EXHIBIT 1.1
Synagro Technologies, Inc.
33,000,000 Shares
Common Stock
UNDERWRITING AGREEMENT
dated June 15, 0000
Xxxx xx Xxxxxxx Securities LLC
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
Underwriting Agreement
June 15, 0000
XXXX XX XXXXXXX SECURITIES LLC
XXXXXX BROTHERS INC.
CIBC WORLD MARKETS CORP.
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Introductory. Synagro Technologies, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 9,302,326 shares of its Common
Stock, par value $0.002 per share (the "Common Stock"); and the stockholders of
the Company named in Schedule B (collectively, the "Selling Stockholders")
severally propose to sell to the Underwriters an aggregate of 23,697,674 shares
of Common Stock. The 9,302,326 shares of Common Stock to be sold by the Company
and the 23,697,674 shares of Common Stock to be sold by the Selling Stockholders
are collectively called the "Firm Shares." In addition, the Selling Stockholders
have severally granted to the Underwriters an option to purchase up to an
additional 4,950,000 shares of Common Stock, each Selling Stockholder selling up
to the amount set forth opposite such Selling Stockholder's name in Schedule B,
all as provided in Section 2. The additional 4,950,000 shares to be sold by the
Selling Stockholders pursuant to such option are collectively called the
"Optional Shares." The Firm Shares and, if and to the extent such option is
exercised, the Optional Shares are collectively called the "Shares." Banc of
America Securities LLC ("BAS"), Xxxxxx Brothers Inc. ("Xxxxxx Brothers") and
CIBC World Markets Corp. have agreed to act as representatives of the several
Underwriters (in such capacity, the "Representatives") in connection with the
offering and sale of the Shares.
Prior to the First Closing Date (as defined herein) all of the Company's
outstanding shares of preferred stock will be converted into shares of Common
Stock. Concurrently with the offering of the Shares, the Company will enter into
a new senior secured credit facility (the "New Credit Facility") as described in
the Prospectus under "Use of Proceeds" and "Description of Certain
Indebtedness." In addition, the Company has entered into a dealer manager
agreement (the "Dealer Manager Agreement") with BAS and Xxxxxx Brothers and will
consummate the tender offer and consent solicitation for the Company's 9 1/2%
Senior Subordinated Notes due 2009 (the "Notes") following the completion of the
offering of the Shares.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
Section 1. A. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter as follows:
(a) Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (File No. 333-122351), which contains a
form of prospectus to be used in connection with the public offering and
sale of the Shares. Such registration statement, as amended, including the
financial statements, exhibits and schedules thereto, in the form in which
it was declared effective by the Commission under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to
be a part thereof at the time of effectiveness pursuant to Rule 430A under
the Securities Act, is called the "Registration Statement." Any
registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement," and
from and after the date and time of filing of the Rule 462(b) Registration
Statement the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. Any preliminary prospectus included in the
Registration Statement or filed with the Commission pursuant to Rule 424(a)
under the Securities Act is called a "Preliminary Prospectus." The
prospectus, in the form first used by the Underwriters to confirm sales of
the Shares, is called the "Prospectus." All references in this Agreement to
the Registration Statement, the Rule 462(b) Registration Statement, a
Preliminary Prospectus, the Prospectus, or any amendments or supplements to
any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("XXXXX").
(b) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated or threatened by the Commission.
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Each Preliminary Prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation
S-T under the Securities Act), was identical to the copy thereof delivered
to the Underwriters for use in connection with the offer and sale of the
Shares. Each of the Registration Statement and any post-effective amendment
thereto, at the time it became effective and at all subsequent times during
the Prospectus Delivery Period (as defined below), complied and will comply
in all material respects with the Securities Act and did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Preliminary Prospectus, as of its date, and the
Prospectus, as amended or supplemented, as of its date and at all
subsequent times during the Prospectus Delivery Period, did not and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, or any post-effective amendment thereto, or the Preliminary
Prospectus or the Prospectus, or any amendments or supplements thereto,
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the Representatives
expressly for use therein. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to
the Registration Statement which have not been described or filed as
required.
(c) Offering Materials Furnished to Underwriters. The Company has
delivered or will deliver to counsel for each Representative one complete
manually signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and Preliminary Prospectuses and
the Prospectus, as amended or supplemented, in such quantities and at such
places as the Representatives have reasonably requested for each of the
Underwriters.
(d) Distribution of Offering Material By the Company. The Company has
not distributed and will not distribute, prior to the later of the
Subsequent Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than a
Preliminary Prospectus, the Prospectus or the Registration Statement.
(e) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(f) The Dealer Manager Agreement. The Dealer Manager Agreement has been
duly authorized, executed and delivered by the Company.
(g) Authorization of the Shares. The Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and
sale pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued, fully paid and nonassessable.
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(h) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or
included in the offering contemplated by this Agreement, other than the
Selling Stockholders with respect to the Shares included in the
Registration Statement, except for such rights as have been duly waived.
