Document/Exhibit Description Pages Size
1: 8-K Current Report 4 12K
2: EX-1.1 Form of Purchase Agreement 49 195K
3: EX-4.1 Form of Note 7 27K
4: EX-5.1 Opinion and Consent of Godfrey & Kahn, S.C. 1 9K
5: EX-99.1 Press Release Dated 08/12/1999 9 41K
6: EX-99.2 Press Release Dated 08/16/1999 1 8K
________________________________________________________________________________
________________________________________________________________________________
SHOPKO STORES, INC.
(a Wisconsin corporation)
____% Senior Notes due ________
PURCHASE AGREEMENT
Dated: August ____, 1999
________________________________________________________________________________
________________________________________________________________________________
Table of Contents
Page
----
SECTION 1. REPRESENTATIONS AND WARRANTIES....................................3
(a) Representations and Warranties by the Company.......................3
(i) Compliance with Registration Requirements.................3
(ii) Incorporated Documents....................................4
(iii) Independent Accountants...................................4
(iv) Financial Statements......................................4
(v) No Material Adverse Change in Business....................5
(vi) Good Standing of the Company..............................5
(vii) Good Standing of Subsidiaries.............................5
(viii) Capitalization............................................6
(ix) Authorization of Agreement................................6
(x) Authorization of the Indenture............................6
(xi) Authorization of the Officer's Certificate................6
(xii) Authorization of the Securities...........................6
(xiii) Description of the Securities and the Indenture...........7
(xiv) Absence of Defaults and Conflicts.........................7
(xv) Absence of Labor Dispute..................................7
(xvi) Absence of Proceedings....................................8
(xvii) Accuracy of Exhibits......................................8
(xviii) Possession of Intellectual Property.......................8
(xix) Absence of Further Requirements...........................8
(xx) Possession of Licenses and Permits........................9
(xxi) Title to Property.........................................9
(xxii) Compliance with Cuba Act..................................9
(xxiii) Investment Company Act....................................9
(xxiv) Environmental Laws.......................................10
(xxv) Registration Rights......................................10
(b) Officer's Certificates.............................................10
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.......................10
(a) Securities.........................................................10
(b) Payment............................................................11
(c) Denominations; Registration........................................11
SECTION 3. COVENANTS........................................................11
(a) Compliance with Securities Regulations and Commission Requests.....11
(b) Filing of Amendments...............................................12
(c) Delivery of Registration Statements................................12
(d) Delivery of Prospectuses...........................................12
(e) Continued Compliance with Securities Laws..........................13
(f) Blue Sky Qualifications............................................13
(g) Rule 158...........................................................13
(h) Use of Proceeds....................................................13
(i) Restriction on Sale of Securities..................................13
(j) Reporting Requirements.............................................14
(k) DTC................................................................14
(l) Rating.............................................................14
SECTION 4. PAYMENT OF EXPENSES..............................................14
(a) Expenses...........................................................15
(b) Termination of Agreement...........................................15
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS..........................15
(a) Effectiveness of Registration Statement............................15
(b) Opinions of Counsel for Company....................................16
(c) Opinion of Counsel for Underwriters................................16
(d) Officers' Certificates.............................................16
(e) Accountant's Comfort Letter........................................17
(f) Bring-down Comfort Letter..........................................17
(g) Maintenance of Rating..............................................17
(h) Indenture..........................................................17
(i) Additional Documents...............................................17
(j) Termination of Agreement...........................................17
SECTION 6. INDEMNIFICATION..................................................18
(a) Indemnification of Underwriters....................................18
(b) Indemnification of Company, Directors and Officers.................18
(c) Actions against Parties; Notification..............................19
(d) Settlement without Consent if Failure to Reimburse.................19
SECTION 7. CONTRIBUTION.....................................................20
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY...21
SECTION 9. TERMINATION OF AGREEMENT.........................................21
(a) Termination; General...............................................21
(b) Liabilities........................................................22
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.......................22
SECTION 11. NOTICES..........................................................22
SECTION 12. PARTIES..........................................................23
SECTION 13. GOVERNING LAW AND TIME...........................................23
SECTION 14. EFFECT OF HEADINGS...............................................23
SCHEDULES
Schedule A - List of Underwriters.............................Sch. A-1
Schedule B - Pricing Information..............................Sch. B-1
EXHIBITS
Exhibit A-1 Form of Opinion of Godfrey & Kahn, S.C................A-1
Exhibit A-2 Form of Opinion of Richard D. Schepp.................A-10
Exhibit B Form of Comfort Letter................................B-1
Exhibit 1.1
SHOPKO STORES, INC.
(a Wisconsin corporation)
$_____________________
____% Senior Notes due ________
PURCHASE AGREEMENT
August ____, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Lehman Brothers Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
ShopKo Stores, Inc., a Wisconsin corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, Banc of America Securities LLC, Chase
Securities Inc. and Lehman Brothers Inc. are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective principal amounts set forth in said Schedule A of
$_________________ aggregate principal amount of the Company's ___ % Senior
Notes due ______ (the "Securities"). The Securities are to be issued pursuant to
an indenture dated as of July 15, 1993, as supplemented by a First Supplemental
Indenture dated as of May 22, 1998 (the "Indenture"), between the Company and
U.S. Bank Trust National Association (f/k/a First Trust National Association),
as trustee (the "Trustee"). The term "Indenture" as used herein includes the
Pricing Committee Resolutions, dated August ____, 1999, and the Officer's
Certificate, dated
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August __, 1999, establishing the form and terms of the Securities pursuant to
Sections 201 and 301 of the Indenture (the "Officer's Certificate").
