About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a S-1 SEC Filing, filed by IRI INTERNATIONAL CORP on 9/8/1997.
Next Section Next Section Previous Section Previous Section
IRI INTERNATIONAL CORP - S-1 - 19970908 - UNDERWRITING

UNDERWRITING

Under the terms of, and subject to the conditions contained in, the U.S. Underwriting Agreement, the U.S. Underwriters, for whom Lehman Brothers Inc., Howard, Weil, Labouisse, Friedrichs Incorporated, Prudential Securities Incorporated and Credit Lyonnais Securities (USA) Inc. are acting as representatives (the "Representatives"), have severally agreed to purchase from the Company and the Selling Stockholders, and the Company and the Selling Stockholders have agreed to sell to each U.S. Underwriter, the aggregate number of shares of Common Stock set forth opposite the name of each U.S. Underwriter below:

                                                              NUMBER OF
                        UNDERWRITER                            SHARES
                        -----------                           ---------
Lehman Brothers Inc. .......................................
Howard, Weil, Labouisse, Friedrichs Incorporated............
Prudential Securities Incorporated..........................
Credit Lyonnais Securities (USA), Inc. .....................

                                                              ---------
          Total.............................................  9,600,000
                                                              =========

Under the terms of, and subject to the conditions contained in, the International Underwriting Agreement, the International Managers, for whom Lehman Brothers International (Europe), Credit Lyonnais Securities, Howard, Weil, Labouisse, Friedrichs Incorporated and Prudential-Bache Securities (U.K.) Inc. are acting as representatives (the "Lead Managers"), have severally agreed to purchase from the Company and the Selling Stockholders, and the Company and the Selling Stockholders have agreed to sell to each International Manager, the aggregate number of shares of Common Stock set forth opposite the name of each International Manager below:

                                                              NUMBER OF
                   INTERNATIONAL MANAGERS                      SHARES
                   ----------------------                     ---------
Lehman Brothers International (Europe)......................
Credit Lyonnais Securities..................................
Howard, Weil, Labouisse, Friedrichs Incorporated............
Prudential-Bache Securities (U.K.) Inc. ....................

                                                              ---------
          Total.............................................  2,400,000
                                                              =========

48

The U.S. Underwriters and the International Managers (collectively, the "Underwriters") propose to offer the shares to the public at the initial public offering price set forth on the cover page of this Prospectus, and to certain selected dealers (who may include the U.S. Underwriters and the International Managers) at such price, less a selling concession not in excess of $ per share. The U.S. Underwriters and the International Managers may allow, and such dealers may re-allow, a concession not in excess of $ per share to certain other Underwriters or to certain other brokers and dealers. After the initial offering to the public, the offering price and other selling terms may be changed by the Representatives and the Lead Managers.

The U.S. Underwriting Agreement and the International Underwriting Agreement (collectively, the "Underwriting Agreements") provide that the obligations of the several U.S. Underwriters and the International Managers, respectively, to pay for and accept delivery of the shares of Common Stock offered hereby are subject to the approval of certain legal matters by counsel and certain other conditions. The nature of the U.S. Underwriters' and the International Managers' obligations is such that, if any of the shares of Common Stock are purchased by the U.S. Underwriters pursuant to the U.S. Underwriting Agreement or by the International Managers pursuant to the International Underwriting Agreement, all the shares of Common Stock agreed to be purchased by either the U.S. Underwriters or the International Managers, as the case may be, pursuant to their respective Underwriting Agreements, must be so purchased. The initial public offering price and underwriting discounts and commissions for the U.S. Offering and the International Offering are identical. The closing of the U.S. Offering is a condition to the closing of the International Offering. The closing of the International Offering is a condition to the closing of the U.S. Offering.

The Company and the Selling Stockholders have agreed in the Underwriting Agreements to indemnify the U.S. Underwriters and the International Managers against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the U.S. Underwriters and the International Managers may be required to make in respect thereof.

Each of the Company and the Selling Stockholders has granted to the U.S. Underwriters a 30-day option to purchase up to 720,000 additional shares on the same terms and conditions as set forth above to cover over-allotments, if any. Each of the Company and the Selling Stockholders has granted to the International Managers a similar option to purchase up to 180,000 additional shares to cover over-allotments, if any. To the extent that such options are exercised, each Underwriter will be committed, subject to certain conditions, to purchase a number of the additional shares of Common Stock proportionate to such Underwriter's initial commitment, as indicated in the preceding tables.