(i) No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Prospectus: (i) there has been no
material adverse change, or any development that could reasonably be
expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course
of business, of the Company and its subsidiaries, considered as one entity
(any such change is called a "Material Adverse Change"); (ii) the Company
and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, nor
entered into any transaction or agreement not in the ordinary course; and
(iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or
other subsidiaries, any of its subsidiaries on any class of capital stock
or repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
(j) Independent Accountants. PricewaterhouseCoopers LLP, who have
expressed their opinion with respect to the financial statements (which
term as used in this Agreement includes the related notes thereto) filed
with the Commission as a part of the Registration Statement and included in
the Prospectus, are independent public or certified public accountants as
required by the Securities Act and the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder (collectively, the
"Exchange Act").
(k) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and
included in the Prospectus present fairly the consolidated financial
position of the Company and its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The historical financial data set forth in the
Prospectus under the captions "Prospectus Summary--Summary Historical and
Pro Forma Financial Data," "Selected Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration
Statement. The Company and its subsidiaries have no material contingent
obligations that are not disclosed in the Company's financial statements in
the Registration Statement and the Prospectus.
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The pro forma financial statements of the Company and its subsidiaries
and the related notes thereto and other pro forma financial data included
under the caption "Prospectus Summary--Summary Historical and Pro Forma
Financial Data," "Unaudited Pro Forma Financial Data," and elsewhere in the
Prospectus and in the Registration Statement present fairly the information
contained therein, have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
have been properly presented on the basis 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 (in the case of pro forma financial
data).
(l) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its significant subsidiaries (as defined in
Regulation S-X of the Securities Act) has been duly incorporated and is
validly existing as a corporation or other legal entity in good standing
under the laws of the jurisdiction of its incorporation or organization and
has power (corporate or otherwise) and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus
and, in the case of the Company, to enter into and perform its obligations
under this Agreement, the Dealer Manager Agreement and the New Credit
Facility. Each of the Company and its significant subsidiaries 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 for such jurisdictions where the failure to so qualify or
to be in good standing would not, individually or in the aggregate, result
in a Material Adverse Change. Except as described in the Prospectus with
respect to the restrictions set forth in the Credit Agreement (as defined
below), all of the issued and outstanding capital stock of each of the
Company's significant subsidiaries has been duly authorized and validly
issued, is fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. The Company does not own or
control, directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed in Exhibit 21 of the Registration
Statement.
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(m) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in
the Prospectus). The Common Stock (including the Shares) conforms in all
material respects to the description thereof contained in the Prospectus.
All of the issued and outstanding shares of Common Stock (including the
shares of Common Stock owned by Selling Stockholders) have been duly
authorized and validly issued, are fully paid and nonassessable and have
been issued in compliance with federal and state securities laws. The
conversion of all of the Company's shares of preferred stock into shares of
Common Stock has occurred in accordance with the provisions governing the
preferred stock. None of the outstanding shares of Common Stock were issued
in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than those
accurately described in the Prospectus. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights granted thereunder, set forth in the Prospectus
accurately and fairly presents, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and
rights.
(n) The Transactions. All necessary corporate action has been duly and
validly taken by the Company to authorize the consummation of the tender
offer and consent solicitation for the Notes as described in the Prospectus
under "Summary--The Transactions."
(o) Listing. The Shares have been approved for listing on the Tier I of
the Pacific Exchange, Incorporated ("Tier I of the Pacific Exchange"),
subject to official notice of issuance.
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(p) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required. Neither the Company nor any of its subsidiaries is
in violation of (i) its charter or by-laws or is in default (or, with the
giving of notice or lapse of time, would be in default) ("Default") under
any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound
(including, without limitation, the Notes or the related indenture (the
"Indenture"), dated as of April 17, 2002, by and among the Company, certain
Guarantors of the Company and Xxxxx Fargo Bank Minnesota, National
Association, as trustee, and the revolving loans and letters of credit
under the Third Amended and Restated Credit Agreement (the "Credit
Agreement"), dated as of April 8, 2002, by and among the Company, Bank of
America, N.A. and various financial institutions), or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(each, an "Existing Instrument") (assuming with respect to the Credit
Agreement that it is refinanced as described in the Prospectus), except for
such Defaults with respect to Existing Instruments as would not reasonably
be expected to result in a Material Adverse Change or (ii) any law, rule or
regulation, or any order of any court or of any other governmental agency
or instrumentality having jurisdiction over the Company or any of its
subsidiaries or affiliates or any of its or their respective properties or
assets. The Company's execution, delivery and performance of this
Agreement, the Dealer Manager Agreement, the New Credit Facility and
consummation of the transactions contemplated hereby, thereby and by the
Prospectus (including, without limitation, the conversion of all of the
Company's shares of preferred stock into shares of Common Stock and the
consummation of the tender offer and consent solicitation for the Notes)
(i) have been duly authorized by all necessary corporate action and will
not result in any violation of the provisions of the charter or by-laws of
the Company or any subsidiary, (ii) will not conflict with or constitute a
breach of, or Default or a Debt Repayment Triggering 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 of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument (assuming with respect to the Credit Agreement that it
is refinanced as described in the Prospectus) and (iii) will not result in
any violation of any law, administrative regulation or administrative or
court decree applicable to the Company or any subsidiary except with
respect to clause (ii) and (iii) as would not reasonably be expected to
result in a Material Adverse Change. No consent, approval, authorization or
other order of, or registration or filing with, any court or other
governmental or regulatory authority or agency, is required for the
Company's execution, delivery and performance of this Agreement, the Dealer
Manager Agreement, the New Credit Facility and consummation of the
transactions contemplated hereby, thereby and by the Prospectus (including,
without limitation, the conversion of all of the Company's shares of
preferred stock into shares of Common Stock and the consummation of the
tender offer and consent solicitation for the Notes), except such as have
been obtained or made by the Company and are in full force and effect under
the Securities Act, applicable state securities or blue sky laws and from
the NASD, Inc. (the "NASD"). As used herein, a "Debt Repayment Triggering
Event" means any event or condition which gives, or with the giving of
notice or lapse of time would give, the holder of any note, debenture or
other evidence of 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 of its
subsidiaries.