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-79763), as amended
by Amendment No. 1 thereto, covering the registration of securities (including
the Securities) under the Securities Act of 1933, as amended (the "1933 Act"),
and the offering thereof from time to time in accordance with Rule 415 of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement, as amended, has been declared
effective by the Commission and the Indenture has been duly qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act"), and the Company has
filed such post-effective amendments thereto as may be required and each such
post-effective amendment has been declared effective by the Commission. Such
registration statement (as so amended, if applicable), including the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the
1933 Act Regulations (the "Rule 430A Information") or Rule 434(d) of the 1933
Act Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement"; and the final prospectus and the final prospectus
supplement relating to the offering of the Securities, in the form first
furnished to the Underwriters by the Company for use in connection with the
offering of the Securities, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall also be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"). If the Company files a registration statement
with the Commission pursuant to Rule 462(b) of the 1933 Act Regulations (the
"Rule 462(b) Registration Statement"), then, after such filing, all references
to "Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement. If the Company elects to rely upon Rule 434 of the 1933
Act Regulations, then all references to "Prospectus" shall also be deemed to
include the final or preliminary prospectus and the applicable term sheet or
abbreviated term sheet (the "Term Sheet"), as the case may be, in the form first
furnished to the Underwriters by the Company in reliance upon Rule 434 of the
1933 Act Regulations, and all references in this Agreement to the date of the
Prospectus shall mean the date of the Term Sheet. A "preliminary prospectus"
shall be deemed to refer to any prospectus, together with any related prospectus
supplement, that omitted, as applicable, the Rule 430A Information, the Rule 434
Information or other information to be included upon pricing in a form of
prospectus or prospectus supplement filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations and was used after such effectiveness and
prior to the execution and delivery of this Agreement. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus, or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "described," "disclosed," "included" or
"stated" in the Registration Statement, any preliminary prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated or deemed to be incorporated by reference in the Registration
Statement, any preliminary prospectus or the Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated or deemed to be incorporated by reference in the Registration
Statement, such preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective, on the date hereof and at the Closing Time, the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and the 1939
Act and the rules and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations"), and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto (including any prospectus wrapper), at the time the Prospectus or
any such amendment or supplement was issued and at the Closing Time,
included or will include an untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Company elects to rely upon Rule 434 of the
1933 Act Regulations, the Company will comply with the requirements of Rule
434. Notwithstanding the foregoing, the representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the
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Company in writing by any Underwriter through Merrill Lynch expressly for
use in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1933 Act, the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations") as applicable, and,
when read together with the other information in the Prospectus, at the
time the Registration Statement became effective, at the time the
Prospectus was issued and at the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement and the Prospectus are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements included and
incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of earnings, shareholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules included in
the Registration Statement and the Prospectus present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data included and incorporated by reference in the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included and
incorporated by reference in the Registration Statement and the Prospectus.
The pro forma and as adjusted information, if any, included or incorporated
by reference in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases
4
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated or described therein, (A) there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (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 could have a Material Adverse Effect, and (C) there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Wisconsin and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement, the Indenture and the Securities; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each subsidiary of the
Company (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus 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,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
capital stock of each such Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable (except by reason of Wisconsin
Statute (S) 180.0622(2)(b)) and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding shares
of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary. The
only subsidiaries of the Company are (1) the subsidiaries listed on Exhibit
21.1 to the Company's Form 10-K for the year ended January 30, 1999 and (2)
the subsidiaries listed on Exhibit 22.1 to Pamida Holdings Corporation's
Form 10-K for the year ended January 31, 1999.
5
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under the
heading "Description of Common Stock - General" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus (or a document incorporated by
reference therein) or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). 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 (except by reason of
Wisconsin Statute (S) 180.0622(2)(b)); none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company.
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) Authorization of the Indenture. The Indenture has been duly
authorized, executed and delivered by the Company and duly qualified under
the 1939 Act and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xi) Authorization of the Officer's Certificate. The Officer's
Certificate has been duly authorized by the Company and, at the Closing
Time, will have been duly executed and delivered by an officer of the
Company and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xii) Authorization of the Securities. The Securities have been
duly authorized by the Company and, at the Closing Time, will have been
duly executed and delivered by the Company and, when authenticated by the
Trustee in the manner provided for in the Indenture, will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law),
and will be in the form contemplated by, and entitled to the benefits of,
the Indenture.
6
(xiii) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and will
be in substantially the respective forms filed or incorporated by
reference, as the case may be, as exhibits to the Registration Statement.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit 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 may be bound, or to which any of the property or
assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture, the Officer's Certificate and
the Securities and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company with its obligations
hereunder and under the Indenture, the Officer's Certificate and the
Securities have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or (except as disclosed in the Registration Statement) Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the Company
or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations.
As used herein, a "Repayment Event" means any event or condition which
gives the holder of any material note, debenture or other evidence of
material indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary.
(xv) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
7
(xvi) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any subsidiary, which is required to be disclosed in the Registration
Statement and the Prospectus (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect (A)
the properties or assets of the Company or any subsidiary or (B) the
consummation of the transactions contemplated by the Company or the
performance of the Company's obligations under the Purchase Agreement, the
Indenture or the Securities; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a party
or of which any of their respective property or assets is the subject which
are not described in the Registration Statement and the Prospectus,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xvii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xviii) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
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 or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, the Securities, the Officer's Certificate
or the Indenture or for the due execution, delivery or performance of the
Indenture and the Securities by the Company, except such as have been
already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations and will be obtained in a timely manner or as may be required
under state securities laws.
8
(xx) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them and the absence of
which, singly or in the aggregate, would result in a Material Adverse
Effect; the Company and its subsidiaries are in compliance with the terms
and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not, singly or in the aggregate, have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Registration Statement and the Prospectus or (b) do not,
singly or in the aggregate, affect the value of such property or interfere
with the use made and proposed to be made of such property by the Company
or any of its subsidiaries in a manner that would have a Material Adverse
Effect; and all of the leases and subleases of the Company and its
subsidiaries and under which the Company or any of its subsidiaries holds
properties described in the Prospectus are in full force and effect, and
neither the Company nor any subsidiary has any notice of any claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to
the continued possession of the leased or subleased premises under any such
lease or sublease except to the extent that the failure to be in full force
and effect, or any such claim, would have a Material Adverse Effect.