The U.S. Underwriters and the International Managers have entered into an Agreement Between U.S. Underwriters and International Managers (the "Agreement Between") pursuant to which each U.S. Underwriter has agreed that, as part of the distribution of the shares of Common Stock (plus any of the shares of Common Stock to cover over-allotments) offered in the U.S. Offering, (a) it is not purchasing any of such shares for the account of anyone other than a U.S. or Canadian Person (as defined below) and (b) it has not offered or sold, and will not offer, sell, resell or deliver, directly or indirectly, any of such shares outside the United States or Canada or to anyone other than a U.S. or Canadian Person. In addition, pursuant to the Agreement Between, each International Manager has agreed that, as part of the distribution of the shares of Common Stock (plus any of the shares of Common Stock to cover over-allotments) offered in the International Offering, (a) it is not purchasing any of such shares for the account of any U.S. or Canadian Person and (b) it has not offered or sold, and will not offer, sell, resell or deliver, directly or indirectly, any of such shares in the United States or Canada or to any U.S. or Canadian Person. Each International Manager has also agreed that it will offer to sell shares of Common Stock only in compliance with all relevant requirements of any applicable laws.

As used herein, "U.S. or Canadian Person" means any resident or citizen of the United States or Canada, any corporation, partnership or other entity created or organized in or under the laws of the United States or Canada or any political subdivision thereof or any estate or trust, the income of which is subject to United States federal income taxation or Canadian income taxation regardless of the source of income (other than a foreign branch of any U.S. or Canadian Person), and includes any United States or Canadian branch of a

49

person who is not otherwise a U.S. or Canadian Person. The term "United States" means the United States of America (including the District of Columbia) and its territories, possessions and other areas subject to its jurisdiction. The term "Canada" means Canada, its provinces, territories and possessions and other areas subject to its jurisdiction.

The foregoing limitations do not apply to stabilization transactions or to certain other transactions specified in the Underwriting Agreements and the Agreement Between, including: (i) certain purchases and sales between the U.S. Underwriters and the International Managers; (ii) certain offers, sales, resales, deliveries or distributions to or through investment advisors or other persons exercising investment discretion; (iii) purchases, offers or sales by a U.S. Underwriter who is also acting as an International Manager or by an International Manager who also is acting as a U.S. Underwriter; and (iv) other transactions specifically approved by the Representatives and the Lead Managers.

Pursuant to the Agreement Between, sales may be made between the U.S. Underwriters and the International Managers of such number of shares of Common Stock as may be mutually agreed upon. Unless otherwise agreed, the price of any shares of Common Stock so sold shall be the public offering price then in effect for the shares of Common Stock being sold by the U.S. Underwriters and the International Managers, less the selling concession allocable to such shares. To the extent that there are sales between the U.S. Underwriters and the International Managers pursuant to the Agreement Between, the number of shares initially available for sale by the U.S. Underwriters or by the International Managers may be more or less than the amount specified on the cover page of this Prospectus.

This Prospectus is not, and under no circumstances is to be construed as, an advertisement or a public offering of shares of Common Stock in Canada or any province or territory thereof. Any offer or sale of shares of Common Stock in Canada may only be made pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer or sale is made.

Each International Manager has represented and agreed that: (i) it has not offered or sold and, prior to the date six months after the latest closing date, will not offer or sell any shares of Common Stock to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 (the "1986 Act") with respect to anything done by it in relation to the shares of Common Stock in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on, and will only issue or pass on, to any person in the United Kingdom any investment advertisement (within the meaning of the 1986 Act) relating to the shares of Common Stock if that person falls within Article II(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on.

No action has been taken or will be taken in any jurisdiction by the Company, the Selling Stockholders or the Underwriters that would permit a public offering of shares of Common Stock in any jurisdiction where action for that purpose is required, other than the United States. Persons into whose possession this Prospectus comes are required by the Company, the Selling Stockholders and the Underwriters to inform themselves about, and to observe any restrictions as to, the offering of shares of Common Stock offered pursuant to the Offering and the distribution of this Prospectus.

Purchasers of the shares of Common Stock offered hereby may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the offering price set forth on the cover page hereof.

The Company and each of its stockholders have agreed, for a period of 180 days from the date of this Prospectus, not to, directly or indirectly, offer, sell or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any Common Stock of the Company, or sell or grant options, rights or warrants with respect to any

50

Common Stock of the Company, without the prior written consent of Lehman Brothers Inc. on behalf of the Representatives and the Lead Managers.