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(q) No Material Actions or Proceedings. Except as otherwise disclosed in
the Prospectus, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened
(i) against or affecting the Company or any of its subsidiaries, (ii) which
has as the subject thereof any officer or director of, or property owned or
leased by, the Company or any of its subsidiaries or (iii) relating to
environmental or discrimination matters, where in any such case (A) there
is a reasonable possibility that such action, suit or proceeding might be
determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No
material labor dispute with the employees of the Company or any of its
subsidiaries or, to the knowledge of the Company, with the employees of any
principal supplier of the Company, exists or, to the best of the Company's
knowledge, is threatened or imminent.
(r) Intellectual Property Rights. The Company and its subsidiaries own
or have rights to use sufficient trademarks, trade names, patent rights,
copyrights, domain names, licenses, approvals, trade secrets and other
similar rights (collectively, "Intellectual Property Rights") reasonably
necessary to conduct the business of the Company and its subsidiaries as
now conducted; and the expected expiration of any of such Intellectual
Property Rights would not result in a Material Adverse Change. Neither the
Company nor any of its subsidiaries has received any notice of infringement
or conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change. The Company is not a party to or bound
by any options, licenses or agreements with respect to the Intellectual
Property Rights of any other person or entity that are required to be set
forth in the Prospectus and are not described in all material respects.
None of the technology employed by the Company has been obtained or is
being used by the Company in violation of any contractual obligation
binding on the Company or, to the Company's knowledge, any of its officers,
directors or employees or otherwise in violation of the rights of any
persons.
(s) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the Company
nor any subsidiary has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, could result in
a Material Adverse Change.
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(t) Title to Properties. Except as otherwise disclosed in the Prospectus
under "Description of Certain Indebtedness--The New Credit Facility" and
"--Other Indebtedness," the Company and each of its subsidiaries has good
and marketable title to all the real property and good title to all other
properties and assets reflected as owned in the financial statements
referred to in Section 1(A)(k) above, in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely affect the
value of such property and do not materially interfere with the use made or
proposed to be made of such property by the Company or such subsidiary. The
real property, improvements, equipment and personal property held under
lease by the Company or any subsidiary are held under valid and enforceable
leases, with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real property,
improvements, equipment or personal property by the Company or such
subsidiary.
(u) Tax Law Compliance. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns or
have received timely extensions thereof and have paid all taxes required to
be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them (except in the case
where failure to file or pay would not reasonably be expected to result in
a Material Adverse Change). The Company has made adequate charges, accruals
and reserves in the applicable financial statements referred to in Section
1(A)(k) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the
Company or any of its subsidiaries has not been finally determined.
(v) Additional Tax Law Requirements. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state,
or any political subdivision thereof, required to be paid in connection
with the execution and delivery of this Agreement or the issuance by the
Company or sale by the Company of the Shares. There are no tax audits or
investigations pending, which if adversely determined would have
individually or in the aggregate a Material Adverse Change, nor are there
any material proposed additional tax assessments against the Company or any
of its subsidiaries which would have individually or in the aggregate a
Material Adverse Change.
(w) Company Not an "Investment Company." The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after
receipt of payment for the Shares, consummation of the transactions as
described in the Prospectus under "Summary--The Transactions" and
application of the proceeds as described in the Prospectus under "Use of
Proceeds" will not be, an "investment company" within the meaning of the
Investment Company Act and will conduct its business in a manner so that it
will not become subject to the Investment Company Act.
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(x) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are
adequate and customary for their businesses including, but not limited to,
policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism
and earthquakes. The Company has no reason to believe that it or any
subsidiary will not be able (i) to renew its existing insurance coverage as
and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company nor any subsidiary has been denied
any insurance coverage which it has sought or for which it has applied,
except for any denials that would not result in a Material Adverse Change.
(y) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares. The Company acknowledges that the Underwriters may
engage in passive market making transactions in the Shares on the Nasdaq
SmallCap Market or Tier I of the Pacific Exchange, as the case may be, in
accordance with Regulation M under the Exchange Act.