(xxii) Compliance with Cuba Act. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(xxiii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act").
9
(xxiv) Environmental Laws. Except as described in the Registration
Statement and the Prospectus and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxv) Registration Rights. Except as disclosed in the Registration
Statement, there are no persons with registration rights or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
The representations in paragraphs (vii) and (viii) regarding the
non-assessibility of securities are subject to the applicability of
Wisconsin Statute (S) 180.0622(2)(b).
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional
10
principal amount of Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York, or at such
other place as shall be agreed upon by the Representatives and the Company, at
9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Securities shall be
in such denominations ($1,000 or integral multiples thereof) and registered in
such names as the Representatives may request in writing at least one full
business day before the Closing Time. The certificates representing the
Securities shall be registered in the name of Cede & Co. pursuant to the Letter
of Representation entered into among the Company, the Trustee and DTC, and shall
be made available for examination and packaging by the Representatives in The
City of New York not later than 10:00 A.M. (Eastern time) on the last business
day prior to the Closing Time.
SECTION 3. Covenants. The Company covenants with each Underwriter as
follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A, Rule 434 or Rule 415, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement or any Rule 462(b) Registration
Statement shall become effective, or any Prospectus, any supplement to the
Prospectus, any Term Sheet or any amended Prospectus shall have been filed, (ii)
of the receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or
11
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus or Term Sheet, as the case may be, transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus or Term Sheet, as the
case may be. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Representatives
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the Representatives or counsel for the Underwriters shall
object; provided, however, that the foregoing provision shall not obligate the
Company to provide the Representatives with copies of any document filed
pursuant to the 1934 Act prior to such filing if such filing occurs after the
Closing Time.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus or
preliminary prospectus supplement as such Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
12
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Restriction on Sale of Securities. During a period of 15 days from the
date of this Agreement, the Company will not, without the prior written consent
of Merrill Lynch, directly or indirectly, issue, offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
13
otherwise transfer or dispose of any debt securities of or guaranteed by the
Company or any securities convertible into or exercisable or exchangeable for
debt securities of or guaranteed by the Company or file any registration
statement under the 1933 Act with respect to any of the foregoing; provided,
however, the Company and any of its subsidiaries may at any time and from time
to time borrow funds under the Credit Agreement, dated as of July 8, 1997, among
the Company, the banks named therein and Banker's Trust Company, as agent, and
any other credit facility existing as of the date hereof.
(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) DTC. The Company will use its reasonable efforts in cooperation with
the Underwriters to permit the Securities to be eligible for clearance and
settlement through DTC.
(l) Rating. The Company shall take all reasonable actions necessary to
enable Moody's Investor's Service Inc. and Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., to provide their respective credit ratings of the
Securities.
SECTION 4. Payment of Expenses.
14
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any transfer taxes or other duties payable upon the sale, issuance or delivery
of the Securities to the Underwriters, (iv) the fees and disbursements of the
Company's outside counsel, accountants and other advisors, (v) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of outside counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of the Trustee, including the reasonable fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of outside counsel to the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of the sale of the Securities, (x) fees and expenses, if any, incurred
in connection with the rating of the Securities, and (xi) the fees and expenses
of any depositary in connection with holding the Securities in book-entry form;
provided, that the aggregate amount of expenses payable by the Company to
counsel for the Underwriters pursuant to (v) and (ix) above shall not exceed
$15,000.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus and
prospectus supplement containing information relating to the description of the
Securities, the specific method of
15
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any
required post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule 430A),
or, if the Company has elected to rely upon Rule 434 of the 1933 Act
Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) Opinions of Counsel for Company. At Closing Time, the Representatives
shall have received the favorable opinions, dated as of Closing Time, of Godfrey
& Kahn, S.C., counsel for the Company in the form set forth in Exhibit A-1
hereto and Richard D. Schepp, Esq., General Counsel of the Company in the form
set forth in Exhibit A-2 hereto. Such letters shall be in form and substance
satisfactory to counsel for the Underwriters. The Representatives shall receive
signed or reproduced copies of such letters for each of the other Underwriters.
Godfrey & Kahn, S.C. may rely on the opinion of Fried, Frank, Harris, Shriver &
Jacobson with respect to matters governed by New York law.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii) (solely
as to preemptive or other similar rights arising by operation of law or under
the charter or by-laws of the Company), (v) through (xii), inclusive, (xiii)
(solely as to the information in the Prospectus under "Description of Common
Stock") and the paragraph immediately following clause (ix) of Exhibit A-1
hereto. In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives.
Fried, Frank, Harris, Shriver & Jacobson may rely on the opinion of Godfrey &
Kahn, S.C. with respect to matters governed by Wisconsin law. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President, the Senior Vice President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement
16
has been issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche LLP a
letter dated such date, substantially in the form of Exhibit C hereto and
otherwise in form and substance satisfactory to the Representatives, together
with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(g) Maintenance of Rating. At Closing Time, the Securities shall be rated
at least Baa by Moody's Investor's Service Inc. and BBB- by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., and the Company shall have
delivered to the Representatives a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Representatives, confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities by any "nationally
recognized statistical rating agency", as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization
shall have publicly announced that it has under surveillance or review its
rating of the Securities or any of the Company's other debt securities.
(h) Indenture. The Company shall have authorized, executed and delivered
the Indenture and the Securities, and a duly authorized officer shall have
executed and delivered the Officer's Certificate, in each case in form and
substance satisfactory to the Representatives and counsel for the Underwriters.
(i) Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy of any
of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Representatives and counsel
for the Underwriters.
