emergency if, in the reasonable judgment of a
majority in interest of the Underwriters including you, any of the
events specified in clauses (c) (ii) through (iv), singly or together
with any other such event, has a material adverse effect on the
condition, financial or otherwise, or in the earnings of the Company and
its subsidiaries, taken as a whole, or on the financial markets in the
United States so as to make it impractical or inadvisable to proceed
with completion of the sale of and payment for the Stock.
(d) You shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of White & Case, counsel for
the Company, to the effect that:
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(i) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, except where the failure to
be so qualified or be in good standing would not reasonably be
expected to have a material adverse effect on the condition,
financial or otherwise, or the earnings of the Company and its
subsidiaries, taken as a whole.
(ii) Each subsidiary of the Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in the United States in which such qualification
is required, except where failure to be so qualified or be in good
standing would not reasonably be expected to have a material
adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole.
(iii) Assuming due authorization, execution and delivery by
the Company under Michigan law, this Agreement and the Subscription
Agreement have each been duly executed and delivered by the
Company.
(iv) To the best knowledge of such counsel after due inquiry,
except as set forth in the Prospectuses, there are no outstanding
(A) securities or obligations of the Company convertible into or
exchangeable for any shares of capital stock of the Company, (B)
warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations for the
Company to issue such shares, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or
obligations.
(v) Such counsel is not aware, after due inquiry, of (A) any
notice of infringement of or conflict with asserted rights of
others with respect to any licenses or other rights to use the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and proprietary knowledge
(hereinafter collectively referred to as "Proprietary Rights")
presently employed by the Company in connection with the operation
of its business, (B) the assertion by others of any rights
inconsistent with the Proprietary Rights of the Company, or (C) any
facts which such counsel believes would render any Proprietary
Rights of the Company invalid, in each case for clauses (A), (B),
or (C), which singly or in the aggregate, would reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole.
(vi) To the best knowledge of such counsel, after due
inquiry, the Company is not (A) in violation of its charter, or (B)
in violation of any law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or
authority applicable to it (including, without limitation, any
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law, administrative regulation, ordinance or order relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants), where
such violation would reasonably be expected to have a material
adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole. To
the best knowledge of such counsel, after due inquiry, neither the
Company nor any of its subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party
or by which it or its property may be bound which defaults, singly
or in the aggregate, would reasonably be expected to have a
material adverse effect on the condition, financial or otherwise,
or the earnings of the Company and its subsidiaries, taken as a
whole.
(vii) The performance of this Agreement and the Subscription
Agreement and the consummation of the transactions contemplated
herein and therein will not conflict with or result in or
constitute a breach or violation of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries
pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument of which such counsel
is aware, after due inquiry, to which the Company or any of its
subsidiaries is a party or by which it or any of them is bound, or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, which, singly or in the aggregate, would
reasonably be expected to have a material adverse effect on the
condition, financial or otherwise, or the earnings of the Company
and its subsidiaries taken as a whole, nor will such action result
in a breach or violation of any applicable law, any rule,
regulation or order of any governmental agency or authority or any
decree or order of any court having jurisdiction over the Company
or any subsidiary of the Company or any of their properties of
which such counsel is aware, after due inquiry; and the Company has
all requisite corporate power and authority to authorize, issue and
sell the U.S. Stock pursuant to this Agreement.
(viii) To the best knowledge of such counsel, after due
inquiry, (a) there is no action, suit or proceeding before or by
any United States or state of the United States court or
governmental agency or body, now pending, or threatened, against or
affecting the Company or any of its subsidiaries, which is required
to be disclosed in the Registration Statement or the Prospectuses
(other than as disclosed therein) and (b) there are no contracts or
documents of the Company which are required to be described in the
Prospectuses or the Registration Statement or filed as exhibits to
the Registration Statement by the Act or by the Rules and
Regulations which have not been so described or so filed as
exhibits thereto.
(ix) No consent, approval, authorization, or order of, or
filing with, any Person or any governmental agency or authority or
any court is required for the consummation of the transactions
contemplated by this Agreement or the Subscription Agreement in
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connection with the issuance or sale of the Stock, except such as
have been obtained and made and as may be required under state
securities laws.
(x) (a) The Company possesses all licenses, certificates,
authorities or permits (collectively, "permits") issued by the
appropriate governmental or regulatory agencies or authorities that
are necessary to enable it to own, lease and operate its properties
and to carry on its business as presently conducted and such
permits contain no restrictions that are materially burdensome to
the Company or any of its subsidiaries and (b) to the knowledge of
such counsel, after due inquiry, the Company has not received any
notice of proceedings, nor is any proceeding threatened, relating
to the revocation or modification of any such permit which in the
case of (a) or (b), singly or in the aggregate, would reasonably be
expected to have a material adverse effect on the condition,
financial or otherwise, or on the earnings of the Company and its
subsidiaries, taken as a whole.
(xi) The descriptions in the Registration Statement and the
Prospectuses of the Company's charter, by-laws, and preferred stock
purchase rights plan, and of statutes, decrees, legal and
governmental proceedings and contracts and such other documents as
are described therein (except in Appendix A, as to which such
counsel need express no opinion) are accurate and fairly present
the information required to be shown.
(xii) Except as described in the Registration Statement,
there are no contracts, agreements or understandings known to such
counsel between the Company and any Person granting such Person the
right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to
be owned by such Person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Act.
(xiii) Such counsel has received notification from the
Commission that the Registration Statement was declared effective
under the Act as of the date and time specified in such opinion,
each of the Prospectuses either was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified in such
opinion on the date specified therein or was included in the
Registration Statement (as the case may be), and, to the best of
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has
been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act; the
Registration Statement and the Prospectuses, and each amendment or
supplement thereto, as of their respective effective or issue
dates, appear on their face to comply as to form in all material
respects with the requirements of the Act and the Rules and
Regulations; nothing has come to such counsel's attention to cause
it to believe that either the Registration Statement or the
Prospectuses, or any such amendment or supplement, as of such
respective dates and the date of such opinion, contained any
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untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstance
under which they were made; it being understood that such counsel
need express no opinion as to Appendix A or as to the financial
statements or schedules or other related statistical or financial
data contained in the Registration Statement or the Prospectuses.
Such counsel may state that the opinions expressed by such counsel are
limited to matters under the laws of the State of New York and to the federal
laws of the United States.
(e) You shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of White & Case, counsel for
the Selling Stockholder, to the effect that:
(i) The Underwriters have obtained from the Selling
Stockholder good and marketable title to the shares of Stock sold
by the Selling Stockholder free and clear, to the best knowledge of
such counsel after due inquiry, of any adverse claims, and the
Selling Stockholder had full corporate right, power and authority
to enter into this Agreement and the Subscription Agreement and to
sell, assign, transfer and deliver such shares of Stock hereunder
and thereunder. For purposes of rendering this opinion, such
counsel may state that they have assumed that the Underwriters have
no notice of any adverse claim regarding such shares of Stock.
(ii) No authorization, approval or consent of, or
registration or qualification with, any Person or any court or
governmental authority or agency is necessary in connection with
the sale of the Stock sold by the Selling Stockholder or the
consummation of the other transactions contemplated by this
Agreement or the Subscription Agreement, except such as have been
obtained and made and as may be required under state securities
laws.
(iii) The execution, delivery and performance of this
Agreement and the Subscription Agreement and the consummation of
the transactions contemplated herein and therein have been
authorized by all necessary corporate action by the Selling
Stockholder and will not (A) conflict with or constitute or result
in a breach or violation of any of the terms or provisions of, or
any default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the Selling Stockholder's
properties or assets pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or
instrument of which such counsel is aware after due inquiry to
which the Selling Stockholder is a party or by which the Selling
Stockholder is bound or to which any of the Selling Stockholder's
properties is subject, or (B) result in a breach or violation of
any applicable law or any rule, regulation or order of any
governmental agency or authority or any court having jurisdiction
over the Selling Stockholder or any of its respective properties of
which such counsel is aware after due inquiry or of the charter or
by-laws of the Selling Stockholder which, in the case of either
clause (A) or (B), would interfere
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with the ability of the Selling Stockholder to sell to the
Underwriters the Common Stock proposed to be sold by it pursuant to
this Agreement and the Subscription Agreement free and clear of any
adverse claims.
(iv) This Agreement and the Subscription Agreement have each
been duly authorized, executed and delivered by the Selling
Stockholder.
(f) You shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of Honigman Miller Schwartz
& Cohn, Michigan counsel for the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Michigan with corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectuses.
(ii) The execution, delivery and performance of this Agreement
and the Subscription Agreement and the consummation of the
transaction contemplated herein and therein have each been duly and
validly authorized by all necessary corporate action by the Company
and this Agreement and the Subscription Agreement have each been
duly executed and delivered by the Company.
(iii) The authorized capital stock of the Company consists of
60,000 shares of series A junior preferred stock, $.01 par value
per share, of which no shares are issued or outstanding, 10,000,000
shares of preferred stock, $.01 par value per share, of which no
shares are issued or outstanding, and 30,000,000 shares of common
stock, $.01 par value per share, of which 11,061,350 shares are
issued and outstanding; all of the shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable and are owned by the
Selling Stockholder; and the capital stock of the Company
(including, without limitation, the Stock) conforms, in all
material respects as to legal matters, to the description thereof
(including, without limitation, statements relating to dividend,
voting, conversion and exchange features) contained under the
caption "Description of Capital Stock" in the Registration
Statement and the Prospectuses, except the description of the
Company's preferred stock purchase rights plan as to which such
counsel need not express any opinion.
(iv) The Stock has been duly authorized, and, in the case of
the Stock being issued by the Company, when issued, and, in the
case of all the Stock, when delivered and paid for pursuant to this
Agreement and the Subscription Agreement, will be fully paid and
nonassessable, and the shareholders of the Company have no
preemptive rights with respect to the Stock.
(v) The performance of this Agreement and the Subscription
Agreement will not result in a breach or violation of the terms and
provisions of the charter (or other equivalent instrument) or by-
laws of the Company; and the Company has all requisite corporate
power and authority to authorize, issue and sell the U.S. Stock as
contemplated by this Agreement.
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(g) You shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of Trench, Rossi e Watanabe,
Brazilian counsel for the Company, to the effect that:
(i) Each Brazilian subsidiary of the Company (each a
"Brazilian Subsidiary") has been duly incorporated and is validly
existing as a company under the laws of Brazil, has the requisite
power and authority to own, lease and operate its properties and to
conduct its business in Brazil as set forth in its Articles of
Organization; all capital of each Brazilian Subsidiary has been
established as provided in its Articles of Organization, has been
fully paid in, is nonassessable, other than the ability of
Brazilian tax, labor and similar authorities to make assessments
against shares of capital stock for tax, labor and similar claims
(of which there currently are none) and (with the exception of
directors' qualifying shares) is owned by the Company, directly or
indirectly, and, except for directors' qualifying shares with
respect to which such counsel need express no opinion, is owned
free and clear of any mortgage, pledge, lien, encumbrance or claim.
(ii) Such counsel is not aware, after due inquiry, of (A) any
notice of infringement of or conflict with asserted rights of
others with respect to any licenses or other rights to use the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and proprietary knowledge
(hereinafter collectively referred to as "Proprietary Rights")
presently employed by any Brazilian Subsidiary in connection with
the operation of its businesses, (B) the assertion by others of any
rights inconsistent with the Proprietary Rights of the Brazilian
Subsidiaries, or (C) any facts which such counsel believes would
render any Proprietary Rights of the Brazilian Subsidiaries
invalid, in each case for clauses (A), (B) or (C), which singly or
in the aggregate, would reasonably be expected to result in any
material adverse change in the condition, financial or otherwise,
or in the earnings of the Company and its subsidiaries, taken as a
whole.
(iii) To the best knowledge of such counsel, after due
inquiry, none of the Brazilian Subsidiaries is in violation of its
Articles of Organization or any law, administrative regulation,
ordinance or order of any Brazilian court, governmental agency,
arbitration panel or authority applicable to it, where such
violation would reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or on the earnings
of the Company and its subsidiaries, taken as a whole.
(iv) The performance of this Agreement and the Subscription
Agreement and the consummation of the transactions contemplated
herein and therein will not conflict with or result in or
constitute a breach or violation of the terms and provisions of the
Articles of Organization of any such subsidiary or, any applicable
Brazilian law, rule, regulation or order of any governmental agency
or authority or any decree or order of any Brazilian court having
jurisdiction over any Brazilian Subsidiary or any of their
properties.