(z) Related Party Transactions. No business or commercial relationship
or transaction, direct or indirect, exists between or among the Company or
any of its affiliates on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
affiliates on the other hand which is required to be described in the
Prospectus, which is not so described pursuant to Regulation S-K of the
Commission.
(aa) Internal Controls and Procedures. The Company maintains (i)
effective internal control over financial reporting as defined in Rule
13a-15 under the Exchange Act and (ii) a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions
are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (C) access to
assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
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(bb) No Material Weakness in Internal Controls. Except as disclosed in
the Prospectus, since the end of the Company's most recent audited fiscal
year, there has been (i) no material weakness in the Company's internal
control over financial reporting (whether or not remediated) and (ii) no
change in the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
(cc) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge,
any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the
character required to be disclosed in the Prospectus.
(dd) No Conflict with Money Laundering Laws. The operations of the
Company and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all applicable
jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines issued, administered or enforced
by any governmental agency (collectively, the "Money Laundering Laws") and
no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Money Laundering Laws is pending or,
to the best knowledge of the Company, threatened.
(ee) No Conflict with OFAC Laws. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Company will not directly or indirectly use the proceeds of the offering,
or lend, contribute or otherwise make available such proceeds, to any
subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
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(ff) Compliance with Environmental Laws. Except as otherwise disclosed
in the Prospectus or as would not, individually or in the aggregate, result
in a Material Adverse Change (i) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or 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 use and disposal
of sewage sludge or biosolids, emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous, dangerous, toxic, biohazardous or infectious
substances, materials, constituents or wastes or toxins, viruses,
infectious disease agents, or pathogens, petroleum and petroleum products
and their breakdown constituents, or any other substance exhibiting a
hazardous waste characteristic including without limitation corrosivity,
ignitability, toxicity, or reactivity, whether solid, gaseous or liquid in
nature (collectively, "Materials of Environmental Concern"), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment
Concern (collectively, "Environmental Laws"), which violation includes, but
is not limited to, noncompliance with any permits, licenses, registrations
or other governmental authorizations (collectively, "Environmental
Permits") required for the operation of the business of the Company or its
subsidiaries under applicable Environmental Laws, or noncompliance with the
terms and conditions thereof, nor has the Company or any of its
subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that the Company or any of its subsidiaries is in violation of any
Environmental Law; (ii) there is no claim, action or cause of action filed
with a court or governmental authority, no investigation with respect to
which the Company has received written notice, and no written notice by any
person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising
out of, based on or resulting from the presence, or release into the
environment, of any Material of Environmental Concern at any location
owned, leased or operated by the Company or any of its subsidiaries, now or
in the past (collectively, "Environmental Claims"), pending or, to the best
of the Company's knowledge, threatened against the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; (iii) there are currently no, and are
no foreseeable, material expenditures payable by the Company or by any of
its subsidiaries, in order to maintain any Environmental Permit, comply
with Environmental Laws or remediate, clean up, xxxxx or remove any
Material of Environmental Concern on any real property currently or
formerly owned, operated or leased by any of them; and (iv) to the best of
the Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law.
12
(gg) ERISA Compliance. Except as would not reasonably be expected to
result in a Material Adverse Change, the Company and its subsidiaries and
any "employee benefit plan" (as defined under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company, its subsidiaries or, solely in the case of an
employee benefit plan subject to Title IV of ERISA, their "ERISA
Affiliates" (as defined below) are in compliance with ERISA. "ERISA
Affiliate" means, with respect to the Company or a subsidiary, any member
of any group of organizations described in Sections 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code") of which the Company or
such subsidiary is a member. Except as would not reasonably be expected to
result in a Material Adverse Change, no "reportable event" (as defined
under ERISA) has occurred or is reasonably expected to occur with respect
to any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. Except as would not
reasonably be expected to result in a Material Adverse Change, neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan"
or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Except as would not
reasonably be expected to result in a Material Adverse Change, each
"employee benefit plan" established or maintained by the Company or its
subsidiaries that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal
Revenue Service and, to the Company's best knowledge, nothing has occurred,
whether by action or failure to act, which would reasonably be expected to
cause the loss of such qualification.
(hh) New Credit Facility. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the New
Credit Facility. The New Credit Facility has been duly and validly
authorized by the Company and when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the other
parties thereto other than the Company), will constitute valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights
of creditors generally, and subject to general principles of equity. The
New Credit Facility conforms in all material respects to the description
thereof in the Registration Statement and the Prospectus.
13
(ii) Brokers. There is no broker, finder or other party that is entitled
to receive from the Company any brokerage or finder's fee or other fee or
commission as a result of any transactions contemplated by this Agreement.
(jj) NASD. To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's
officers, directors or 5% or greater security holders, except as set forth
in the Registration Statement.
(kk) Industry Data. The market-related and customer-related data and
estimates and other industry-related data included in the Preliminary
Prospectus and the Prospectus are based on or derived from sources which
the Company believes to be reliable and accurate.