Prior to this Offering, there has been no public market for the Common Stock. The initial public offering price will be negotiated among the Company, the Selling Stockholders, the Representatives and the Lead Managers. Among the factors considered in determining the initial public offering price of the Common Stock, in addition to prevailing market conditions, are recent financial and operating results of the Company, the proposed capital structure, assets and liabilities of the Company, estimates of the business potential and earnings prospects of the Company, the prospects for the industry in which the Company operates, an assessment of the Company's management, consideration of the above factors in relation to market valuation of companies in related businesses and other factors deemed relevant. Additionally, consideration was given to the general status of the securities markets, the market conditions for new offerings of securities, the demand for similar securities of publicly traded companies in related businesses and other relevant factors. The initial public offering price set forth on the cover page of this Prospectus should not, however, be considered an indication of the actual value of the Common Stock. Such price will be subject to change as a result of market conditions and other factors. There can be no assurance that an active trading market will develop for the Common Stock or that the Common Stock will trade in the public market subsequent to the Offering at or above the initial public offering price.

At June 30, 1997, Lehman Commercial Paper Inc. and Strategic Resource Partners Inc., each an affiliate of Lehman Brothers Inc., in the aggregate owned 10% or more of the outstanding subordinated debt of the Company. As a result of such ownership, the National Association of Securities Dealers, Inc. ("NASD") may view this offering as a participation by Lehman Brothers in the distribution in a public offering of securities issued by a company with which Lehman Brothers has a conflict of interest. As a result, this offering is being made pursuant to the provisions of Rule 2720 of the NASD's Conduct Rules. Such provisions require, among other things, that the initial public offering price be no higher than that recommended by a "qualified independent underwriter," who must participate in the preparation of the registration statement and the prospectus and who must exercise the usual standards of "due diligence" with respect thereto. Prudential Securities Incorporated is acting as a qualified independent underwriter in this Offering, and the initial public offering price of the shares is not higher than the price recommended by Prudential Securities Incorporated, which price was determined based on the factors discussed above. In accordance with such Rule 2720, the U.S. Underwriters and the International Managers will not make sales of shares of Common Stock offered hereby to customers' discretionary accounts without the prior specific written approval of such customers.

In connection with its roles as Advisor, Arranger and Syndication Agent under the Senior Credit Facility, Lehman Commercial Paper Inc., an affiliate of Lehman Brothers Inc., was paid customary fees. In connection with its role as an interim lender under the Senior Notes Agreement, Strategic Resource Partners, an affiliate of Lehman Brothers Inc., was paid customary fees.

Until the distribution of the Common Stock is completed, rules of the Securities and Exchange Commission may limit the ability of the Underwriters and certain selling group members to bid for and purchase shares of Common Stock. As an exception to these rules, the Representatives and the Lead Managers are permitted to engage in certain transactions that stabilize the price of the Common Stock. Such transactions may consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Common Stock.

If the Representatives and Lead Managers create a short position in the Common Stock in connection with the Offering, (i.e., if they sell more shares of Common Stock than are set forth on the cover page of this Prospectus), the Representatives and the Lead Managers may reduce that short position by purchasing Common Stock in the open market. The Representatives and the Lead Managers also may elect to reduce any short position by exercising all or part of the Underwriters' Over-Allotment Options described herein.

The Representatives and the Lead Managers also may impose a penalty bid on certain Underwriters and selling group members. This means that if the Representatives or the Lead Managers purchase shares of Common Stock in the open market to reduce such Underwriters' short position or to stabilize the price of the

51

Common Stock they may reclaim the amount of the selling concession from the Underwriters and selling group members who sold those shares as part of this Offering.

In general, purchases of a security for the purpose of stabilization or to reduce a syndicate short position could cause the price of the security to be higher than it might otherwise be in the absence of such purchases. The imposition of a penalty bid might have an effect on the price of a security to the extent that it were to discourage resales of the security by purchasers in this Offering.

Neither the Company, the Selling Stockholders nor any of the Underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Common Stock. In addition, neither the Company, the Selling Stockholders nor any of the Underwriters makes any representation that the Representatives or Lead Managers will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice.

The Company intends to apply to have the Common Stock listed for trading on the NYSE. In order to meet one of the requirements for listing the Common Stock on the NYSE, the U.S. Underwriters will undertake to sell lots of 100 or more shares of Common Stock to a minimum of 2,000 beneficial owners.

BROKERAGE PARTNERS