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(v) To the knowledge of such counsel, there is no action,
suit or proceeding before or by any Brazilian court or governmental
agency or body, now pending, or, to the best knowledge and
information of such counsel, threatened, against or affecting the
Brazilian Subsidiaries, which is required to be disclosed in the
Registration Statement or the Prospectuses (other than as disclosed
therein); and there are no contracts or documents of the Brazilian
Subsidiaries which are required to be described in the Prospectuses
or the Registration Statement or filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations
which have not been so described or so filed as exhibits thereto.
(vi) The Brazilian Subsidiaries possess all licenses,
certificates, authorities or permits (collectively, "permits")
issued by the appropriate governmental or regulatory agencies or
authorities that are necessary to enable them to own, lease and
operate their respective properties and to carry on their
respective businesses as presently conducted except for such
permits the lack of which either singly or in the aggregate would
not reasonably be expected to have a material adverse effect on the
condition, financial or otherwise, or on the earnings of the
Company and its subsidiaries, taken as a whole.
(vii) The Company has obtained a Certificate of Investment
from the Central Bank of Brazil reflecting the U.S. dollar amount
of the Company's investment in CAPCO do Brasil as necessary to
permit the Company to repatriate under current Brazilian law up to
the U.S. dollar registered amount shown in such Certificate of
Investment free and clear of any tax, duty, withholding or
deduction in Brazil and to permit CAPCO do Brasil to remit profits
to the Company in U.S. dollars under current Brazilian law (after
payment of Brazilian withholding income tax), and such Certificate
of Investment is in full force and effect; at present, no other
permits, licenses, authorization, certificates or approvals from
any Brazilian governmental authority are necessary to permit
remittances of profits to the Company; and CAPCO do Brasil at
present has access to the floating commercial rate currency market
in Brazil for purchasing U.S. dollars to make remittances of
profits to the Company.
(viii) Confirming the information set forth in Attachment A
to this Agreement.
(h) You shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of Bernard D. Henely,
General Counsel of Clark, to the effect that:
(i) Clark has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware.
(ii) The execution, delivery and performance of this
Agreement and the Subscription Agreement and the consummation of
the transaction contemplated herein and therein have each been duly
and validly authorized by all necessary corporate action by the
Clark and will not (A) conflict with or constitute or result in a
breach or violation of any of the terms or provisions of, or
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any default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of Clark's properties or assets pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which Clark is a party or by which
Clark is bound or to which any of Clark's properties is subject, or (B)
result in a breach or violation of any applicable law or any rule,
regulation or order of any governmental agency or authority or any court
having jurisdiction over Clark or any of its respective properties or of
the charter or by-laws of Clark which, in the case of either clause (A)
or (B), would interfere with the ability of the Selling Stockholder to
sell to the Underwriters the Common Stock proposed to be sold by it
pursuant to this Agreement and the Subscription Agreement free and clear
of any adverse claims.
(iii) This Agreement and the Subscription Agreement have each
been duly authorized, executed and delivered by Clark.
(i) You shall have received from Mayer, Brown & Platt, counsel for
the Underwriters, such opinion or opinions, dated the First Closing Date
and each Option Closing Date, if any, to the effect that:
(i) The Company is validly existing and in good standing
under the laws of the State of Michigan.
(ii) The Stock has been duly authorized, and when issued and
delivered and paid for in accordance with the terms of the
Underwriting Agreement and the Subscription Agreement, will be
validly issued, fully paid and non-assessable.
(iii) The execution and delivery of the Underwriting Agreement
and the Subscription Agreement have been duly and validly
authorized by all necessary corporate action by the Company.
(iv) The Registration Statement became effective under the
Act, and to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Act and no proceedings for that purpose have been
initiated or threatened by the Commission.
(v) The Stock conforms as to legal matters in all material
respects to the descriptions thereof in the Registration Statement
and the Prospectuses.
(vi) The Registration Statement and the Prospectuses, and each
amendment or supplement thereto, as of their respective effective
or issue dates, appear on their face to comply as to form in all
material respects with the requirements of the Act and the Rules
and Regulations; nothing has come to such counsel's attention to
cause it to believe that either the Registration Statement or the
Prospectuses, or any such amendment or supplement, as of such
respective dates and the date of such opinion, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstance under which
they were made; it being understood that such counsel need express
no opinion as to
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Appendix A or as to the financial statements or schedules or other
related statistical or financial data contained in the Registration
Statement or the Prospectuses.
The Company and the Selling Stockholder shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters. In rendering such opinion, Mayer, Brown &
Platt may rely as to the incorporation of the Company and all other
matters governed by Michigan law upon the opinion of Honigman Miller
Schwartz & Cohn referred to in subsection (f) of this Section.
(j) You shall have received a certificate, dated the First Closing
Date and each Option Closing Date, if any, of the President or any Vice-
President and a principal financial or accounting officer of the Company
in which such officers shall state that the representations and
warranties of the Company in this Agreement are true and correct, that
the Company has complied in all material respects with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the First Closing Date and each such Option
Closing Date, if any, that no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the best of their knowledge after
reasonable investigation, are contemplated by the Commission and that,
subsequent to the date of the most recent financial statements in the
Prospectuses, there has been no material adverse change in the financial
position or results of operations of the Company and its subsidiaries as
a whole, except as set forth in or contemplated by the Prospectuses or
as described in such certificate.
(k) You shall have received a certificate, dated the First Closing
Date and each Option Closing Date, if any, of the President or any Vice-
President and a principal financial or accounting officer of Clark in
which such officers shall state that the representations and warranties
of Clark in this Agreement are true and correct, and that, subsequent to
the date of the most recent financial statements in the Prospectuses,
there has been no material adverse change in the financial position or
results of operations of the Company and its subsidiaries as a whole,
except as set forth in or contemplated by the Prospectuses or as
described in such certificate.
(l) You shall have received a certificate, dated the First Closing
Date and each Option Closing Date, if any, of the President or any Vice-
President of the Selling Stockholder in which such officers shall state
that the representations and warranties of the Selling Stockholder in
this Agreement are true and correct and that the Selling Stockholder has
complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the First Closing Date and each Option Closing Date, if any.
(m) You shall have received a letter, dated the First Closing
Date, and each Option Closing Date, if any, of Price Waterhouse, to the
effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (a) of this Section, except that the specified
date referred to will be a date not more than five days prior to the
First Closing Date or such Option Closing Date, as the case may be, for
the purposes of this subsection.
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(n) The closing of the sale of the International Stock to the
Managers pursuant to the Subscription Agreement shall occur concurrently
with the closing of the sale of the Firm Shares being purchased by the
Underwriters.
The Company, the Selling Stockholder and Clark will furnish you with such
conformed copies of such opinions, certificates, letters and documents as you
reasonably request.
7. Indemnification and Contribution. (a) The Company, the Selling
Stockholder and Clark, jointly and severally, will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred upon receipt of request for payment therefor;
provided, however, that none of the Company, the Selling Stockholder or Clark
will be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you specifically for use
therein.
(b) Each Underwriter will indemnify and hold harmless the Company, the
Selling Stockholder and Clark against any losses, claims, damages or
liabilities to which the Company, the Selling Stockholder or Clark may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, either of the Prospectuses, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through you
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company, the Selling Stockholder or Clark in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred upon receipt of request for
payment therefor.
(c) The indemnity agreement of the Company, the Selling Stockholder and
Clark in this Agreement is subject to the condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission or
alleged omission made in a preliminary prospectus or in the U.S. Prospectus
(or any amendment or supplement thereto), it shall not inure to the benefit
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of any Underwriter if such Underwriter failed to send or give a copy of the
U.S. Prospectus (as amended or supplemented, if the Company or the Selling
Stockholder (as the case may be) shall have furnished any amendment or
supplement thereto to such Underwriter, which corrected such untrue statement
or omission that is the basis of the loss, liability, claim, damage or
expense for which indemnification is sought) to the person asserting any such
loss, liability, claim, damage or expense at such time as the U.S Prospectus,
as so amended or supplemented, is required under the Act to be delivered to
such person.
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
may, unless an actual or potential conflict exists, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one firm for all such indemnified parties. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened action in respect of which any
indemnified party is a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each party which would otherwise be liable to provide
indemnification under subsection (a) or (b) above shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i)(A) if the Company or the Underwriters are the indemnifying party, 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 from the offering
of the U.S. Stock and (B) if the Selling Stockholder or Clark is the
indemnifying party, in such proportion as is appropriate to reflect the
relative benefit received by the Selling Stockholder and Clark, on the one
hand, and the Underwriters, on the other, from the Offering of the Selling
Stockholder's U.S. Stock, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or the indemnified party failed to
give the notice required under subsection (d) above, then, 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, the Selling
Stockholder or Clark, as the case may be, on the one hand and the
Underwriters on the other in
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connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Selling
Stockholder or Clark, as the case may be, on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the U.S. Offering (before deducting expenses)
received by the Company or the Selling Stockholder, as the case may be, bear
to the total underwriting discounts and commissions received by the
Underwriters. The relative fault 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, the Selling Stockholder, Clark or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company, the Selling Stockholder, Clark and the Underwriters
agree that it would not be just and equitable if contribution pursuant to
this subsection (e) were determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to above in this subsection (e). The amount paid by
an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the shares of the U.S. Stock underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations
in this subsection (e) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(f) The obligations of the Company, the Selling Stockholder and Clark
under this Section shall be in addition to any liability which the Company,
the Selling Stockholder and Clark may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each director of the Company, to each officer
of the Company who has signed the Registration Statement and to each person,
if any, who controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase any U.S. Stock hereunder on either the First
Closing Date or any Option Closing Date and the aggregate number of shares of
U.S. Stock that such defaulting Underwriter or Underwriters agreed but failed
to purchase does not exceed 10% of the total number of shares of U.S. Stock,
you may make arrangements satisfactory to the Company and the Selling
Stockholder for the purchase of such Stock by other Persons, including any of
the Underwriters, but if no such arrangements are made by such Closing Date,
the non-defaulting Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase on such Closing Date
the U.S. Stock that such
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<PAGE>
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate number of shares of
U.S. Stock with respect to which such default or defaults occur exceeds 10%
of the total number of shares of U.S. Stock, you will use reasonable efforts
to make arrangements for the purchase of such U.S. Stock by other Persons.
In the event that arrangements satisfactory to you, the Company and the
Selling Stockholder for the purchase of such U.S. Stock by other Persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company
or the Selling Stockholder, except as provided in Section 9 of this
Agreement. As used in this Agreement, the term "Underwriter" includes any
Person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers, the Selling Stockholder, Clark and the several
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the Selling
Stockholder, Clark, the Company or any of their respective representatives,
officers or directors or any controlling Person, and will survive delivery of
and payment for the U.S. Stock. If this Agreement is terminated pursuant to
Section 8 of this Agreement or if for any reason the purchase of the U.S.
Stock by the Underwriters is not consummated, the Company and the Selling
Stockholder shall remain responsible for the expenses to be paid or
reimbursed by them pursuant to Section 5 of this Agreement and the respective
obligations of the Company, the Selling Stockholder, Clark and the
Underwriters pursuant to Section 7 of this Agreement shall remain in effect.
If the purchase of the U.S. Stock by the Underwriters is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 8 of this Agreement or the occurrence of any event
specified in clause (ii), (iii) or (iv) of Section 6(c) of this Agreement,
the Company and the Selling Stockholder will, jointly and severally,
reimburse the Underwriters for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the U.S. Stock.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to you, c/o CS First Boston Corporation, Park Avenue Plaza, New
York, New York 10055, Attention: Investment Banking Department, New Issue
Processing Group, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 100 North Michigan Street, South Bend,
Indiana 46634, Attention: Secretary, or, if sent to Clark, will be mailed,
delivered or telegraphed and confirmed to it at 100 North Michigan Street,
South Bend, Indiana 46634, Attention: Secretary, or, if sent to the Selling
Stockholder, will be mailed, delivered or telegraphed and confirmed to it at
100 North Michigan Street, South Bend, Indiana 46634, Attention: Secretary,
with a copy in the case of notices to any of the Company and/or the Selling
Stockholder and/or Clark to White & Case, 1155 Avenue of the Americas, New
York, New York 10036, Attention: Arthur A. Scavone; provided, however, that
any notice to an Underwriter pursuant to Section 7 of this Agreement will be
mailed, delivered or telegraphed and confirmed to such Underwriter.
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<PAGE>
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling Persons referred to in Section 7 of
this Agreement, and no other Person will have any right or obligation
hereunder.