(ll) No Termination of Contracts. Neither the Company nor any of its
subsidiaries has sent or received any notice indicating the termination of
or intention to terminate any of the contracts or agreements referred to or
described in the Registration Statement or the Prospectus, or filed as an
exhibit to the Registration Statement, and no such termination has been
threatened by the Company, any subsidiary or any other party to any such
contract or agreement.
(mm) No Sale or Issuance of Common Stock. Except as described in the
Registration Statement and the Prospectus, the Company has not sold or
issued any shares of Common Stock during the six-month period preceding the
date of the Prospectus, including any sales pursuant to Regulation D or
Regulation S of the Securities Act.
(nn) Forward-Looking Information. The information contained in the
Registration Statement and the Prospectus regarding the Company's
expectations, plans and intentions, and any other information that
constitutes "forward-looking" information within the meaning of the
Securities Act and the Exchange Act were made by the Company on a
reasonable basis and reflect the Company's good faith belief and/or
estimate of the matters described therein.
(oo) Dividend Policy and Restrictions. The statements (including the
assumptions described therein) included in the Registration Statement and
the Prospectus under the caption "Dividend Policy and Restrictions" (i) are
within the coverage of Rule 175(b) under the Securities Act to the extent
such data constitute forward-looking statements as defined in Rule 175(c),
(ii) were made by the Company with a reasonable basis and reflect the
Company's good faith estimate of the matters described therein and (iii)
are based upon the Company's assessment and analysis of all material
factors it deems relevant and the application of assumptions which it deems
reasonable after due and proper consideration of relevant facts.
14
(pp) Backlog. The information contained under the caption
"Business--Backlog" in the Prospectus is true and correct.
(qq) No Insolvency. Immediately after the consummation of the
transactions contemplated by this Agreement, the Dealer Manager Agreement
and the New Credit Facility, the fair value and present fair saleable value
of the assets of the Company and its subsidiaries taken as a whole will
exceed its stated liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities); and the Company and its
subsidiaries taken as a whole is not, nor will it be, after giving effect
to the execution, delivery and performance of this Agreement, the Dealer
Manager Agreement and the New Credit Facility and the consummation of the
transactions contemplated hereby and thereby, left with unreasonably small
capital with which to carry on its business as it is proposed to be
conducted, unable to pay its debts (contingent or otherwise) as they
mature, or otherwise insolvent.
(rr) Criminal or Bankruptcy Proceedings. To the knowledge of the
Company, after due inquiry, none of the directors or officers or
shareholders of the Company listed under "Principal and Selling
Stockholders" in the Prospectus is or has ever been subject to prior
criminal or bankruptcy proceedings in the United States or elsewhere during
the past five years (excluding minor traffic violations and other similar
minor offenses).
(ss) Xxxxxxxx-Xxxxx Act Compliance. The Company is and, on the First
Closing Date and the Subsequent Closing Date, if any, will be, in
compliance with the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002
that are effective and is actively taking steps to ensure that it will be
in compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act of
2002 upon the effectiveness of such provisions.
(tt) Description of Laws and Documents. The statements in the Prospectus
under the captions "Business--Federal, State and Local Government
Regulation," "Business--Permitting Process," "Business--Patents and
Proprietary Rights," "Certain Relationships and Related Transactions,"
"Description of Certain Indebtedness," "Description of Capital Stock,"
"Shares Eligible for Future Sale," "Material United States Federal Income
Tax Considerations" and "Underwriting," insofar as they purport to describe
the material provisions of the laws and documents referred to therein, are
accurate summaries in all material respects.
15
(uu) Registration and Quotation of Common Stock. The Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or listing of the
Common Stock on the Nasdaq SmallCap Market or Tier I of the Pacific
Exchange, except as described in the Prospectus with respect to the
application to list the Common Stock on the Tier I of the Pacific Exchange,
nor has the Company received any notification that the Commission, the
Nasdaq SmallCap Market or the Pacific Exchange is contemplating terminating
such registration or quotation.
Any certificate signed by an officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
The Company acknowledges that the Underwriters and, for purposes of the
opinions to be delivered pursuant to Section 5 hereof, counsel to the Company
and counsel to the Underwriters, will rely upon the accuracy and truthfulness of
the foregoing representations and hereby consents to such reliance.
B. Representations and Warranties of the Selling Stockholders. Each Selling
Stockholder represents, warrants and covenants to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly authorized
(if applicable), executed and delivered by or on behalf of such Selling
Stockholder.
(b) The Custody Agreement and Power of Attorney. Each of the (i) Custody
Agreement signed by such Selling Stockholder and J. Xxxx Xxxxxxx and Xxxxx
X. Xxxxxx XX, as custodians (each, the "Custodian"), relating to the
deposit of the Shares to be sold by such Selling Stockholder (the "Custody
Agreement") and (ii) Power of Attorney appointing J. Xxxx Xxxxxxx and Xxxxx
X. Xxxxxx XX as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Selling Stockholder has been duly authorized (if
applicable), executed and delivered by such Selling Stockholder.