(j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time and such termination shall be without
liability of any party to any other party except as provided in
17
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the reasonable fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed
18
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying
19
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the prospectus supplement, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities
20
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 any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities,
or (v) if since the date of this
21
Agreement, there has occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities by any nationally
recognized securities rating agency, or such securities rating agency has
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other debt securities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Securities which it
or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(i) if the aggregate principal amount of the Defaulted Securities does
not exceed 10% of the aggregate principal amount of the Securities to be
purchased hereunder, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof
in the proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting Underwriters, or
(ii) if the aggregate principal amount of the Defaulted Securities
exceeds 10% of the aggregate principal amount of the Securities to be
purchased hereunder, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement either the Representatives or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Amy
22
Lane and Perry Hall; and notices to the Company shall be directed to the Company
at ShopKo Stores, Inc., 700 Pilgrim Way, P.O. Box 19060, Green Bay, WI 54307,
attention of Mr. Paul H. Freischlag, Jr., Senior Vice President and Chief
Financial Officer, with a copy to Richard D. Schepp, Esq., Senior Vice President
and General Counsel.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and, the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
23
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
SHOPKO STORES, INC.
By:_____________________________________
Richard D. Schepp
Senior Vice President,
General Counsel and Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
LEHMAN BROTHERS INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:_________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
24
SCHEDULE A
[Download Table]
Principal
Amount of
Name of Underwriter Securities
------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................
Banc of America Securities LLC..................................
Chase Securities Inc. ..........................................
Lehman Brothers Inc. ...........................................
----------
Total...................................................
==========
Sch. A-1
SCHEDULE B
SHOPKO STORES, INC.
$_______________
____% Senior Notes due ______
1. The initial public offering price of the Securities shall be ___%
of the principal amount thereof, plus accrued interest, if any, from the
date of issuance.
2. The purchase price to be paid by the Underwriters for the
Securities shall be ___% of the principal amount thereof.
3. The interest rate on the Securities shall be ___% per annum.
4. The interest payment dates of the Securities shall be _______ and
_______ of each year, commencing __________.
5. The Company will have the right to redeem the Securities at any
time, in whole or in part, upon at least 30 days' notice mailed to the
registered address of each holder of the Securities. The Company will pay
a redemption price equal to the greater of (1) 100% of the principal amount
of the Securities to be redeemed or (2) the sum of the present values of
the Remaining Scheduled Payments discounted on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months) at a rate equal to the
sum of the Treasury Rate plus twenty-five basis points.
If the Company redeems any Securities, accrued interest on those
Securities will be payable to the redemption date.
"Treasury Rate" means, for any redemption date, the rate per annum
equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security,
selected by a Reference Treasury Dealer appointed by the Company, as having
a maturity comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of those
Securities.
"Comparable Treasury Price" means, for any redemption date, (1) the
average of the Reference Treasury Dealer Quotations for that redemption
date after excluding the highest and lowest of those Reference Treasury
Dealer Quotations, or (2) if the Trustee obtains fewer than five Reference
Treasury Dealer Quotations, the average of all the quotations.
"Reference Treasury Dealer" means any nationally recognized investment
banking firm that is a primary U.S. Government securities dealer.
"Reference Treasury Dealer Quotations" means, for each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by that Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third business day preceding that redemption date.
"Remaining Scheduled Payments" means, for each Security to be
redeemed, the remaining scheduled payments of principal and interest on
that Security that would be due after the related redemption date but for
that redemption. If that redemption date is not an interest payment date
with respect to that Security, the amount of the next succeeding scheduled
interest payment on that Security will be reduced by the amount of the
interest accrued on the Security to the redemption date.
Sch.B-1
Exhibit A-1
FORM OF OPINION OF GODFREY & KAHN, S.C.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
August _____, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Lehman Brothers Inc.
As representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have acted as counsel to ShopKo Stores, Inc., a Wisconsin corporation
(the "Company"), in connection with the public offering by the Company of $_____
in aggregate amount of _____% Senior Notes due _____ (the "Securities"),
pursuant to the terms of the Purchase Agreement dated August __, 1999 (the
"Purchase Agreement"), by and among the Company, and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities
LLC, Chase Securities Inc. and Lehman Brothers Inc. as Representatives of the
several Underwriters named in Schedule A thereto. This opinion is furnished to
you pursuant to Section 5(b) of the Purchase Agreement. Certain capitalized
terms used in this opinion and not defined herein are defined in the Purchase
Agreement.
For purposes of this opinion, we have examined the following:
(a) the Registration Statement on Form S-3 (File No. 333-79763)
relating to the public offering of the Securities and Amendment No. 1
thereto as filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Act"), and evidence satisfactory to us that
the Registration Statement, as amended, became effective under the Act on
July 14, 1999 (the Registration Statement as amended when it became
effective,
A-1
including documents incorporated therein by reference, is hereinafter
referred to as the "Registration Statement," and the Prospectus in the form
filed with the Commission on August ____, 1999 pursuant to Rule 424(b),
including documents incorporated therein by reference, is hereinafter
referred to as the "Prospectus");
(b) an executed copy of the Purchase Agreement;
(c) the Amended and Restated Articles of Incorporation of the
Company, certified by the Secretary of State of the State of Wisconsin;
(d) the Amended and Restated Bylaws of the Company, certified by its
Secretary;
(e) Resolutions of the Board of Directors of the Company adopted on
May 26, 1999; and resolutions of the Pricing Committee of the Board of
Directors adopted at a meeting thereof on August __, 1999, in each case
certified by its Secretary;
(f) the Indenture, dated July 15, 1993, between the Company and U.S.
Bank Trust National Association (f/k/a First Trust National Association),
as supplemented by a First Supplemental Indenture dated as of May 22, 1998
(the "Indenture");
(g) the Officer's Certificate, dated August ____, 1999, establishing
the form and terms of the Securities pursuant to sections 201 and 301 of
the Indenture (the "Officer's Certificate"); and
(h) the Securities.
We have also examined such other documents and reviewed such questions of
law as we have considered necessary and appropriate for purposes of this
opinion.