12. Representation of Underwriters. You will act for the several
Underwriters in connection with the transactions contemplated by this
Agreement, and any action under this Agreement taken by you jointly or by CS
First Boston Corporation will be binding upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.
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<PAGE>
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholder, Clark and the several Underwriters in accordance with its terms.
Very truly yours,
CLARK AUTOMOTIVE PRODUCTS CORPORATION
By:/s/ C. E. Cheesbrough
Name Printed: C. E. Cheesbrough
Title: Vice President,
Secretary and Controller
AUTOMOTIVE PRODUCTS COMPANY
By:/s/ John J. Moran, Jr.
Name Printed: John J. Moran, Jr.
Title: Vice President and Secretary
CLARK EQUIPMENT COMPANY
By:/s/ Bernard D. Henely
Name Printed: Bernard D. Henely
Title: Vice President
The forgoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
CS FIRST BOSTON CORPORATION
MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED,
Acting on behalf of themselves
and as the Representatives
of the several Underwriters
By CS FIRST BOSTON CORPORATION
By:/s/ Joseph D. Fashano
Name Printed: Joseph D. Fashano
Title: Director
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<PAGE>
Attachment A
In 1986, because of insufficient hard currency reserves at the Brazilian
currency exchange agency (the "Central Bank"), the Brazilian government
temporarily imposed certain restrictions on the timing and flow of certain
currency remittances out of Brazil. This resulted in a delay in the payment
of dividends out of Brazil and may have raised the cost for some companies of
converting local currency to pay dividends to their parents. In 1989, again,
similar temporary restrictions were imposed with similar results. No
restrictions are currently in place. The Central Bank and the Brazilian
government have discretionary powers to restrict currency exchange
transactions in the event of severe hard currency shortages.
Brazilian currency exchange controls were first established in the
1930s. Today, such controls are limited to general authorizations issued by
the Central Bank in the form of certificates (e.g., certificate of
investment) allowing their respective holders to exchange local currency for
U.S. Dollars and to remit the U.S. Dollars out of Brazil. As an example, if
a non-resident organizes a company in Brazil and funds such company with
capital by wire transferring U.S. Dollars into Brazil, the non-resident
obtains from the Central Bank a certificate of investment showing on its face
the amounts invested, the name of the investor and the name of the local
company. In order to effect dividend remittances out of Brazil, the local
company presents to a local bank the Brazilian currency needed to purchase
the U.S. Dollars together with the original certificate of investment plus
the local corporate documents evidencing the corporate earnings and
declaration of dividends. The local bank then wire transfers the funds out
of Brazil without any intervention or authorization from the Central Bank.
Brazilian banks must obtain a charter from the Central Bank in order to
conduct banking business in Brazil. Most of these banks are also chartered
to conduct currency exchange transactions. There are two basic currency
exchange markets in Brazil: (i) the commercial rate (ii) the floating rate.
The Central Bank does not intervene in the commercial market except in
purchasing and selling currency in an attempt to control rates. Most
commercial and corporate currency exchange is carried out at the commercial
rate, e.g., with regard to capital repatriations, repayment of loans, payment
of dividends or interest, payments for imports. The obligors of such
obligations may freely purchase the necessary currency to make the required
payments abroad by presenting to a bank chartered to deal in currency
exchange a certificate of investment, a certificate of a loan transaction, an
important license, or similar document.
The floating rate market is a free market where banks may buy and sell
currency at freely negotiated rates without any Central Bank interference.
Transactions carried out through the free market are mainly related to travel
and to certain transfers of capital. This market is the first step towards
the creation of a free exchange market in Brazil. The floating rate market
has also been extended to permit the purchase of foreign currency for
Brazilians to invest abroad and for Brazilian companies to establish and
maintain foreign offices.
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<PAGE>
SCHEDULE A
Total Number
Total Number of Firm Shares
of Firm Shares to be Purchased
to be Purchased from the
Underwriter from the Company Selling Stockholder
CS First Boston Corporation. . . . . . . 179,195 1,990,805
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . 179,195 1,990,805
Allen & Company Incorporated . . . . . . 9,910 110,090
Arnhold and S. Bleichroeder, Inc.. . . . 4,955 55,045
Baird, Patrick & Co., Inc. . . . . . . . 4,955 55,045
Robert W. Baird & Co. Incorporated . . . 4,955 55,045
Bear, Stearns & Co. Inc. . . . . . . . . 9,910 110,090
Alex. Brown & Sons Incorporated. . . . . 9,910 110,090
Dain Bosworth Incorporated . . . . . . . 4,955 55,045
Dean Witter Reynolds Inc.. . . . . . . . 9,910 110,090
Dillon, Read & Co. Inc.. . . . . . . . . 9,910 110,090
Donaldson, Lufkin & Jenrette Securities
Corporation. . . . . . . . . . . . . . 9,910 110,090
A.G. Edwards & Sons, Inc.. . . . . . . . 9,910 110,090
First of Michigan Corporation. . . . . . 4,955 55,045
Furman Selz Incorporated . . . . . . . . 4,955 55,045
Gabelli & Company, Inc.. . . . . . . . . 4,955 55,045
Garantia Inc.. . . . . . . . . . . . . . 4,955 55,045
Goldman, Sachs & Co. . . . . . . . . . . 9,910 110,090
Interstate/Johnson Lane Corporation. . . 4,955 55,045
Invemed Associates, Inc. . . . . . . . . 9,910 110,090
Kemper Securities, Inc.. . . . . . . . . 4,955 55,045
Kidder, Peabody & Co. Incorporated . . . 9,910 110,090
Ladenburg, Thalmann & Co. Inc. . . . . . 4,955 55,045
C.J. Lawrence/Deutsche Bank Securities
Corporation. . . . . . . . . . . . . . 4,955 55,045
Lazard Freres & Co.. . . . . . . . . . . 9,910 110,090
Legg Mason Wood Walker Incorporated. . . 4,955 55,045
Lehman Brothers Inc. . . . . . . . . . . 9,910 110,090
McDonald & Company Securities, Inc.. . . 4,955 55,045
Montgomery Securities. . . . . . . . . . 9,910 110,090
J.P. Morgan Securities Inc.. . . . . . . 9,910 110,090
Morgan Stanley & Co. Incorporated. . . . 9,910 110,090
Oppenheimer & Co., Inc.. . . . . . . . . 9,910 110,090
PaineWebber Incorporated . . . . . . . . 9,910 110,090
Piper Jaffray Inc. . . . . . . . . . . . 4,955 55,045
Prudential Securities Incorporated . . . 9,910 110,090
RAS Securities Corp. . . . . . . . . . . 4,955 55,045
The Robinson-Humphrey Company, Inc.. . . 4,955 55,045
Roney & Co. . . . . . . . . . . . . . . 4,955 55,045
Salomon Brothers Inc . . . . . . . . . . 9,910 110,090
Smith Barney Shearson Inc. . . . . . . . 9,910 110,090
Stifel, Nicolaus & Company, Incorporated 4,955 55,045
Wertheim Schroder & Co. Incorporated . . 9,910 110,090
Euro Tranche . . . . . . . . . . . 165,161 1,834,839
Total . . . . . . . . . . . . . . 825,806 9,174,194
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<PAGE>
SCHEDULE B
Managers
CS First Boston Limited
Merrill Lynch International Limited
ABN AMRO Bank N.V.
Banque Bruxelles Lambert S.A.
Cazenove & Co.
Dresdner Bank Aktiengesellschaft
UBS Limited
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<PAGE>
<PAGE>
2,000,000 Shares
CLARK AUTOMOTIVE PRODUCTS CORPORATION
Common Stock
(par value U.S. $0.01 per share)
SUBSCRIPTION AGREEMENT
London, England
May 6, 1994
To: CS First Boston Limited
Merrill Lynch International Limited
ABN AMRO Bank N.V.
Banque Bruxelles Lambert S.A.
Cazenove & Co.
Dresdner Bank Aktiengesellschaft
UBS Limited
(the "Managers")
c/o: CS First Boston Limited ("CSFB")
One Cabot Square
London E14 4QJ
Dear Sirs:
Clark Automotive Products Corporation, a Michigan corporation
("Company"), proposes to issue and sell 165,161 shares of its common stock,
par value U.S. $.01 per share ("Common Stock"), outside the United States and
Canada, and Automotive Products Company, a Delaware corporation (the "Selling
Stockholder"), proposes to sell outside the United States and Canada an
aggregate of 1,834,839 outstanding shares of the Common Stock (such 2,000,000
shares of Common Stock being hereinafter referred to collectively as the
"International Firm Shares"). The Company and the Selling Stockholder
propose to sell the International Firm Shares to the Managers. The Selling
Stockholder also proposes to grant an option, exercisable by CS First Boston
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated, for the
U.S. Underwriters and the Managers to purchase up to an aggregate of not more
than 1,000,000 additional shares of Common Stock on the terms and conditions
set forth below (such additional shares being hereinafter referred to as the
"Optional Shares"). The International Firm Shares and the Optional Shares
which the Managers elect to purchase ("Managers' Optional Shares"), if
purchased, are herein collectively called the "International Stock." The
sale of the International Stock is referred to herein as the "International
Offering." This Subscription Agreement as amended, supplemented or modified
from time to time, is referred to herein as "this Agreement."
It is understood that the Company and the Selling Stockholder are
concurrently herewith entering into an underwriting agreement ("Underwriting
Agreement") dated the date hereof with certain United States underwriters
listed in Schedule B hereto ("U.S. Underwriters") relating to the concurrent
offering and sale of 8,000,000 shares of Common Stock ("U.S.
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<PAGE>
Firm Shares") by the Company and the Selling Stockholder in the United States
and Canada ("U.S. Offering"). CS First Boston Corporation and Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as
representatives (the "Representatives") for the U.S. Underwriters. The
International Offering and the U.S. Offering are collectively referred to
herein as the "Offerings." The International Stock, the U.S. Firm Shares and
the additional Optional Shares to be sold to the U.S. Underwriters in the
case of over-allotments (the "U.S. Optional Shares," which together with the
U.S. Firm Shares are herein collectively referred to as the "U.S. Stock") are
collectively referred to herein as the "Stock." To provide for coordination
of their activities, the U.S. Underwriters and the Managers have entered into
an Agreement Between U.S. Underwriters and Managers which permits them, among
other things, to sell Stock to each other for purposes of resale.
The Company, the Selling Stockholder and Clark Equipment Company, a
Delaware corporation ("Clark"), hereby agree with the Managers as follows:
1. Representations and Warranties of the Company, the Selling
Stockholder and Clark.
(a) The Company, the Selling Stockholder and Clark jointly and
severally represent and warrant to, and agree with, the Managers that:
(i) A registration statement (No. 33-75626), including a form of
prospectus relating to the International Stock to be sold in the
International Offering and a form of prospectus relating to the U.S. Stock to
be sold in the U.S. Offering, has been filed with the Securities and Exchange
Commission ("Commission") and either (A) has been declared effective under
the Securities Act of 1933 ("Act") and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment. If the
Company does not propose to amend such registration statement and if any
post-effective amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the
most recent such amendment has been declared effective by the Commission.
For purposes of this Agreement, "Effective Time" means (A) if the Company has
advised CSFB, as representative of the Managers, that it does not propose to
amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission, or (B) if the Company has advised CSFB,
as representative of the Managers, that it proposes to file an amendment or
post-effective amendment to such registration statement, the date and time as
of which such registration statement, as amended by such amendment or post-
effective amendment, as the case may be, is declared effective by the
Commission. "Effective Date" means the date of the Effective Time. Such
registration statement, as amended at the Effective Time, including all
information (if any) deemed to be a part of such registration statement as of
the Effective Time pursuant to Rule 430A(b) under the Act, is hereinafter
referred to as the "Registration Statement," and the form of prospectus
relating to the International Stock to be sold in the International Offering
and the form of prospectus relating to the U.S. Stock to be sold in the U.S.
Offering, each as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in the Registration Statement are hereinafter
respectively referred to as the "International Prospectus" and the "U.S.
Prospectus" and collectively
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<PAGE>
referred to as the "Prospectuses." No stop order suspending the
effectiveness of such Registration Statement or any part thereof has been
issued and no proceeding for that purpose has been instituted or, to the best
knowledge of the Company, the Selling Stockholder and Clark, threatened by
the Commission.