(c) Title to Shares to be Sold; All Authorizations Obtained. Such
Selling Stockholder has, and on the First Closing Date and the Subsequent
Closing Date (as defined below) will have, valid title to, or a valid
"security entitlement" within the meaning of Section 8-102(a)(17) of the
New York Uniform Commercial Code (the "UCC") in respect of, the Shares (or
the preferred stock convertible into Shares, as the case may be) which may
be sold by such Selling Stockholder (free and clear of all security
interests, adverse claims and liens) pursuant to this Agreement on such
date and the legal right and power, and all authorizations and approvals
required by law and under other organizational documents to enter into this
Agreement and its Custody Agreement and Power of Attorney, to sell,
transfer and deliver all of the Shares which may be sold by such Selling
Stockholder pursuant to this Agreement and to comply with its other
obligations hereunder and thereunder. Upon payment for the Shares to be
sold by such Selling Stockholder pursuant to this Agreement, delivery of
such Shares, as directed by the Underwriters, to Cede & Co. ("Cede") or
such other nominee as may be designated by The Depository Trust Company
("DTC"), registration of such Shares in the name of Cede or such other
nominee and the crediting of such Shares on the books of DTC to securities
accounts of the Underwriters (assuming that neither DTC nor any such
Underwriter has notice of any adverse claim (within the meaning of Section
8-105 of the UCC) to such Shares), (A) DTC shall be a "protected purchaser"
of such Shares within the meaning of Section 8-303 of the UCC, (B) under
Section 8-501 of the UCC, the Underwriters will acquire a valid security
entitlement in respect of such Shares and (C) no action based on any
"adverse claim," within the meaning of Section 8-102(a)(1) of the UCC, to
such Shares may be asserted against the Underwriters with respect to such
Shares.
16
(d) Non-Contravention; No Further Authorizations or Approvals Required.
The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement and the Power of Attorney will not
contravene or conflict with, result in a breach of, or constitute a Default
under, or require the consent of any other party to, the charter or
by-laws, or other organizational documents of such Selling Stockholder (if
applicable) or any other agreement or instrument to which such Selling
Stockholder is a party or by which it is bound or under which it is
entitled to any right or benefit, any provision of applicable law or any
judgment, order, decree or regulation applicable to such Selling
Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the consummation by such Selling Stockholder of the
transactions contemplated in this Agreement, except such as have been
obtained or made and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the NASD.
(e) No Registration or Other Similar Rights. Such Selling Stockholder
does not have any registration or other similar rights to have any equity
or debt securities registered for sale by the Company under the
Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as have been exercised or waived in
writing or are described in the Prospectus under "Certain Relationships and
Related Transactions."
17
(f) No Further Consents, etc. Except for the (i) exercise by such
Selling Stockholder of certain registration rights described in the
Prospectus (which registration rights have been duly exercised pursuant
thereto), (ii) consent of such Selling Stockholder to the respective number
of Shares to be sold by all of the Selling Stockholders pursuant to this
Agreement and (iii) waiver by certain other holders of Common Stock of
certain registration rights pursuant to such registration rights, no
consent, approval or waiver is required under any instrument or agreement
to which such Selling Stockholder is a party or by which it is bound or
under which it is entitled to any right or benefit, in connection with the
offering, sale or purchase by the Underwriters of any of the Shares which
may be sold by such Selling Stockholder under this Agreement or the
consummation by such Selling Stockholder of any of the other transactions
contemplated hereby.
(g) Disclosure Made by Such Selling Stockholder in the Prospectus. All
information furnished by or on behalf of such Selling Stockholder in
writing expressly for use in the Registration Statement and Prospectus is,
and on the First Closing Date and the Subsequent Closing Date will be,
true, correct, and complete in all material respects, and does not, and on
the First Closing Date and the Subsequent Closing Date will not, contain
any untrue statement of a material fact or omit to state any material fact
necessary to make such information not misleading. Such Selling Stockholder
confirms as accurate the number of shares of Common Stock set forth
opposite such Selling Stockholder's name in the Prospectus under the
caption "Principal and Selling Stockholders" (both prior to and after
giving effect to the sale of the Shares).
(h) No Price Stabilization or Manipulation. Such Selling Stockholder has
not taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares.
(i) Confirmation of Completeness of Disclosure. Such Selling Stockholder
is not prompted to sell shares of Common Stock by any information
concerning the Company which is not set forth in the Registration Statement
and the Prospectus.
(j) Compliance with Registration Requirements. Such Selling Stockholder
has reviewed the Registration Statement, the Preliminary Prospectus and the
Prospectus and nothing has come to its attention which would lead it to
believe that either the Registration Statement or any amendments thereto,
at the time the Registration Statement or such amendments 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 Preliminary Prospectus or the
Prospectus, as of its date or at the First Closing Date or any Subsequent
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that no representation
is made as to any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for
use in the Registration Statement, any Preliminary Prospectus or the
Prospectus.
18
Any certificate signed by or on behalf of any Selling Stockholder and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
Such Selling Stockholder acknowledges that the Underwriters and, for
purposes of the opinion to be delivered pursuant to Section 5 hereof, counsel to
the Company and counsel to the Underwriters, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents to such
reliance.