In rendering our opinions set forth below, we have assumed the authenticity
of all documents submitted to us as originals, the genuineness of all signatures
and the conformity to authentic originals of all documents submitted to us as
copies. With respect to all parties to agreements or instruments relevant hereto
other than the Company, we have assumed that such parties had the requisite
power and authority (corporate or otherwise) to execute, deliver and perform
such agreements or instruments and that such agreements or instruments are the
valid, binding and enforceable obligations of such parties. As to questions of
fact material to our opinion, we have relied upon certificates of officers of
the Company and of public officials.
Based on the foregoing, we are of the opinion 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 Wisconsin (meaning
in Wisconsin that the Company has filed its most recent annual report and has
not filed articles of dissolution).
A-2
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and the Company has corporate power and authority to enter into and
perform its obligations under the Purchase Agreement, the Indenture and the
Securities.
(iii) The capital stock of the Company conforms as to legal matters to the
description thereof set forth in the Prospectus under the caption "Description
of Common Stock - General"; 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 (subject to Wis. Stats. (S)180.0622(2)(b)); and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive rights of any securityholder of the Company arising from any law,
statute, rule, regulation or the Company's charter or bylaws or, to the best of
our knowledge, other similar rights of any securityholder of the Company.
(iv) Each corporate Subsidiary listed on Schedule A to this opinion has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus; except as otherwise disclosed in the
Registration Statement and the Prospectus, all of the issued and outstanding
capital stock of each corporate Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable (subject to Wis. Stats.
(S)180.0622(2)(b), as applicable) and, to the best of our knowledge, is owned by
the Company, directly or through Subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any corporate Subsidiary was issued in
violation of the preemptive rights of any securityholder of such corporate
Subsidiary arising from any law, statute, rule, regulation or the Company's
charter or bylaws or, to the best of our knowledge, similar rights of any
securityholder of such corporate Subsidiary.
(v) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The Indenture has been duly authorized, executed and delivered by the
Company and (assuming the due authorization, execution and delivery thereof by
the Trustee) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(vii) The Officer's Certificate has been duly authorized, executed and
delivered by an officer of the Company in accordance with the terms of the
Indenture.
A-3
(viii) The Securities are in the form contemplated by the Indenture, have
been duly authorized, extended and delivered by the Company and, assuming that
the Securities have been duly authenticated by the Trustee, constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be entitled to the
benefits of the Indenture.
(ix) The Indenture has been duly qualified under the 1939 Act.
(x) The Securities and the Indenture conform in all material respects to
the descriptions thereof contained in the Prospectus.
(xi) The Registration Statement has been declared effective under the
Act; any required filing of the Prospectus pursuant to Rule 424(b) under the Act
has been made in the manner and within the time period required by Rule 424(b);
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the Act and no proceedings for that purpose have been instituted or
are pending or threatened by the Commission.
(xii) The Registration Statement, the Rule 430A Information (as defined in
the preamble to the Purchase Agreement) and the Rule 434 Information (as defined
in the preamble to the Purchase Agreement), as applicable, the Prospectus and
each amendment or supplement to the Registration Statement and Prospectus as of
their respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom and each
Trustee's Statement of Eligibility on Form T-1 (the "Form T-1s"), as to which we
express no opinion) complied as to form in all material respects with the
requirements of the Act.
(xiii) The information in the Prospectus under "Description of Debt
Securities" and "Certain United States Federal Income Tax Consequences," in the
Registration Statement under Item 15, and in the final prospectus supplement
under "Description of the Notes," to the extent that it constitutes matters of
law, summaries of legal matters, the Company's charter and bylaws or legal
proceedings, or legal conclusions, has been reviewed by us and is correct in all
material respects.
(xiv) All descriptions in the Registration Statement and Prospectus of
contracts and other documents to which the Company or any of its Subsidiaries is
a party, excluding general references in the Registration Statement to such
contracts and other documents, are accurate in all material respects.
(xv) To our knowledge, neither the Company nor any Subsidiary is in
violation of its charter or by-laws and no default by the Company or any
subsidiary exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
A-4
mortgage, loan agreement, note, lease or other agreement or instrument that is
filed or incorporated by reference as an exhibit to the Registration Statement
or listed on Schedule B to this opinion (the "Material Contracts"), other than
such defaults which, singly or in the aggregate, would not result in a Material
Adverse Effect.
(xvi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the Act, which have
been obtained, or as may be required under the securities or blue sky laws of
the various states, as to which we express no opinion) is necessary or required
in connection with the due authorization, execution and delivery of the Purchase
Agreement, Officer's Certificate or Indenture or for the offering, issuance or
sale of the Securities.
(xvii) The execution, delivery and performance by the Company of the
Purchase Agreement, the Indenture and the Securities and the consummation by the
Company of the transactions contemplated in the Purchase Agreement and in the
Registration Statement and Prospectus (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement, the Indenture
and the Securities do not and will not, whether with or without the giving of
notice or lapse of time or both, to the best of our knowledge based solely on
our review of agreements and instruments which have been filed or incorporated
by reference as exhibits to the Registration Statement, conflict with or
constitute a breach of, or default or (except as disclosed in the Registration
Statement) Repayment Event (as defined in Section 1(a)(xiii) of the Purchase
Agreement) under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to any of the Material Contracts (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not, singly or in the
aggregate, have a Material Adverse Effect), nor will such action result in any
violation of the provisions of the articles of incorporation or by-laws of the
Company or any Subsidiary or, any applicable law, statute, rule or regulation
known to us.
(xviii) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules therein or omitted
therefor, as to which we express no opinion), when they became effective or were
filed with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the 1933 Act or the 1934 Act, as
applicable, and the rules and regulations of the Commission thereunder.
(xix) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information (except for financial statements and schedules and other financial
data included therein or omitted therefrom, as to which we express no
A-5
opinion), at the time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which we express no
opinion), at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the date hereof, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Our opinions expressed above are limited to the Wisconsin Business
Corporation Law, the laws of the States of Wisconsin and New York, and the
federal laws of the United States of America. Insofar as our opinions above
involve the laws of the State of New York, we have relied with your consent
solely on the opinion of Fried, Frank, Harris, Shriver & Jacobson.