(ii) If the Effective Time is prior to the execution and delivery of
this Agreement: (A) on the Effective Date, the Registration Statement
conformed in all material respects to the requirements of the Act and the
rules and regulations of the Commission ("Rules and Regulations") and did not
include 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 (B) on the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the
Prospectuses pursuant to Rule 424(b), the Registration Statement and each of
the Prospectuses will conform in all material respects to the requirements of
the Act and the Rules and Regulations, and none of such documents includes,
or will include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading (in the light of the
circumstances under which they were made in the case of each of the
Prospectuses.) If the Effective Time is subsequent to the execution and
delivery of this Agreement: on the Effective Date, the Registration Statement
and each of the Prospectuses will conform in all material respects to the
requirements of the Act and the Rules and Regulations, and none of such
documents will include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. The two preceding sentences do not
apply to statements in or omissions from any of such documents based upon
written information furnished to the Company by any Manager through CSFB
specifically for use therein.
(iii) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Michigan with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectuses; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, except where failure to be so qualified or be in
good standing would not reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole.
(iv) Each subsidiary of the Company has been duly incorporated and is
validly existing as a company under the laws of the jurisdiction of its
incorporation, has all corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, except where failure to
be so qualified or be in good standing would not reasonably be expected to
have a material adverse effect on the condition, financial or otherwise, or
in the earnings of the Company and its subsidiaries, taken as a whole; all
capital of such subsidiaries has been established as provided in their
respective Articles of Organization, has been fully paid in, is
nonassessable, other than the ability of Brazilian tax, labor and similar
authorities to make assessments against shares of capital stock for tax,
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<PAGE>
labor and similar claims (of which there currently are none) and (with the
exception of directors' qualifying shares) is owned by the Company, directly
or through subsidiaries, and, to the extent owned directly or indirectly by
the Company, is free and clear of any mortgage, pledge, lien, encumbrance or
claim.
(v) This Agreement and the Underwriting Agreement have each been duly
authorized, executed and delivered by the Company.
(vi) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectuses
under "Capitalization"; all of the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Selling Stockholder, a
wholly-owned subsidiary of Clark; and the capital stock of the Company
(including, without limitation, the Stock) conforms to all statements
relating thereto (including, without limitation, statements relating to
dividend, voting, conversion and exchange features) contained in the
Registration Statement and the Prospectuses. Except as set forth in the
Prospectuses, there are no outstanding (A) securities or obligations of the
Company convertible into or exchangeable for any shares of capital stock of
the Company, (B) warrants, rights or options to subscribe for or purchase
from the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations for the Company to
issue such shares, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or obligations.
(vii) Except as set forth in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any natural person,
corporation, partnership, trust, firm, association or other entity, whether
acting in an individual, fiduciary or other capacity (a "Person") granting
such Person the right to require the Company to file a registration statement
under the Act with respect to any securities of the Company owned or to be
owned by such Person or to require the Company to include such securities in
the securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(viii) The Company and its subsidiaries own or possess all licenses or
other rights to use the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and proprietary knowledge (hereinafter
collectively referred to as "Proprietary Rights") presently employed by them
in connection with the operation of their businesses, except in each case
where the failure to own, possess or have rights to use such Proprietary
Rights, singly or in the aggregate, would not reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings of the Company and its subsidiaries, taken as a
whole. Neither the Company nor any of its subsidiaries (A) has received any
notice of infringement of or conflict with asserted rights of others with
respect to any Proprietary Rights, (B) is aware of the assertion by others of
any rights inconsistent with the Company's Proprietary Rights, and (C) is
aware of any facts which it believes would render any of its Proprietary
Rights invalid, in each case for clauses (A), (B), or (C), which singly or in
the aggregate, would reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings of the
Company and its subsidiaries, taken as a whole.
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<PAGE>
(ix) The financial statements included in the Registration Statement
and the Prospectuses comply in all material respects with the requirements of
the Act and the Rules and Regulations, present fairly the financial position
of the Company and its consolidated subsidiaries as of the dates indicated
and the consolidated results of their operations for the periods specified
and have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis; and the related
supporting schedules included in the Registration Statement present fairly
the information required to be stated therein in compliance with the
applicable Rules and Regulations. The financial information and statistical
data set forth in the Prospectuses under the captions "Summary Selected
Combined Financial Data," "Capitalization," "Selected Combined Financial
Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Supplementary Quarterly Financial Data" and the table
labeled "Product Line Sales" under the caption "Business-Principal Products"
are fairly stated in all material respects in relation to the consolidated
financial statements of the Company from which they have been derived.
(x) Since the respective dates as of which information is given in the
Registration Statement and the Prospectuses, except as otherwise stated
therein, (A) there has been no material adverse change, or any development
involving a prospective material adverse change, in the condition, financial
or otherwise, or in the earnings of the Company and its subsidiaries, taken
as a whole, (B) there have been no transactions entered into by the Company
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the condition, financial or
otherwise, or the earnings of the Company and its subsidiaries, taken as a
whole, (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on its capital stock other than the dividend
declared by the Company's board of directors on April 14, 1994, and (D) there
has not been any change in the capital stock of the Company or any of its
subsidiaries or any material change in the long-term debt of the Company and
its subsidiaries, taken as a whole.
(xi) Neither the Company nor any of its subsidiaries is (A) in
violation of its charter (or other equivalent instrument), or (B) in
violation of any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or other authority applicable
to it (including, without limitation, any law, administrative regulation,
ordinance or order relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants), where such violation would reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or in the
earnings of the Company and its subsidiaries, taken as a whole, or (C) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by which
it or its property are bound which defaults, singly or in the aggregate,
would reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole; and the performance of this Agreement and the
Underwriting Agreement and the consummation of the transactions contemplated
herein and therein have been duly and validly authorized by all necessary
corporate action and will not conflict with or constitute or result in a
breach or
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violation of, or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which it or any of them are
bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject, which, singly or in the aggregate, would reasonably
be expected to result in any material adverse change in the condition,
financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole, nor will such action result in any violation
of the provisions of the charter (or other equivalent instrument) or by-laws
of the Company or of any of its subsidiaries or any applicable law, any rule,
regulation or order of any governmental agency or authority or any decree or
order of any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, the violation of which, singly or in
the aggregate, would reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings of the
Company and its subsidiaries, taken as a whole; and the Company has full
corporate power and authority to authorize, issue and sell the International
Stock as contemplated by this Agreement.
(xii) The Company and its subsidiaries have good and marketable title
to all real property and good title to all personal property owned by them,
in each case that is material to the condition, financial or otherwise, or
the earnings of the Company and its subsidiaries, taken as a whole, in each
case free and clear of all liens, charges, encumbrances, and restrictions
except such as do not materially affect the value of such property and do not
interfere in any material respect with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries that are
material to the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material in
relation to the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole and do not interfere in any
material respect with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries taken as a whole.
(xiii) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, the Selling
Stockholder and Clark, is imminent which, singly or in the aggregate, could
be material to the condition, financial or otherwise, or the earnings of the
Company and its subsidiaries, taken as a whole; and the Company is not aware
of any existing or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers, contractors or customers which would
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole.
(xiv) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, the Selling Stockholder and Clark, threatened,
against or affecting the Company or any of its subsidiaries, which is
required to be disclosed in the Registration Statement or the Prospectuses
which have not been so disclosed, or which would reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings of the Company and its
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subsidiaries, taken as a whole, or which would reasonably be expected to
materially and adversely affect the properties or assets thereof or which
would reasonably be expected to materially and adversely affect the
consummation of this Agreement or the Underwriting Agreement; all pending
legal or governmental proceedings to which the Company or any subsidiary is a
party or of which any of their property is the subject, including ordinary
routine litigation incidental to the business, are, considered in the
aggregate, not material to condition, financial or otherwise, or the earnings
of the Company and its subsidiaries, taken as a whole; and there are no
contracts or documents of the Company or any of its subsidiaries which are
required to be described in the Prospectuses or the Registration Statement or
filed as exhibits to the Registration Statement by the Act or by the Rules
and Regulations which have not been so described or so filed as exhibits
thereto.
(xv) No authorization, approval or consent of, or registration or
qualification with, any Person or any court or governmental authority or
agency is necessary in connection with the issuance or sale of the Stock by
the Company or the consummation of the other transactions contemplated by
this Agreement, except such as have been or will be obtained prior to the
First Closing Date or the Option Closing Date (as applicable).
(xvi) The Company and the Company's subsidiaries possess all licenses,
certificates, authorities or permits (collectively, "permits") issued by the
appropriate governmental or regulatory agencies or authorities that are
necessary to enable them to own, lease and operate their respective
properties and to carry on their respective businesses as presently conducted
except for permits the lack of which would not reasonably be expected to have
a material adverse effect on the condition, financial or otherwise, or the
earnings of the Company and its subsidiaries, taken as a whole; neither the
Company nor any of its subsidiaries has received any notice of proceedings,
nor to the knowledge of the Company and its subsidiaries, the Selling
Stockholder and Clark is any proceeding threatened, relating to the
revocation or modification of any such permit which, singly or in the
aggregate, would reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings of the
Company and its subsidiaries, taken as a whole; and, such permits contain no
restrictions that are materially burdensome to the Company or any of its
subsidiaries.
(xvii) (A) All United States Federal income tax returns of the Company
and each of its subsidiaries required by law to be filed have been filed and
all taxes shown by the said returns or otherwise assessed which are due and
payable have been paid, except assessments against which appeals have been or
will be promptly taken and (B) the Company and its subsidiaries have filed
all other tax returns which are required to have been filed by them pursuant
to applicable state, local or other law, except, as to each of the foregoing
clauses (A) and (B), insofar as the failure to file such returns,
individually and in the aggregate, would not reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole, and have paid
all taxes due pursuant to said returns or pursuant to any assessment received
by the Company or its subsidiaries, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been
provided in accordance with United States generally accepted accounting
principles or if the failure to make any or all such payments, singly or in
the aggregate, would not be material to the condition, financial or
otherwise, or the earnings
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of the Company and its subsidiaries, taken as a whole. The charges, accruals
and reserves on the consolidated books of the Company in respect of any
income and corporation tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional income tax
for any years not finally determined, except to the extent of any inadequacy
which would not reasonably be expected to have a material adverse effect on
the condition, financial or otherwise, or on the earnings of the Company and
its subsidiaries, taken as a whole.
(xviii) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (A) all
material transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States
generally accepted accounting principles appropriate in the circumstances to
reflect in all material respects the substance of events and transactions
that should be included and to maintain accountability for assets; (C)
irregularities or material errors do not occur or would be detected within a
timely period by employees in the normal course of performing their assigned
functions; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xix) The Stock has been duly authorized, and, in the case of the Stock
being issued by the Company, when issued, and, in the case of all the Stock,
when delivered and paid for pursuant to this Agreement and the Underwriting
Agreement, will be fully paid and nonassessable, and the stockholders of the
Company have no preemptive rights with respect to the Stock.
(xx) In the past five years the Company has not received from its
independent accountants any communication that such accountants have noted
any matter involving the Company's internal control structure and its
operation that such accountants considered to be a material weakness in the
Company's internal control structure or its operation.
(xxi) When the Registration Statement was or is initially declared
effective, the Company will have complied with all provisions of Section
517.075 of Florida Statutes, 1987, as amended, requiring disclosure in the
International Prospectus by the Company if the Company or any of its
affiliates conducted or will conduct any business with the government of Cuba
or with any person or affiliate located in Cuba.
(xxii) The Company has obtained a Certificate of Investment from the
Central Bank of Brazil reflecting the U.S. dollar amount of the Company's
investment in CAPCO do Brasil Empreendimentos e Participacoes Ltda. ("CAPCO
do Brasil") as necessary to permit the Company to repatriate under current
Brazilian law up to the U.S. dollar registered amount shown in such
Certificate of Investment free and clear of any tax, duty, withholding or
deduction in Brazil and to permit CAPCO do Brasil to remit profits to the
Company in U.S. dollars under current Brazilian law (after payment of
Brazilian withholding income tax), and such Certificate of Investment is in
full force and effect; at present, no other permits, licenses, authorization,
certificates or approvals from any Brazilian governmental authority are
necessary to permit remittances of profits to the Company; and CAPCO do
Brasil at present has access to the floating commercial rate currency market
in Brazil for purchasing U.S. dollars to make remittances of profits to the
Company.
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(xxiii) The descriptions in the Registration Statement and the
Prospectuses of the Company's charter and by-laws, statutes, decrees, legal
and governmental proceedings and contracts and such other documents as are
described therein are accurate and fairly present the information required to
be shown.
(xxiv) Assuming appropriate personal jurisdiction and subject matter
jurisdiction, none of the Company's subsidiaries nor any of their properties
or assets has any immunity from the jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).