Section 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. Upon the terms herein set forth, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of 9,302,326
Firm Shares and (ii) each of the Selling Stockholders severally agrees to sell
to the several Underwriters an aggregate of 23,697,674 Firm Shares, each Selling
Stockholder selling the number of Firm Shares set forth opposite such Selling
Stockholder's name on Schedule B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company and the Selling Stockholders the
respective number of Firm Shares set forth opposite their names on Schedule A.
The purchase price per Firm Share to be paid by the several Underwriters to the
Company and the Selling Stockholders shall be $4.085 per share.
(b) The First Closing Date. Delivery of certificates for the Firm Shares to
be purchased by the Underwriters and payment therefor shall be made at the
offices of BAS, 0 Xxxx 00xx Xxxxxx Xxx Xxxx, XX or Debevoise & Xxxxxxxx LLP, 000
Xxxxx Xxxxxx Xxx Xxxx, XX (or such other place as may be agreed to by the
Company and the Representatives) at 9:00 a.m. New York time, on June 21, 2005 or
such other time and date not later than 1:30 p.m. New York time, ten business
days following the original contemplated First Closing Date as the
Representatives shall designate by notice to the Company (the time and date of
such closing are called the "First Closing Date").
19
(c) The Optional Shares; the Subsequent Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Selling
Stockholders hereby grant an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 4,950,000 Optional Shares from
the Selling Stockholders at the purchase price per share to be paid by the
Underwriters for the Firm Shares. The option granted hereunder may be exercised
from time to time upon notice by the Representatives to the Company and the
Selling Stockholders, which notice may be given at any time within 30 days from
the date of this Agreement. Such notice shall set forth (i) the aggregate number
of Optional Shares as to which the Underwriters are exercising the option, (ii)
the names and denominations in which the certificates for the Optional Shares
are to be registered and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with,
but not earlier than, the First Closing Date; and in such case the term "First
Closing Date" shall refer to the time and date of delivery of certificates for
the Firm Shares and the Optional Shares). Such time and date of delivery, if
subsequent to the First Closing Date, is called a "Subsequent Closing Date" and
shall be determined by the Representatives and shall not be earlier than three
nor later than five full business days after delivery of such notice of
exercise. If any Optional Shares are to be purchased, (a) each Underwriter
agrees, severally and not jointly, to purchase the number of Optional Shares
(subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Optional Shares to be purchased as the number of Firm Shares set forth
on Schedule A opposite the name of such Underwriter bears to the total number of
Firm Shares and (b) each Selling Stockholder agrees, severally and not jointly,
to sell the number of Optional Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Optional Shares to be sold as the number of
Optional Shares set forth in Schedule B opposite the name of such Selling
Stockholder bears to the total number of Optional Shares. The Representatives
may cancel the option at any time prior to its expiration by giving written
notice of such cancellation to the Company and the Selling Stockholders.
(d) Public Offering of the Shares. The Representatives hereby advise the
Company and the Selling Stockholders that the Underwriters intend to offer for
sale to the public, as described in the Prospectus, their respective portions of
the Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares to be sold by the
Company shall be made at the First Closing Date (and, if applicable, at any
Subsequent Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Shares to be sold by the Selling
Stockholders shall be made at the First Closing Date (and, if applicable, at any
Subsequent Closing Date) by wire transfer of immediately available funds to the
order of the Custodian.
20
It is understood that the Representatives have been authorized, for their
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Shares and
any Optional Shares the Underwriters have agreed to purchase. BAS, Xxxxxx
Brothers and CIBC World Markets Corp., individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Shares to be purchased by any Underwriter whose funds shall not
have been received by the Representatives by the First Closing Date or the
Subsequent Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Shares to be sold by such Selling Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement.
(f) Delivery of the Shares. Delivery of the Firm Shares and the Optional
Shares shall be made through the facilities of DTC unless the Representatives
shall otherwise instruct. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date the Shares are first released by
the Underwriters for sale to the public, the Company shall deliver or cause to
be delivered, copies of the Prospectus in such quantities and at such places as
the Representatives shall request.
Section 3. Additional Covenants.
A. Covenants of the Company. The Company further covenants and agrees with
each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of
the First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered
in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), prior to amending or supplementing the Registration
Statement (including any registration statement filed under Rule 462(b)
under the Securities Act) or the Prospectus (including any amendment or
supplement through incorporation by reference of any report filed under the
Exchange Act), the Company shall furnish to the Representatives for review
a copy of each such proposed amendment or supplement, and the Company shall
not file any such proposed amendment or supplement to which the
Representatives reasonably object.