With regard to our opinion as set forth in paragraphs (iii) and (iv) as it
relates to the non-assessability of shares of capital stock of the Company,
section 180.0622(2)(b) of the Wisconsin Statutes provides that shareholders of a
corporation may be assessed up to the par value of their shares to satisfy the
obligations of such corporation to its employees for services rendered, but not
exceeding six months service in the case of any individual employee. Certain
Wisconsin courts have interpreted "par value" to mean the full amount paid by
the purchaser of shares upon issuance thereof. Also, in determining whether
shares of capital stock of the Company are fully paid, we have relied solely on
representations of officers of the Company that the consideration to be received
by the Company in connection with the issuance of any shares of its capital
stock has in fact been received in conformity with the resolutions of the Board
of Directors of the Company authorizing such issuances.
Wherever we indicate that our opinion with respect to the existence or
absence of facts is "to our knowledge" or the like, our opinion is, with your
express permission, based solely on the current actual awareness of facts or
other information of the attorneys currently with our firm who have represented
the Company in connection with the public offering of the Securities and of any
other attorneys currently with our firm whom we have determined are likely to
have knowledge of the matters covered by this opinion.
This opinion is limited to the matters set forth herein, and no opinion may
be inferred or implied beyond the matters expressly contained herein. These
opinions are being provided solely for the purpose of complying with the
requirements of Section 5(b) of the Purchase Agreement and are being furnished
to you solely for the benefit of the Underwriters. This letter may not be used
or relied upon for any other purpose, or furnished to, used by or referred to by
any other party, or copied, quoted or referred to in any report or document, or
filed with any governmental authority, without our prior written consent, except
A-6
that Fried, Frank, Harris, Shriver & Jacobson may rely upon this letter with
respect to matters of Wisconsin law for purposes of delivering their opinion
pursuant to Section 5(c) of the Purchase Agreement.
Very truly yours,
GODFREY & KAHN, S.C.
A-7
Schedule A
----------
Pamida Holdings Corporation
Pamida Inc.
SVS Trucking, Inc.
ProVantage Holdings, Inc.
ShopKo Ventures-Duluth, Inc.
ShopKo Properties, Inc.
Penn-Daniels, Incorporated
ProVantage Health Services, Inc.
ParMark Corporation
PVHS, Inc.
ProVantage Prescription Management Services L.L.C.
Bravell, Inc.
ProVantage Mail Services, Inc.
ProVantage Vision Management Services, Inc.
ProVMed, LLC
A-8
Schedule B
----------
1. Agreement and Plan of Merger, dated as of May 10, 1999, by and among ShopKo
Stores, Inc., ShopKo Merger Corp. and Pamida Holdings Corporation.
A-9
Exhibit A-2
FORM OF OPINION OF RICHARD D. SCHEPP
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
August ____, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Lehman Brothers Inc.
As representatives of the several Underwriters
c/o Merrill Lynch & Company
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
I am Senior Vice President, General Counsel and Secretary of ShopKo Stores,
Inc., a Wisconsin corporation (the "Company"), and, in that capacity, have
assisted the Company in connection with the public offering by the Company of
$_____ in aggregate amount of _____% Senior Notes due _____ (the "Securities"),
pursuant to the terms of the Purchase Agreement dated August __, 1999 (the
"Purchase Agreement"), by and among the Company and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC,
Chase Securities Inc. and Lehman Brothers Inc. as Representatives of the several
Underwriters named in Schedule A thereto. This opinion is furnished to you
pursuant to Section 5(b) of the Purchase Agreement. Certain capitalized terms
used in this opinion and not defined herein are defined in the Purchase
Agreement.
For purposes of this opinion, I have examined such documents and reviewed
such questions of law as I have considered necessary or appropriate. In
rendering the opinions set forth below, I have assumed the authenticity of all
documents submitted to me as originals, the genuiness of all signatures and the
conformity to authentic originals of all documents submitted to me as copies.
With respect to all parties to agreements or instruments relevant hereto other
than the Company and its subsidiaries, I have assumed that each such party had
the requisite power and authority (corporate or otherwise) to execute, deliver
and perform such agreements or instruments and that such agreements or
instruments are the valid, binding and enforceable obligations of each of such
parties. As to questions of fact material to my
A-10
opinion, I have relied upon certificates of officers of the Company and its
subsidiaries and of public officials.
Based on the foregoing, I am of the opinion that:
(i) To the best of my knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or any
Subsidiary is a party, or to which the property of the Company or any Subsidiary
is subject, before or brought by any court or governmental agency or body,
domestic or foreign, of the type required to be disclosed in the Registration
Statement (as defined in the preamble to the Purchase Agreement) which is not so
disclosed, or which might reasonably be expected to result in a Material Adverse
Effect (as defined in Section 1(a)(iv) of the Purchase Agreement) or which might
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated by the Company or the performance of the Company's
obligations under the Purchase Agreement.
(ii) The execution, delivery and performance of the Purchase Agreement,
the Indenture and the Securities and the consummation of the transactions
contemplated in the Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company with its obligations under the
Purchase Agreement, the Indenture and the Securities do not and will not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach 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 judgment, order, writ or
decree, known to me, or any government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries or any
of their respective properties, assets or operations.
(iii) The information in the Form 10-K under the sections entitled
"Business--Government Regulation" and "Legal Proceedings," to the extent that it
constitutes matters of law, summaries of legal matters, the Company's charter
and bylaws or legal proceedings, has been reviewed by me and is correct in all
material respects.
(iv) 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, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(v) Each corporate Subsidiary is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(vi) To the best of my knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.
A-11
(vii) To the best of my knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement other than
those described or referred to therein or filed or incorporated by reference as
exhibits thereto, and the descriptions thereof or references thereto are correct
in all material respects.
(viii) To the best of my knowledge, except as described in the Registration
Statement, there are no persons with registration rights or other similar rights
to have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
(ix) To my knowledge, no default by the Company nor any Subsidiary exists
in the due performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus, other than such defaults, which,
singly or in the aggregate, would not result in a Material Adverse Effect.