(xxv) Other than this Agreement, the Underwriting Agreement and the
engagement letter dated December 1, 1993 between Clark and CS First Boston
Corporation, there are no contracts, agreements or understandings between the
Company or the Selling Stockholder and any person that would give rise to a
valid claim against the Company, the Selling Stockholder or any Underwriter
for a brokerage commission, finder's fee or other like payment.
(xxvi) Except for the capital stock of CAPCO do Brasil, receivables
owed to the Company by Eaton Corporation and contract rights described in the
Registration Statement and the Prospectuses, the Company owns no real or
personal property located in the United States that is material to the
condition, financial or otherwise, or the earnings of the Company and its
subsidiaries, taken as a whole.
(xxvii) The Company and each of its subsidiaries maintains adequate
insurance, based on the types of business in which the Company and its
subsidiaries are engaged and the geographic location of the assets of the
Company and its subsidiaries.
(b) The Selling Stockholder represents and warrants to, and agrees
with, the Managers that:
(i) The Selling Stockholder has and, on the First Closing Date (as
hereinafter defined) and each Option Closing Date (as hereinafter
defined), if any, will have good and marketable title to the shares of
the Stock to be sold by the Selling Stockholder free and clear of any
adverse claims and full corporate right, power and authority to enter
into this Agreement and the Underwriting Agreement and to sell, assign,
transfer and deliver the shares of the Stock to be sold by the Selling
Stockholder hereunder and thereunder; and upon the delivery of and
payment for the Stock hereunder and thereunder the Managers and the
several Underwriters will acquire good and marketable title to the
shares of the International Stock and the U.S. Stock, respectively, free
and clear of any adverse claims to be sold by such Selling Stockholder.
(ii) This Agreement and the Underwriting Agreement have each been
duly authorized, executed and delivered by the Selling Stockholder.
(iii) No authorization, approval or consent of, or registration or
qualification with, any Person or any court or governmental authority or
agency is necessary in connection with the sale of the Stock sold by the
Selling Stockholder or the consummation of the other transactions
contemplated by this Agreement or the Underwriting Agreement, except
such as have been or will be obtained prior to the First Closing Date.
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(iv) The execution, delivery and performance of this Agreement and
the Underwriting Agreement and the consummation of the transactions
contemplated herein and therein have been authorized by all necessary
action by the Selling Stockholder and Clark, as appropriate, and will
not (A) conflict with or constitute or result in a breach or violation
of any of the terms or provisions of, or any default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
of the Selling Stockholder's properties or assets pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Selling Stockholder is a party or
by which the Selling Stockholder is bound or to which any of the Selling
Stockholder's properties is subject, or (B) result in a breach or
violation of any applicable law or any rule, regulation or order of any
governmental agency or authority or any court having jurisdiction over
the Selling Stockholder or any of its respective properties or of the
charter or by-laws of the Selling Stockholder which, in the case of
either clause (A) or (B), would interfere with the ability of the
Selling Stockholder to sell to the Managers the Common Stock proposed to
be sold by it pursuant to this Agreement and the Underwriting Agreement
free and clear of any adverse claims.
2. Covenants.
(a) The Company agrees with the Managers and the Selling Stockholder
that:
(i) If the Effective Time is prior to the execution and delivery
of this Agreement, the Company will file the Prospectuses with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by CSFB, as representative of the
Managers, which consent shall not be unreasonably withheld, subparagraph
(4)) of Rule 424(b) not later than the second business day following the
execution and delivery of this Agreement. The Company will advise CSFB,
as representative of the Managers, promptly of any such filing pursuant
to Rule 424(b).
(ii) The Company will advise CSFB, as representative of the
Managers, promptly of any proposal to amend or supplement the
registration statement as filed or either or both of the related
prospectuses or the Registration Statement or either or both of the
Prospectuses and will not effect such amendment or supplementation
without CSFB's prior consent, which consent shall not be unreasonably
withheld; and the Company will also advise CSFB, as representative of
the Managers, promptly of the effectiveness of the Registration
Statement (if the Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of
the Registration Statement or the Prospectuses and of the institution by
the Commission of any stop order proceedings in respect of the
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(iii) If, at any time when a prospectus relating to the Stock is
required to be delivered under the Act, any event occurs as a result of
which either or both of the Prospectuses as then amended or supplemented
would include an untrue statement of a material fact or
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omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend either or both of the Prospectuses to
comply with the Act, the Company promptly will prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither CSFB's
consent to, nor the Managers' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6 of
this Agreement.
(iv) As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally available to
its security holders an earnings statement (which need not be audited)
covering a period of at least 12 months beginning after the Effective
Date which will satisfy the provisions of Section 11(a) of the Act. For
the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes the Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter. It is understood by the parties hereto that the
foregoing covenant shall not be deemed to require any action or other
filing by the Company other than the filing with the Commission of the
Company's periodic reports on Forms 10-K and 10-Q.
(v) The Company will furnish to CSFB copies of the Registration
Statement (three of which will be signed and will include all exhibits),
each related preliminary prospectus relating to the International Stock,
the International Prospectus and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as
CSFB requests.
(vi) The Company will take all reasonable action to arrange for
the qualification of the Stock for sale under the laws of such
jurisdictions as CSFB designates; provided, however, that the Company
shall not be obligated thereby to qualify as a foreign corporation, or
to become subject to taxes, in any jurisdiction in which it is not
currently so qualified or so subject; and the Company will continue such
qualifications in effect so long as required for the distribution
thereof.
(vii) During the period of three years hereafter, the Company will
furnish to CSFB and, upon request, to each of the other Managers, a copy
of its annual report to stockholders for such year at the time such
report is sent to the stockholders of the Company; and the Company will
furnish to CSFB (A) as soon as available, a copy of each report or
definitive proxy statement of the Company filed with the Commission
under the Securities Exchange Act of 1934 or mailed to stockholders, and
(B) from time to time, such other information concerning the Company as
CSFB may reasonably request.
(viii) Except as set forth in or as contemplated by this
Agreement, the Company will not, without the prior written consent of
CSFB, offer, sell, contract to sell or otherwise dispose of any
additional shares of its Common Stock or any other capital stock (or any
securities convertible into or exchangeable for Common Stock or any
other capital stock), or file with the Commission a registration
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statement under the Act relating to, any shares of its capital stock, or
any security convertible into or exchangeable for such capital stock,
for a period of 180 days after the date of the commencement of the
public offering for the International Stock.
(b) The Company and the Selling Stockholder agree with the Managers
that the Company and the Selling Stockholder will pay all expenses incident
to the performance of the obligations of the Company and the Selling
Stockholder, as the case may be, under this Agreement, and will, jointly and
severally, reimburse the Managers for any expenses (including reasonable fees
and disbursements of counsel) incurred by them in connection with the
qualification of the Stock for sale under the laws of such jurisdictions as
CSFB designates and the printing of memoranda relating thereto, for the
filing fee of the National Association of Securities Dealers, Inc. (the
"NASD") relating to the review by the NASD pursuant to its Corporate
Financing Rule, for fees and expenses relating to the listing of the Stock on
the New York Stock Exchange and for expenses incurred in distributing to the
Managers preliminary prospectuses relating to the International Stock and the
International Prospectus (including any amendments and supplements thereto).
(c) The Company and the Selling Stockholder, as applicable, will notify
the Managers promptly upon becoming aware of any material change affecting
any of their respective representations, warranties, agreements or
indemnities herein at any time prior to payment being made to the Company or
the Selling Stockholder on the First Closing Date or any Option Closing Date,
as applicable, and will take such steps as CSFB may reasonably request to
remedy the same.
(d) The Company and the Selling Stockholder will, jointly and
severally, indemnify and hold harmless the Managers against any documentary,
stamp or similar issue tax, including interest and penalties, on the
creation, issue and sale of the International Stock and on the execution of
this Agreement.
(e) The Selling Stockholder agrees with the several Managers that,
except as set forth in or as contemplated by this Agreement, the Selling
Stockholder will not, without the prior written consent of CS First Boston
Corporation, offer, sell, contract to sell or otherwise dispose of any
additional shares of Common Stock or any other capital stock of the Company
(or any securities convertible into or exchangeable for Common Stock or any
other capital stock of the Company) for a period of 180 days after the date
of the commencement of the public offering for the International Stock.
3. Purchase, Sale, Delivery and Payment.
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Company and the Selling Stockholder agree, severally and not jointly, to sell
to each Manager, and each Manager agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholder, at a purchase price of
U.S. $11.58 per share (representing the offering price of U.S. $12.00 per
share less a selling concession of U.S. $0.42 per share) the respective
number of International Firm Shares set forth opposite the name of such
Manager in Schedule A hereto.
The Company and the Selling Stockholder will deliver the International
Firm Shares to CSFB for the accounts of the Managers, at the office of CS
First Boston Corporation, as agent for CSFB, Park Avenue Plaza, New York,
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New York 10055, against payment of the purchase price by certified or
official bank check or checks in New York Clearing House (next day) funds
drawn to the order of the Company in the case of 165,161 International Firm
Shares and to the Selling Stockholder in the case of 1,834,839 International
Firm Shares, at the offices of White & Case, 1155 Avenue of the Americas, New
York, New York 10055 at 10:00 a.m., New York time, on May 13, 1994, or at
such other time not later than five full business days thereafter as CSFB, as
representative of the Managers, and the Company determine, such time being
herein referred to as the "First Closing Date." Payment shall be made in
U.S. dollars. The certificates for the International Firm Shares so to be
delivered will be in such denominations and registered in such names as CSFB
requests and will be made available for checking and packaging at the above
office of CS First Boston Corporation at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CS First Boston Corporation given
to the Selling Stockholder from time to time not more than 30 days subsequent
to the date of the commencement of the U.S. Offering, the Selling Stockholder
agrees to sell to each Manager and each Manager agrees, severally and not
jointly, to purchase from the Selling Stockholder up to 20% of the number of
Optional Shares specified in such notice at the purchase price per share set
forth in the first paragraph of this Section 3 (it being understood that the
U.S. Underwriters, severally and not jointly, are agreeing to purchase up to
80% of the number of Optional Shares specified in such notice pursuant to
Section 3 of the Underwriting Agreement). Such Managers' Optional Shares
that are purchased by the Managers, if any, shall be purchased from the
Company for the account of each Manager in the same proportion as the number
of International Firm Shares set forth opposite such Manager's name in
Schedule A hereto bears to the total number of International Firm Shares
(subject to adjustment by CSFB in its discretion to eliminate fractions).
This option may be exercised by CS First Boston Corporation only for the
purpose of covering over-allotments made in connection with the sale of the
International Firm Shares and the U.S. Firm Shares. No Optional Shares shall
be sold or delivered unless the International Firm Shares and the U.S. Firm
Shares previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Shares or any portion thereof may be
surrendered and terminated at any time upon notice by CS First Boston
Corporation to the Selling Stockholder.
The time for delivery of and payment for any Managers' Optional Shares,
being herein referred to as an "Option Closing Date" (which may be the First
Closing Date), shall be determined by mutual agreement between CSFB and the
Selling Stockholder but shall be not later than five days after written
notice of election to purchase such Optional Shares is given. The Selling
Stockholder will deliver the Managers' Optional Shares being purchased on an
Option Closing Date to CSFB, for the accounts of the Managers, at the above
office of CS First Boston Corporation against payment of the purchase price
therefor by certified or official bank check or checks in New York Clearing
House (next day) funds drawn to the order of the Selling Stockholder, at the
above office of White & Case, on each Option Closing Date. Payment shall be
made in U.S. dollars. The certificates for the Managers' Optional Shares so
to be delivered will be in such denominations and registered in such names as
CSFB, as representative of the Managers, requests and will be made available
for checking and packaging at the above office of CS First Boston Corporation
at a reasonable time in advance of each Option Closing Date.
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The Company and the Selling Stockholder will pay to the Managers as
aggregate compensation for their commitments hereunder and for their services
in connection with the purchase of the International Stock and the management
of the offering thereof, if the sale and delivery of the International Firm
Shares or Managers' Optional Shares, if any, to the Managers provided for
herein is consummated, an amount equal to U.S. $0.30 per share of
International Stock, which may be divided among the Managers in such
proportions as they may determine. Such payment will be made on the First
Closing Date, with respect to the International Firm Shares, and on each
Option Closing Date, with respect to the Managers' Optional Shares to be
purchased on such date, by way of deduction by the Managers of said amount
from the purchase price for the shares of International Stock sold hereunder
on each such date.
4. Offering by Managers.
It is understood that the Managers propose to offer the International
Stock for sale to the public as set forth in the International Prospectus.
Each of the Company, the Selling Stockholder, Clark and each Manager agrees
that it will not, directly or indirectly, purchase, offer, sell or deliver
any International Stock or have in its possession or distribute or publish
the International Prospectus or any other offering material in or from any
country or jurisdiction except under circumstances that will result in
compliance with any applicable laws and regulations and that will not impose
any obligations on the Company, the Selling Stockholder, Clark or any
Manager.
In connection with the distribution of the International Stock, the
Managers, through CS First Boston Corporation, may overallot or effect
transactions in any over-the-counter market or otherwise, which stabilize or
maintain the market prices of the International Stock at levels other than
those which might otherwise prevail, but in such event and in relation
thereto the Managers will act for themselves and not as the agent of the
Company, the Selling Stockholder or Clark, and any loss resulting from
overallotment and stabilization will be borne, and any profit arising
therefrom will be beneficially retained, by the Managers. Such stabilizing,
if commenced, may be discontinued at any time.
5. Conditions Precedent.
The obligations of the several Managers to purchase and pay for the
International Firm Shares on the First Closing Date and the Managers'
Optional Shares on each Option Closing Date, if any, will be subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholder herein, to the accuracy of the statements of Company officers and
the Selling Stockholder made pursuant to the provisions hereof, to the
performance by the Company and the Selling Stockholder of their obligations
hereunder and to the following additional conditions precedent:
(a) CSFB shall have received a letter, dated the date of delivery
thereof (which, if the Effective Time is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the registration statement to
be filed shortly prior to the Effective Time), of Price
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Waterhouse confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating in effect that:
(i) in their opinion the financial statements and schedules
and summary of earnings examined by them and included in the
Registration Statement comply in form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) on the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(1) the information set forth under "Summary Selected
Combined Financial Data," "Selected Combined Financial Data"
or "Capitalization" in the Prospectuses does not agree with
the amounts set forth in the audited consolidated financial
statements from which it was derived or was not determined on
a basis substantially consistent with that of the
corresponding amounts in the audited financial statements
included in the Registration Statement;
(2) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than five days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and
its consolidated subsidiaries or, at the date of the latest
available balance sheet read by such accountants, there was
any decrease in consolidated total assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectuses; or
(3) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period
of corresponding length ended the date of the latest income
statement included in the Prospectuses, in consolidated net
sales, gross income, operating income, income from continuing
operations or income per common share from continuing
operations;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectuses disclose
have occurred or may occur or which are described in such letter;
and
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statement (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the
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internal controls of the Company's accounting system or are derived
directly from such records by analysis or computation) with the
results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter
and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as
otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent to
the execution and delivery of this Agreement, "Registration Statement"
shall mean the registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectuses" shall mean the prospectuses included
in the Registration Statement.
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not
later than 10:00 A.M., New York time, on the date of this Agreement or
such later date as shall have been consented to by CSFB, as
representative of the Managers. If the Effective Time is prior to the
execution and delivery of this Agreement, each of the Prospectuses shall
have been filed with the Commission in accordance with the Rules and
Regulations and Section 2 of this Agreement. The Stock shall have been
approved for listing, subject to official notice of issuance, on the New
York Stock Exchange not later than 10:00 A.M., New York time, on the
date of this Agreement or such later time and date as shall have been
consented to by CSFB, as representative of the Managers. On or prior to
the First Closing Date and each Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company, the Selling Stockholder,
Clark or CSFB, shall be contemplated by the Commission.
(c) CSFB shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of White & Case, counsel for
the Company, to the effect that:
(i) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, except where the failure to
be so qualified or be in good standing would not reasonably be
expected to have a material adverse effect on the condition,
financial or otherwise, or the earnings of the Company and its
subsidiaries, taken as a whole.
(ii) Each subsidiary of the Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in the United States in which such qualification
is required, except where failure to be so qualified or be in good
standing would not reasonably be expected to have a material
adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole.
(iii) Assuming due authorization, execution and delivery by
the Company under Michigan law, this Agreement and the Underwriting
Agreement have each been duly executed and delivered by the
Company.
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(iv) To the best knowledge of such counsel after due inquiry,
except as set forth in the Prospectuses, there are no outstanding
(A) securities or obligations of the Company convertible into or
exchangeable for any shares of capital stock of the Company, (B)
warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations for the
Company to issue such shares, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or
obligations.
(v) Such counsel is not aware, after due inquiry, of (A) any
notice of infringement of or conflict with asserted rights of
others with respect to any licenses or other rights to use the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and proprietary knowledge
(hereinafter collectively referred to as "Proprietary Rights")
presently employed by the Company in connection with the operation
of its business, (B) the assertion by others of any rights
inconsistent with the Proprietary Rights of the Company, or (C) any
facts which such counsel believes would render any Proprietary
Rights of the Company invalid, in each case for clauses (A), (B),
or (C), which singly or in the aggregate, would reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, or in the earnings of the Company and its
subsidiaries, taken as a whole.
(vi) To the best knowledge of such counsel, after due
inquiry, the Company is not (A) in violation of its charter, or (B)
in violation of any law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or
authority applicable to it (including, without limitation, any law,
administrative regulation, ordinance or order relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants), where
such violation would reasonably be expected to have a material
adverse effect on the condition, financial or otherwise, or on the
earnings of the Company and its subsidiaries, taken as a whole. To
the best knowledge of such counsel, after due inquiry, neither the
Company nor any of its subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party
or by which it or its property may be bound which defaults, singly
or in the aggregate, would reasonably be expected to have a
material adverse effect on the condition, financial or otherwise,
or the earnings of the Company and its subsidiaries, taken as a
whole.
(vii) The performance of this Agreement and the Underwriting
Agreement and the consummation of the transactions contemplated
herein and therein will not conflict with or result in or
constitute a breach or violation of, or default under, or result in
the creation or imposition of any lien, charge or
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encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument of which such
counsel is aware, after due inquiry, to which the Company or any of its
subsidiaries is a party or by which it or any of them is bound, or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, which, singly or in the aggregate, would
reasonably be expected to have a material adverse effect on the
condition, financial or otherwise, or the earnings of the Company and
its subsidiaries taken as a whole, nor will such action result in a
breach or violation of any applicable law, any rule, regulation or order
of any governmental agency or authority or any decree or order of any
court having jurisdiction over the Company or any subsidiary of the
Company or any of their properties of which such counsel is aware, after
due inquiry; and the Company has all requisite corporate power and
authority to authorize, issue and sell the International Stock pursuant
to this Agreement.
(viii) To the best knowledge of such counsel, after due
inquiry, (a) there is no action, suit or proceeding before or by
any United States or state of the United States court or
governmental agency or body, now pending, or threatened, against or
affecting the Company or any of its subsidiaries, which is required
to be disclosed in the Registration Statement or the Prospectuses
(other than as disclosed therein) and (b) there are no contracts or
documents of the Company which are required to be described in the
Prospectuses or the Registration Statement or filed as exhibits to
the Registration Statement by the Act or by the Rules and
Regulations which have not been so described or so filed as
exhibits thereto.
(ix) No consent, approval, authorization, or order of, or
filing with, any Person or any governmental agency or authority or
any court is required for the consummation of the transactions
contemplated by this Agreement or the Underwriting Agreement in
connection with the issuance or sale of the Stock, except such as
have been obtained and made and as may be required under state
securities laws.
(x) (a) The Company possesses all licenses, certificates,
authorities or permits (collectively, "permits") issued by the
appropriate governmental or regulatory agencies or authorities that
are necessary to enable it to own, lease and operate its properties
and to carry on its business as presently conducted and such
permits contain no restrictions that are materially burdensome to
the Company or any of its subsidiaries and (b) to the knowledge of
such counsel, after due inquiry, the Company has not received any
notice of proceedings, nor is any proceeding threatened, relating
to the revocation or modification of any such permit which in the
case of (a) or (b), singly or in the aggregate, would reasonably be
expected to have a material adverse effect on the condition,
financial or otherwise, or on the earnings of the Company and its
subsidiaries, taken as a whole.
(xi) The descriptions in the Registration Statement and the
Prospectuses of the Company's charter, by-laws, and preferred stock
purchase rights plan, and of statutes, decrees, legal and
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governmental proceedings and contracts and such other documents as
are described therein (except in Appendix A, as to which such
counsel need express no opinion) are accurate and fairly present
the information required to be shown.
(xii) Except as described in the Registration Statement,
there are no contracts, agreements or understandings known to such
counsel between the Company and any Person granting such Person the
right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to
be owned by such Person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Act.
(xiii) Such counsel has received notification from the
Commission that the Registration Statement was declared effective
under the Act as of the date and time specified in such opinion,
each of the Prospectuses either was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified in such
opinion on the date specified therein or was included in the
Registration Statement (as the case may be), and, to the best of
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has
been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act; the
Registration Statement and the Prospectuses, and each amendment or
supplement thereto, as of their respective effective or issue
dates, appear on their face to comply as to form in all material
respects with the requirements of the Act and the Rules and
Regulations; nothing has come to such counsel's attention to cause
it to believe that either the Registration Statement or the
Prospectuses, or any such amendment or supplement, as of such
respective dates and the date of such opinion, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstance under which
they were made; it being understood that such counsel need express
no opinion as to Appendix A or as to the financial statements or
schedules or other related statistical or financial data contained
in the Registration Statement or the Prospectuses.
Such counsel may state that the opinions expressed by such counsel are
limited to matters under the laws of the State of New York and to the federal
laws of the United States.
(d) CSFB shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of White & Case, counsel for
the Selling Stockholder, to the effect that:
(i) The Managers have obtained from the Selling Stockholder
good and marketable title to the shares of Stock sold by the
Selling Stockholder free and clear, to the best knowledge of such
counsel after due inquiry, of any adverse claims, and the Selling
Stockholder had full corporate right, power and authority to enter
into this Agreement and the Underwriting Agreement and to
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sell, assign, transfer and deliver such shares of Stock hereunder
and thereunder. For purposes of rendering this opinion, such
counsel may state that they have assumed that the Managers have no
notice of any adverse claim regarding such shares of Stock.
(ii) No authorization, approval or consent of, or
registration or qualification with, any Person or any court or
governmental authority or agency is necessary in connection with
the sale of the Stock sold by the Selling Stockholder or the
consummation of the other transactions contemplated by this
Agreement or the Underwriting Agreement, except such as have been
obtained and made and as may be required under state securities
laws.
(iii) The execution, delivery and performance of this
Agreement and the Underwriting Agreement and the consummation of
the transactions contemplated herein and therein have been
authorized by all necessary corporate action by the Selling
Stockholder and will not (A) conflict with or constitute or result
in a breach or violation of any of the terms or provisions of, or
any default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the Selling Stockholder's
properties or assets pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or
instrument of which such counsel is aware after due inquiry to
which the Selling Stockholder is a party or by which the Selling
Stockholder is bound or to which any of the Selling Stockholder's
properties is subject, or (B) result in a breach or violation of
any applicable law or any rule, regulation or order of any
governmental agency or authority or any court having jurisdiction
over the Selling Stockholder or any of its respective properties of
which such counsel is aware after due inquiry or of the charter or
by-laws of the Selling Stockholder which, in the case of either
clause (A) or (B), would interfere with the ability of the Selling
Stockholder to sell to the Managers the Common Stock proposed to be
sold by it pursuant to this Agreement and the Underwriting
Agreement free and clear of any adverse claims.
(iv) This Agreement and the Underwriting Agreement have each
been duly authorized, executed and delivered by the Selling
Stockholder.
(e) CSFB shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of Honigman Miller Schwartz
& Cohn, Michigan counsel for the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Michigan with corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectuses.
(ii) The execution, delivery and performance of this
Agreement and the Underwriting Agreement and the consummation of
the transaction contemplated herein and therein have each been duly
and validly authorized by all necessary corporate action by the
Company and this Agreement and the Underwriting Agreement have each
been duly executed and delivered by the Company.
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(iii) The authorized capital stock of the Company consists of
60,000 shares of series A junior preferred stock, $.01 par value
per share, of which no shares are issued or outstanding, 10,000,000
shares of preferred stock, $.01 par value per share, of which no
shares are issued or outstanding, and 30,000,000 shares of common
stock, $.01 par value per share, of which 11,061,350 shares are
issued and outstanding; all of the shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable and are owned by the
Selling Stockholder; and the capital stock of the Company
(including, without limitation, the Stock) conforms, in all
material respects as to legal matters, to the description thereof
(including, without limitation, statements relating to dividend,
voting, conversion and exchange features) contained under the
caption "Description of Capital Stock" in the Registration
Statement and the Prospectuses, except the description of the
Company's preferred stock purchase rights plan as to which such
counsel need not express any opinion.