Nothing has come to my attention that would lead me to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information (as defined in the preamble to the Purchase Agreement) (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which I express no opinion), at the time such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Prospectus or any amendment or supplement thereto (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which I express no opinion), at the time the Prospectus
was issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time (as defined in Section 2(b) of the Purchase Agreement),
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
My opinions expressed above are limited to the laws of the State of
Wisconsin and the federal laws of the United States of America. With respect to
the opinions herein expressed which relate to laws of a state other than the
State of Wisconsin, I have assumed that the laws of such state are identical in
all respects to those of the State of Wisconsin.
Wherever I indicate that my opinion with respect to the existence or
absence of facts is "to my knowledge" or the like, my opinion is, with your
express permission, based solely on my current actual awareness of facts or
other information.
A-12
This opinion is limited to the matters set forth herein, and no opinion may
be inferred or implied beyond the matters expressly contained herein. These
opinions are being provided solely for the purpose of complying with the
requirements of Section 5(b) of the Purchase Agreement and are being furnished
to you solely for the benefit of the Underwriters. This letter may not be used
or relied upon for any other purpose, or furnished to, used by or referred to by
any other party, or copied, quoted or referenced to in any report or document,
or filed with any governmental authority, without my prior written consent.
Very truly yours,
SHOPKO STORES, INC.
Richard D. Schepp
Senior Vice President, General Counsel
and Secretary
A-13
Exhibit B
[Form of Comfort Letter of Deloitte & Touche]
August ____, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Lehman Brothers Inc.
As representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have audited the consolidated balance sheets of ShopKo Stores, Inc. and
subsidiaries (the "Company") as of January 30, 1999 and January 31, 1998 and the
related consolidated statements of earnings, shareholders' equity and cash flows
for the year (52 weeks) ended January 30, 1999, the year (49 weeks) ended
January 31, 1998 and for the year (52 weeks) ended February 22, 1997. The above
mentioned financial statements are included in the registration statement (No.
333-79763) on Form S-3 filed by the Company with the Securities and Exchange
Commission. We also audited the consolidated financial statement schedule
included in the Company's Form 10-K for the year ended January 30, 1999 (the
"Form 10-K"). Our report with respect to the financial statements referenced
above is included and incorporated by reference in the registration statement,
and our report with respect to the consolidated financial statement schedule is
included in the Form 10-K and incorporated by reference in the registration
statement. The registration statement as amended through the date hereof is
herein referred to as the Registration Statement.
In connection with the Registration Statement:
1. We are independent certified public accountants with respect to the
Company within the meaning of the Securities Act of 1933, as amended
(the "1933 Act"), and the published rules and regulations thereunder.
B-1
2. In our opinion, the audited consolidated financial statements of the
Company audited by us and included and incorporated by reference in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
published rules and regulations thereunder. In addition, the
consolidated financial statement schedule included in the Form 10-K,
when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
3. We have not audited any financial statements of the Company as of any
date or for any period subsequent to January 30, 1999. Although we have
conducted an audit for the year ended January 30, 1999, the purpose (and
therefore the scope) of the audit was to enable us to express our
opinion on the Company's consolidated financial statements as of January
30, 1999 and for the year then ended, but not on the financial
statements for any interim period within that year. Therefore, we are
unable to and do not express any opinion on the unaudited consolidated
balance sheets as of May 1, 1999 or August 1, 1999 or the unaudited
consolidated statements of earnings, cash flows and shareholders' equity
for the fiscal quarters ended May 1, 1999, May 2, 1998, August 1, 1999
and August 2, 1998, included and incorporated by reference in the
Registration Statement, or on the financial position, results of
operations or cash flows as of any date or for any period subsequent to
January 30, 1999.
4. For purposes of this letter, we have read the 1999 minutes of all
meetings of the stockholders and board of directors and committees of
the board of directors of the Company and its subsidiaries as set forth
in the minute books at _______, 1999, officials of the Company having
advised us that the minutes of all such meetings through that date were
set forth therein; we have carried out other procedures with respect to
the Company to [cut-off date] as follows (our work did not extend to the
period from [cut-off date] to [date within three business days of
pricing]).
5. With respect to the fiscal quarters ended May 1, 1999, May 2, 1998,
August 1, 1999 and August 2, 1998, we have
a. Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in Statement on Auditing Standards No. 71,
Interim Financial Information ("SAS 71"), on the Company's unaudited
consolidated balance sheets as of May 1, 1999 and August 1, 1999 and
the related unaudited consolidated statements of earnings, cash flows
and shareholders' equity for the fiscal quarters ended May 1, 1999,
May 2, 1998, August 1, 1999 and August 2, 1998, and
b. Inquired of certain officials of the Company who have responsibility
for financial and accounting matters whether (1) the unaudited
consolidated balance sheet and related consolidated statements of
earnings, cash flows and shareholders' equity
B-2
referred to in 5a above are in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited consolidated financial statements of the Company
included in the Registration Statement, and (2) comply as to form in
all material respects with the applicable accounting requirements of
the 1933 Act and the published rules and regulations thereunder.
c. On the basis of procedures described in paragraphs 5a and 5b above,
nothing came to our attention that caused us to believe that the
financial statements described in paragraph 5a above do not comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act regulations or any
material modifications should be made to such financial statements for
them to be in conformity with generally accepted accounting
principles.
6. Company officials have advised us that no financial statements as of any
date or for any period subsequent to August 1, 1999 are available.