(iv) The Stock has been duly authorized, and, in the case of
the Stock being issued by the Company, when issued, and, in the
case of all the Stock, when delivered and paid for pursuant to this
Agreement and the Underwriting Agreement, will be fully paid and
nonassessable, and the shareholders of the Company have no
preemptive rights with respect to the Stock.
(v) The performance of this Agreement and the Underwriting
Agreement will not result in a breach or violation of the terms and
provisions of the charter (or other equivalent instrument) or by-
laws of the Company; and the Company has all requisite corporate
power and authority to authorize, issue and sell the International
Stock as contemplated by this Agreement.
(f) CSFB shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of Trench, Rossi e Watanabe,
Brazilian counsel for the Company, to the effect that:
(i) Each Brazilian subsidiary of the Company (each a
"Brazilian Subsidiary") has been duly incorporated and is validly
existing as a company under the laws of Brazil, has the requisite
power and authority to own, lease and operate its properties and to
conduct its business in Brazil as set forth in its Articles of
Organization; all capital of each Brazilian Subsidiary has been
established as provided in its Articles of Organization, has been
fully paid in, is nonassessable, other than the ability of
Brazilian tax, labor and similar authorities to make assessments
against shares of capital stock for tax, labor and similar claims
(of which there currently are none) and (with the exception of
directors' qualifying shares) is owned by the Company, directly or
indirectly, and, except for directors' qualifying shares with
respect to which such counsel need express no opinion, is owned
free and clear of any mortgage, pledge, lien, encumbrance or claim.
(ii) Such counsel is not aware, after due inquiry, of (A) any
notice of infringement of or conflict with asserted rights of
others with respect to any licenses or other rights to use the
patents, patent rights, licenses, inventions, copyrights, know-
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how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and proprietary knowledge
(hereinafter collectively referred to as "Proprietary Rights") presently
employed by any Brazilian Subsidiary in connection with the operation of
its businesses, (B) the assertion by others of any rights inconsistent
with the Proprietary Rights of the Brazilian Subsidiaries, or (C) any
facts which such counsel believes would render any Proprietary Rights of
the Brazilian Subsidiaries invalid, in each case for clauses (A), (B) or
(C), which singly or in the aggregate, would reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings of the Company and its subsidiaries, taken
as a whole.
(iii) To the best knowledge of such counsel, after due
inquiry, none of the Brazilian Subsidiaries is in violation of its
Articles of Organization or any law, administrative regulation,
ordinance or order of any Brazilian court, governmental agency,
arbitration panel or authority applicable to it, where such
violation would reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or on the earnings
of the Company and its subsidiaries, taken as a whole.
(iv) The performance of this Agreement and the Underwriting
Agreement and the consummation of the transactions contemplated
herein and therein will not conflict with or result in or
constitute a breach or violation of the terms and provisions of the
Articles of Organization of any such subsidiary or, any applicable
Brazilian law, rule, regulation or order of any governmental agency
or authority or any decree or order of any Brazilian court having
jurisdiction over any Brazilian Subsidiary or any of their
properties.
(v) To the knowledge of such counsel, there is no action,
suit or proceeding before or by any Brazilian court or governmental
agency or body, now pending, or, to the best knowledge and
information of such counsel, threatened, against or affecting the
Brazilian Subsidiaries, which is required to be disclosed in the
Registration Statement or the Prospectuses (other than as disclosed
therein); and there are no contracts or documents of the Brazilian
Subsidiaries which are required to be described in the Prospectuses
or the Registration Statement or filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations
which have not been so described or so filed as exhibits thereto.
(vi) The Brazilian Subsidiaries possess all licenses,
certificates, authorities or permits (collectively, "permits")
issued by the appropriate governmental or regulatory agencies or
authorities that are necessary to enable them to own, lease and
operate their respective properties and to carry on their
respective businesses as presently conducted except for such
permits the lack of which either singly or in the aggregate would
not reasonably be expected to have a material adverse effect on the
condition, financial or otherwise, or on the earnings of the
Company and its subsidiaries, taken as a whole.
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(vii) The Company has obtained a Certificate of Investment
from the Central Bank of Brazil reflecting the U.S. dollar amount
of the Company's investment in CAPCO do Brasil as necessary to
permit the Company to repatriate under current Brazilian law up to
the U.S. dollar registered amount shown in such Certificate of
Investment free and clear of any tax, duty, withholding or
deduction in Brazil and to permit CAPCO do Brasil to remit profits
to the Company in U.S. dollars under current Brazilian law (after
payment of Brazilian withholding income tax), and such Certificate
of Investment is in full force and effect; at present, no other
permits, licenses, authorization, certificates or approvals from
any Brazilian governmental authority are necessary to permit
remittances of profits to the Company; and CAPCO do Brasil at
present has access to the floating commercial rate currency market
in Brazil for purchasing U.S. dollars to make remittances of
profits to the Company.
(viii) Confirming the information set forth in Attachment A.
(g) You shall have received an opinion, dated the First Closing
Date, and each Option Closing Date, if any, of Bernard D. Henely,
General Counsel of Clark, to the effect that:
(i) Clark has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware.
(ii) The execution, delivery and performance of this
Agreement and the Underwriting Agreement and the consummation of
the transaction contemplated herein and therein have each been duly
and validly authorized by all necessary corporate action by the
Clark and will not (A) conflict with or constitute or result in a
breach or violation of any of the terms or provisions of, or any
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of Clark's properties or assets
pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which Clark is a
party or by which Clark is bound or to which any of Clark's
properties is subject, or (B) result in a breach or violation of
any applicable law or any rule, regulation or order of any
governmental agency or authority or any court having jurisdiction
over Clark or any of its respective properties or of the charter or
by-laws of Clark which, in the case of either clause (A) or (B),
would interfere with the ability of the Selling Stockholder to sell
to the Underwriters the Common Stock proposed to be sold by it
pursuant to this Agreement and the Underwriting Agreement free and
clear of any adverse claims.
(iii) This Agreement and the Underwriting Agreement have each
been duly authorized, executed and delivered by Clark.
(h) CSFB shall have received from Mayer, Brown & Platt, counsel
for the Managers, such opinion or opinions, dated the First Closing Date
and each Option Closing Date, if any, to the effect that:
(i) The Company is validly existing and in good standing under
the laws of the State of Michigan.
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(ii) The Stock has been duly authorized, and when issued and
delivered and paid for in accordance with the terms of this
Agreement and the Underwriting Agreement, will be validly issued,
fully paid and non-assessable.
(iii) The execution and delivery of this Agreement and the
Underwriting Agreement have been duly and validly authorized by all
necessary corporate action by the Company.
(iv) The Registration Statement became effective under the
Act, and to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Act and no proceedings for that purpose have been
initiated or threatened by the Commission.
(v) The Stock conforms as to legal matters in all material
respects to the descriptions thereof in the Registration Statement
and the Prospectuses.
(vi) The Registration Statement and the Prospectuses, and
each amendment or supplement thereto, as of their respective
effective or issue dates, appear on their face to comply as to form
in all material respects with the requirements of the Act and the
Rules and Regulations; nothing has come to such counsel's attention
to cause it to believe that either the Registration Statement or
the Prospectuses, or any such amendment or supplement, as of such
respective dates and the date of such opinion, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstance under which
they were made; it being understood that such counsel need express
no opinion as to Appendix A or as to the financial statements or
schedules or other related statistical or financial data contained
in the Registration Statement or the Prospectuses.
The Company and the Selling Stockholder shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters. In rendering such opinion, Mayer, Brown &
Platt may rely as to the incorporation of the Company and all other
matters governed by Michigan law upon the opinion of Honigman Miller
Schwartz & Cohn referred to in subsection (e) of this Section.
(i) CSFB shall have received a certificate, dated the First
Closing Date and each Option Closing Date, if any, of the President or
any Vice-President and a principal financial or accounting officer of
the Company in which such officers shall state that the representations
and warranties of the Company in this Agreement are true and correct,
that the Company has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the First Closing Date and each such
Option Closing Date, if any, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of
their knowledge after reasonable investigation, are contemplated by the
Commission and that, subsequent to the date of the most recent financial
statements in the Prospectuses, there has been
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no material adverse change in the financial position or results of
operations of the Company and its subsidiaries as a whole, except as set
forth in or contemplated by the Prospectuses or as described in such
certificate.
(j) CSFB shall have received a certificate, dated the First
Closing Date and each Option Closing Date, if any, of the President or
any Vice-President and a principal financial or accounting officer of
Clark in which such officers shall state that the representations and
warranties of Clark in this Agreement are true and correct, and that,
subsequent to the date of the most recent financial statements in the
Prospectuses, there has been no material adverse change in the financial
position or results of operations of the Company and its subsidiaries as
a whole, except as set forth in or contemplated by the Prospectuses or
as described in such certificate.
(k) CSFB shall have received a certificate, dated the First
Closing Date and each Option Closing Date, if any, of the President or
any Vice-President of the Selling Stockholder in which such officers
shall state that the representations and warranties of the Selling
Stockholder in this Agreement are true and correct and that the Selling
Stockholder has complied in all material respects with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the First Closing Date and each Option Closing
Date, if any.
(l) CSFB shall have received a letter, dated the First Closing
Date, and each Option Closing Date, if any, of Price Waterhouse, to the
effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (a) of this Section, except that the specified
date referred to will be a date not more than five days prior to the
First Closing Date or such Option Closing Date, as the case may be, for
the purposes of this subsection.
(m) The closing of the sale of the U.S. Firm Shares being
purchased by the Underwriters pursuant to the Underwriting Agreement
shall occur concurrently with the closing of the sale of the
International Stock being purchased by the Managers on such date.
The Company, the Selling Stockholder and Clark will furnish you with such
conformed copies of such opinions, certificates, letters and documents as you
reasonably request. If any of the conditions set forth in this Section 5 is
not satisfied on or prior to the First Closing Date or the applicable Option
Closing Date, as applicable, the parties hereto shall be released and
discharged from their respective obligations hereunder (except for the
liability of the Company and the Selling Stockholder for the payment of costs
and expenses as provided in Section 2 of this Agreement and for the
respective obligations of the parties hereto pursuant to Section 6 of this
Agreement). The Managers (or CSFB on their behalf) may, in their discretion,
however, waive compliance with the whole or any part of this Section 5.
6. Indemnification and Contribution.
(a) The Company, the Selling Stockholder and Clark, jointly and
severally, will indemnify and hold harmless each Manager against any losses,
claims, damages or liabilities, joint or several, to which such Manager may
become subject, under the Act or otherwise, insofar as such
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losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, either of the
Prospectuses, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Manager for any legal or other expenses reasonably incurred by
such Manager in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred upon receipt
of request for payment therefor; provided, however, that none of the Company,
the Selling Stockholder or Clark will be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Manager
through CSFB specifically for use therein.
(b) Each Manager will indemnify and hold harmless the Company, the
Selling Stockholder and Clark against any losses, claims, damages or
liabilities to which the Company, the Selling Stockholder or Clark may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, either of the Prospectuses, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Manager through CSFB
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company, the Selling Stockholder or Clark in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred upon receipt of request for
payment therefor.
(c) The indemnity agreement of the Company, the Selling Stockholder and
Clark in this Agreement is subject to the condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission or
alleged omission made in a preliminary prospectus or in the U.S. Prospectus
(or any amendment or supplement thereto), it shall not inure to the benefit
of any Manager if such Manager failed to send or give a copy of the U.S.
Prospectus (as amended or supplemented, if the Company or the Selling
Stockholder (as the case may be) shall have furnished any amendment or
supplement thereto to such Manager, which corrected such untrue statement or
omission that is the basis of the loss, liability, claim, damage or expense
for which indemnification is sought) to the person asserting any such loss,
liability, claim, damage or expense at such time as the U.S Prospectus, as so
amended or supplemented, is required under the Act to be delivered to such
person.
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
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will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
may, unless an actual or potential conflict exists, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one firm for all such indemnified parties. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened action in respect of which any
indemnified party is a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each party which would otherwise be liable to provide
indemnification under subsection (a) or (b) above shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i)(A) if the Company or the Managers are the indemnifying party, in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Managers on the other from the offering of
the U.S. Stock and (B) if the Selling Stockholder or Clark is the
indemnifying party, in such proportion as is appropriate to reflect the
relative benefit received by the Selling Stockholder and Clark, on the one
hand, and the Managers, on the other, from the Offering of the Selling
Stockholder's U.S. Stock, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or the indemnified party failed to
give the notice required under subsection (d) above, then, 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, the Selling
Stockholder or Clark, as the case may be, on the one hand and the Managers on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
Selling Stockholder or Clark, as the case may be, on the one hand and the
Managers on the other shall be deemed to be in the same proportion as the
total net proceeds from the U.S. Offering (before deducting expenses)
received by the Company or the Selling Stockholder, as the case may be, bear
to the total underwriting discounts and commissions received by the Managers.
The relative fault 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, the Selling Stockholder, Clark or the Managers and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
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The Company, the Selling Stockholder, Clark and the Managers agree that it
would not be just and equitable if contribution pursuant to this subsection
(e) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (e). The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to
in the first sentence of this subsection (e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Manager shall be required to contribute any amount in
excess of the amount by which the total price at which the shares of the U.S.
Stock underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Manager has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Managers' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company, the Selling Stockholder and Clark
under this Section shall be in addition to any liability which the Company,
the Selling Stockholder and Clark may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Manager within the meaning of the Act; and the obligations of the Managers
under this Section shall be in addition to any liability which the respective
Managers otherwise have and shall extend, upon the same terms and conditions,
to each director of the Company, to each officer of the Company who has
signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
7. Default of Managers.
If any Manager or Managers default in their obligations to purchase any
International Stock hereunder on either the First Closing Date or any Option
Closing Date and the aggregate number of shares of International Stock that
such defaulting Manager or Managers agreed but failed to purchase does not
exceed 10% of the total number of shares of International Stock, CSFB may
make arrangements satisfactory to the Company and the Selling Stockholder for
the purchase of such shares of International Stock by other Persons,
including any of the Managers, but if no such arrangements are made by such
Closing Date, the non-defaulting Managers shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase on such
Closing Date the International Stock that such defaulting Manager or Managers
agreed but failed to purchase. If any Manager or Managers so default and the
aggregate number of shares of International Stock with respect to which such
default or defaults occur exceeds 10% of the total number of shares of
International Stock you shall use reasonable efforts to make arrangements for
the purchase of such International Stock by other Persons. In the event that
arrangements satisfactory to CSFB, the Company and the Selling Stockholder
for the purchase of such International Stock by other Persons are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Manager, the Company or the
Selling Stockholder, except as provided in Section 8 of this Agreement. As
used in this Agreement, the term "Manager" includes any Person substituted
for a Manager under this Section. Nothing herein will relieve a defaulting
Manager from liability for its default.
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8. Termination.
Notwithstanding anything herein contained, the Managers may, through
CSFB, by notice to the Company and the Selling Stockholder, terminate this
Agreement at any time before payment is made to the Company or the Selling
Stockholder if there shall have occurred (a) a change in U.S. or
international financial, political or economic conditions as would, in the
reasonable judgment of CSFB, be so material and adverse as to make it
impracticable or inadvisable to proceed with the sale of and payment for the
International Stock, or (b) subsequent to the execution and delivery of this
Agreement there shall have occurred (i) any material adverse change, or any
development involving a prospective material adverse change, in or affecting
particularly the business or properties of the Company or its subsidiaries
which, in the reasonable judgment of CSFB, materially impairs the investment
quality of the International Stock; (ii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the over-the-
counter market; (iii) any banking moratorium declared by United States
Federal, New York or Brazilian authorities; or (iv) any outbreak or
escalation of major hostilities in which the United States or Brazil is
involved, any declaration of war by the United States Congress or by
Brazilian authorities or any other substantial national (with respect to the
United States or Brazil) or international calamity or emergency if, in the
reasonable judgment of CSFB, any of the events specified in clauses (b)(ii)
through (iv), singly or together with any other such event, has a material
adverse effect on the condition, financial or otherwise, or in the earnings
of the Company and its subsidiaries, taken as a whole, or on the financial
markets in the United States so as to make it impractical or inadvisable to
proceed with completion of the sale of and payment for the International
Stock.
If the Managers shall elect to terminate this Agreement as provided in
this Section 8, the Company and the Selling Stockholder shall be notified
promptly by CSFB. If this Agreement is terminated pursuant to Section 7 of
this Agreement or this Section 8, or if the purchase of the International
Stock by the Managers is not consummated for any reason permitted under this
Agreement, the Company and the Selling Stockholder shall remain responsible
for the expenses to be paid or reimbursed by them pursuant to Section 2 of
this Agreement and the respective obligations of the Company, the Selling
Stockholder and the Managers pursuant to Section 6 of this Agreement shall
remain in effect, regardless of the cause of such termination or
nonconsummation. If the purchase of the International Stock by the Managers
is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 7 of this Agreement or the
occurrence of any event specified in subsection 8(a) or clause (ii), (iii) or
(iv) of subsection 8(b) of this Agreement, the Company and the Selling
Stockholder will reimburse the Managers for all out-of-pocket expenses
(including fees and expenses of counsel) reasonably incurred by them in
connection with this Agreement and the offering of the International Stock.
9. Survival of Certain Representations and Obligations.
The respective indemnities, agreements, representations, warranties and
other statements of the Company or its officers, the Selling Stockholder,
Clark and the several Managers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any
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investigation, or statement as to the results thereof, made by or on behalf
of any Manager, the Selling Stockholder, Clark, the Company or any of their
respective representatives, officers or directors or any controlling Person,
and will survive delivery of and payment for the International Stock.
10. Notices.
All communications hereunder will be in writing and, if sent to the
Managers, will be mailed, delivered or telegraphed and confirmed to CSFB, One
Cabot Square, London E14 4QJ (Attention: Company Secretary), or, if sent to
the Company, will be mailed, delivered or telegraphed and confirmed to it at
100 North Michigan Street, South Bend, Indiana 46634, Attention: Secretary,
or, if sent to Clark, will be mailed, delivered or telegraphed and confirmed
to it at 100 North Michigan Street, South Bend, Indiana 46634, Attention:
Secretary, or, if sent to the Selling Stockholder, will be mailed, delivered
or telegraphed and confirmed to it at 100 North Michigan Street, South Bend,
Indiana 46634, Attention: Secretary, with a copy in the case of notices to
any of the Company and/or the Selling Stockholder and/or Clark to White &
Case, 1155 Avenue of the Americas, New York, New York 10036, Attention:
Arthur A. Scavone; provided, however, that any notice to a Manager pursuant
to Section 6 of this Agreement will be mailed, delivered or telegraphed and
confirmed to such Manager.
11. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective personal representatives and successors
and the officers and directors and controlling Persons referred to in
Section 6 of this Agreement, and no other Person will have any right or
obligation hereunder.
12. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.
13. Applicable Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York without regard to principles of conflicts
of law.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholder, Clark and the Managers in accordance with its terms.
Very truly yours,
CLARK AUTOMOTIVE PRODUCTS CORPORATION
By:/s/ C. E. Cheesbrough
Name Printed: C. E. Cheesbrough
Title: Vice President, Secretary and
Controller
AUTOMOTIVE PRODUCTS COMPANY
By:/s/ John J. Moran, Jr.
Name Printed: John J. Moran, Jr.
Title: Vice President and Secretary
CLARK EQUIPMENT COMPANY
By:/s/ Bernard D. Henely
Name Printed: Bernard D. Henely
Title: Vice President
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To: CLARK AUTOMOTIVE PRODUCTS CORPORATION
AUTOMOTIVE PRODUCTS COMPANY
CLARK EQUIPMENT COMPANY
We confirm that the foregoing letter correctly sets out the arrangements
agreed among us.
Yours faithfully,
CS FIRST BOSTON LIMITED
By:/s/ Sharon Holmes
Name Printed: Sharon Holmes
MERRILL LYNCH INTERNATIONAL LIMITED
ABN AMRO BANK N.V.
BANQUE BRUXELLES LAMBERT S.A.
CAZENOVE & CO.
DRESDNER BANK AKTIENGESELLSCHAFT
UBS LIMITED
Each by its duly authorized
attorney:
/s/ Sharon Holmes
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Attachment A
In 1986, because of insufficient hard currency reserves at the Brazilian
currency exchange agency (the "Central Bank"), the Brazilian government
temporarily imposed certain restrictions on the timing and flow of certain
currency remittances out of Brazil. This resulted in a delay in the payment
of dividends out of Brazil and may have raised the cost for some companies of
converting local currency to pay dividends to their parents. In 1989, again,
similar temporary restrictions were imposed with similar results. No
restrictions are currently in place. The Central Bank and the Brazilian
government have discretionary powers to restrict currency exchange
transactions in the event of severe hard currency shortages.
Brazilian currency exchange controls were first established in the 1930s.
Today, such controls are limited to general authorizations issued by the
Central Bank in the form of certificates (e.g., certificate of investment)
allowing their respective holders to exchange local currency for U.S. Dollars
and to remit the U.S. Dollars out of Brazil. As an example, if a non-
resident organizes a company in Brazil and funds such company with capital by
wire transferring U.S. Dollars into Brazil, the non-resident obtains from the
Central Bank a certificate of investment showing on its face the amounts
invested, the name of the investor and the name of the local company. In
order to effect dividend remittances out of Brazil, the local company
presents to a local bank the Brazilian currency needed to purchase the U.S.
Dollars together with the original certificate of investment plus the local
corporate documents evidencing the corporate earnings and declaration of
dividends. The local bank then wire transfers the funds out of Brazil
without any intervention or authorization from the Central Bank.
Brazilian banks must obtain a charter from the Central Bank in order to
conduct banking business in Brazil. Most of these banks are also chartered
to conduct currency exchange transactions. There are two basic currency
exchange markets in Brazil: (i) the commercial rate (ii) the floating rate.
The Central Bank does not intervene in the commercial market except in
purchasing and selling currency in an attempt to control rates. Most
commercial and corporate currency exchange is carried out at the commercial
rate, e.g., with regard to capital repatriations, repayment of loans, payment
of dividends or interest, payments for imports. The obligors of such
obligations may freely purchase the necessary currency to make the required
payments abroad by presenting to a bank chartered to deal in currency
exchange a certificate of investment, a certificate of a loan transaction, an
important license, or similar document.
The floating rate market is a free market where banks may buy and sell
currency at freely negotiated rates without any Central Bank interference.
Transactions carried out through the free market are mainly related to travel
and to certain transfers of capital. This market is the first step towards
the creation of a free exchange market in Brazil. The floating rate market
has also been extended to permit the purchase of foreign currency for
Brazilians to invest abroad and for Brazilian companies to establish and
maintain foreign offices.
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SCHEDULE A
Total Number of
International Firm
Manager Shares to be Purchased
CS First Boston Limited . . . . . . . . . . . . 750,000
Merrill Lynch International Limited . . . . . . 750,000
ABN AMRO Bank N.V.. . . . . . . . . . . . . . . 100,000
Bank Bruxelles Lambert S.A. . . . . . . . . . . 100,000
Cazenove & Co. . . . . . . . . . . . . . . . 100,000
Dresdner Bank Aktiengesellschaft. . . . . . . . 100,000
UBS Limited . . . . . . . . . . . . . . . 100,000
Total . . . . . . . . . . . . . . . 2,000,000
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SCHEDULE B
U.S. Underwriters
CS First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Allen & Company Incorporated
Arnhold and S. Bleichroeder, Inc.
Baird, Patrick & Co., Inc.
Robert W. Baird & Co. Incorporated
Bear, Stearns & Co. Inc.
Alex. Brown & Sons Incorporated
Dain Bosworth Incorporated
Dean Witter Reynolds Inc.
Dillon, Read & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
A.G. Edwards & Sons, Inc.
First of Michigan Corporation
Furman Selz Incorporated
Gabelli & Company, Inc.
Garantia Inc.
Goldman, Sachs & Co.
Interstate/Johnson Lane Corporation
Invemed Associates, Inc.
Kemper Securities, Inc.
Kidder, Peabody & Co. Incorporated
Ladenburg, Thalmann & Co. Inc.
C.J. Lawrence/Deutsche Bank Securities Corporation
Lazard Freres & Co.
Legg Mason Wood Walker Incorporated
Lehman Brothers Inc.
McDonald & Company Securities, Inc.
Montgomery Securities
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
Oppenheimer & Co., Inc.
PaineWebber Incorporated
Piper Jaffray Inc.
Prudential Securities Incorporated
RAS Securities Corp.
The Robinson-Humphrey Company, Inc.
Roney & Co.
Salomon Brothers Inc
Smith Barney Shearson Inc.
Stifel, Nicolaus & Company, Incorporated
Wertheim Schroder & Co. Incorporated
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