Accordingly, the procedures carried out by us with respect to changes in
financial statement items after August 1, 1999 have, of necessity, been
more limited than those with respect to the periods referred to in 5
above. We have inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether (i) on [cut-
off date], 1999 there was any change in the capital stock, increase in
long-term obligations or total current liabilities, or decrease in total
assets, working capital or total shareholders' equity of the Company in
each case as compared with the amounts shown in the August 1, 1999
balance sheet included in the Registration Statement, or (ii) during the
period from August 1, 1999 to [cut-off date], 1999 there was any
decrease, as compared with the corresponding period in the preceding
year, in total revenues, net sales, income from operations, earnings
before income taxes, net earnings before extraordinary item or net
earnings.. On the basis of these inquiries and our reading of the
minutes as described in 4 above, nothing came to our attention that
caused us to believe that there was any such change, increase or
decrease, except in all instances for any increases or decreases that
the Registration Statement discloses have occurred or may occur.
7. Based upon the procedures set forth above and a reading of the Selected
Historical Consolidated Financial Data included in the Registration
Statement and a reading of the financial statements from which such data
were derived, nothing came to our attention that caused us to believe
that the Selected Historical Consolidated Financial Data included in the
Registration Statement do not comply as to form in all material respects
with the disclosure requirements of Item 301 of Regulation S-K of the
1933 Act, that the amounts included in the Selected Historical
Consolidated Financial Data are not in agreement with the corresponding
amounts in the audited consolidated financial statements for the
respective periods or that the financial statements not included in the
Registration Statement from which certain of such data were derived are
not in conformity with generally accepted accounting principles.
B-3
8. We have compared the information included in or incorporated by
reference in the Registration Statement under selected captions with the
disclosure requirements of Regulation S-K of the 1933 Act and on the
basis of limited procedures nothing came to our attention that caused us
to believe that this information does not comply as to form in all
material respects with the disclosure requirements of Items 302 and 402,
respectively, of Regulation S-K.
9. For purposes of this letter, we have also read the items identified by
you on the attached copies of certain pages of the Registration
Statement and documents incorporated by reference therein and have
performed the following procedures, which were applied as indicated with
respect to the letters explained below:
A. Compared the dollar amounts, descriptions and numbers with the
related information shown in the Company's audited consolidated
financial statements or the notes thereto, for the respective
periods and found them to be in agreement, rounded as appropriate.
B. Agreed to or recomputed based upon information contained within this
registration statement.
C. Compared the dollar amounts, descriptions and numbers with the
related information included in the Company's unaudited consolidated
financial statements or the notes thereto, for the respective
periods and found them to be in agreement, rounded as appropriate.
D. Compared the dollar amounts, percentages, descriptions and numbers
with supporting schedules or report provided or prepared by
employees in the Company's accounting department and found them to
be in agreement. Amounts appearing in such schedule or report were
compared with accounting records of the Company and found to be in
agreement.
E. Recalculated for mathematical accuracy and found to be in agreement.
The amounts or percentages were derived from amounts included in the
Company's audited consolidated financial statements or the notes
thereto for the periods indicated.
F. Recalculated for mathematical accuracy and found to be in agreement.
The amounts or percentages were derived from amounts included in the
Company's unaudited consolidated financial statements for the fiscal
quarters indicated.
G. Compared the dollar amounts, descriptions and number with the
supporting board of directors minutes and found them to be in
agreement.
H. Compared the dollar amounts, descriptions and numbers with the
Pamida Holdings Corporation financial statements for the period
indicated and found
B-4
them to be in agreement.
I. Compared the amount with the ProVantage Health Services, Inc.
("ProVantage") financial statements for the period indicated
contained in amendment No. 4 to Form S-1 registration statement
(No. 333-71743) filed by ProVantage and found them to be in
agreement, rounded as appropriate.
J. Compared with a schedule or report prepared by ProVantage and found
them to be in agreement. Amounts appearing in such schedule or
report were compared with accounting records of ProVantage and found
to be in agreement, rounded as appropriate.
K. Compared the dollar amounts, percentages, descriptions and number
with the supporting schedules or report provided or prepared by
employees in the Company's accounting department and found them to
be in agreement. Amounts appearing in such schedule or report were
compared or reconciled with accounting records of the Company and
found to be in agreement.
L. We compared the information included under the heading "Ratios of
Earnings to Fixed Charges" with the requirements of Regulation S-K,
Item 503(d). We also inquired of certain officials of the Company
who have responsibility for financial and accounting matters whether
this information conforms with the disclosure requirements of Item
503(d) of Regulation S-K. Nothing came to our attention as a result
of the foregoing procedures that caused us to believe that this
information does not conform with the disclosure requirements of
Item 503(d) of Regulation S-K.
M. Recalculated for mathematical accuracy and found to be in agreement,
the amounts or percentages were derived from amounts included in the
Company's audited consolidated financial statements or the notes
thereto for the periods indicated and the unaudited consolidated
financial statements or the notes thereto for the fiscal quarter
indicated.
10. Our audit of the financial statements for the periods referred to in
the introductory paragraph of this letter were comprised of audit tests
and procedures deemed necessary for the purpose of expressing an
opinion on such financial statements taken as a whole. For neither the
periods referred to therein nor any other period did we perform audit
tests for the purpose of expressing an opinion on individual balances
of accounts or summaries of selected transactions such as those
enumerated above and, accordingly, we do not express an opinion
thereon.
11. It should be understood that we make no representations regarding
questions of legal interpretation or regarding the sufficiency for your
purposes of the procedures enumerated above and referenced in the
attached marked pages of the Registration Statement; also, such
procedures would not necessarily reveal any material misstatement of
the amounts or percentages listed in the Registration Statement.
B-5
Further, we have addressed ourselves solely to the foregoing data as
set forth in the Registration Statement and make no representations
regarding the adequacy of disclosure or regarding whether any material
facts have been omitted.
12. This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their
investigation of the affairs of the Company in connection with the
offering of common stock covered by the Registration Statement, and it
is not to be used, circulated, quoted or otherwise referred to for any
purpose, including but not limited to the purchase or sale of the
common stock, nor is it to be filed with or referred to in whole or in
part in the Registration Statement or any other document, except that
reference may be made to it in the Purchase Agreement or in any list of
closing documents pertaining to the offering of the common stock
covered by the Registration Statement.
B-6
Dates Referenced Herein and Documents Incorporated by Reference
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