21
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing
of any post-effective amendment to the Registration Statement or any
amendment or supplement to any Preliminary Prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Stock from any securities exchange upon
which it is listed for trading or included or designated for quotation, or
of the threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any time,
the Company will use its reasonable best efforts to obtain the lifting of
such order at the earliest possible moment. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b) and 430A,
as applicable, under the Securities Act and will use its reasonable efforts
to confirm that any filings made by the Company under such Rule 424(b) were
received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if in the reasonable opinion of the Representatives or
counsel for the Underwriters it is otherwise necessary to amend or
supplement the Prospectus to comply with law, the Company agrees to
promptly prepare (subject to Section 3(A)(a) hereof), file with the
Commission and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Prospectus so that the statements
in the Prospectus as so amended or supplemented will not, in the light of
the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law. The Underwriters shall use their reasonable best efforts
to cease delivering the Prospectus upon receiving written notice from the
Company that an amendment or supplement is required under this section.
22
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representatives may reasonably
request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Shares for sale under (or obtain exemptions from the application of) the
state securities or blue sky laws or Canadian provincial Securities laws or
other foreign laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required
for the distribution of the Shares. The Company shall not be required to
qualify to do business as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the
Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Shares for
offering, sale or trading in any jurisdiction or any initiation or threat
of any proceeding for any such purpose, and in the event of the issuance of
any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall maintain, at its expense, a
registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month
period after the effective date of the Registration Statement that
satisfies the provisions of Section 11(a) of the Securities Act.
(i) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission all
reports and documents required to be filed under the Exchange Act.
Additionally, the Company shall report the use of proceeds from the
issuance of the Shares as may be required under Rule 463 under the
Securities Act.
23
(j) Company to Provide Interim Financial Statements. Prior to the First
Closing Date, the Company will furnish the Underwriters, as soon as they
have been prepared by or are available to the Company, a copy of any
unaudited interim financial statements of the Company for any period
subsequent to the period covered by the most recent financial statements
appearing in the Registration Statement and the Prospectus.
(k) Agreement Not to Offer or Sell Additional Securities. During the
period commencing on the date hereof and ending on the 90th day following
the date of the Prospectus, the Company will not, without the prior written
consent of BAS and Xxxxxx Brothers (which consent may be withheld at the
sole discretion of BAS and Xxxxxx Brothers), directly or indirectly, sell,
offer, contract or grant any option to sell, pledge, transfer or establish
an open "put equivalent position" within the meaning of Rule 16a-1(h) under
the Exchange Act, or otherwise dispose of or transfer, or announce the
offering of, or file any registration statement under the Securities Act in
respect of, any shares of Common Stock, options or warrants to acquire
shares of the Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Shares); provided, however, that the Company
may issue shares of its Common Stock or options to purchase its Common
Stock, or Common Stock upon exercise of options, pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the
Prospectus. Notwithstanding the foregoing, if (x) during the last 17 days
of the 90-day restricted period the Company issues an earnings release or
material news or a material event relating to the Company occurs, or (y)
prior to the expiration of the 90-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 90-day period, the restrictions imposed in
this clause shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence
of the material news or material event.
(l) Future Reports to the Representatives. During the period of two
years hereafter the Company will furnish to the Representatives at their
respective addresses set forth in Section 13: (i) as soon as practicable
after the end of each fiscal year, copies of the Annual Report of the
Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's
independent public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report
on Form 8-K or other report filed by the Company with the Commission, the
NASD or any securities exchange; and (iii) as soon as available, copies of
any report or communication of the Company mailed generally to holders of
its capital stock.
24
(m) Investment Limitation. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Shares in
such a manner as would require the Company or any of its subsidiaries to
register as an investment company under the Investment Company Act.
(n) No Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
(o) Existing Lock-Up Agreement. The Company will use its reasonable best
efforts to enforce all agreements between the Company and any of its
security holders that prohibit the sale, transfer, assignment, pledge or
hypothecation of any of the Company's securities in connection with the
Company's offering. In addition, the Company will direct the transfer agent
to place stop transfer restrictions upon any such securities of the Company
that are bound by such existing "lock-up" agreements for the duration of
the periods contemplated in such agreements.
(p) Press Release. Prior to the First Closing Date, the Company will
issue no press release or other communications directly or indirectly and
hold no press conference with respect to the Company or any of its
subsidiaries, the condition, financial or otherwise, or the earnings,
business affairs or business prospects of any of them, or the offering of
the Shares, without the prior written consent of the Representatives,
unless in the judgment of the Company and its counsel, and after
notification to the Representatives, such press release or communication is
required by law.
(q) Company to Perform its Obligations. The Company will use its
reasonable best efforts to do and perform all things required to be done
and performed by it under this Agreement, the New Credit Facility, the
Dealer Manager Agreement, the tender offer and consent solicitation for the
Notes and any other related agreements prior to or after the First Closing
Date and the Subsequent Closing Date, if any, and to satisfy all conditions
precedent on its part to the obligations of the Underwriters to purchase
and accept delivery of the Shares.
(r) Listing. The Shares have been approved for listing on the Tier I of
the Pacific Exchange, subject to official notice of issuance.
25
(s) Compliance with Securities Law. The Company will comply with all
applicable securities and other laws, rules and regulations, including,
without limitation, the Xxxxxxxx-Xxxxx Act of 2002, and use its best
efforts to cause the Company's directors and officers, in their capacities
as such, to comply with such laws, rules and regulations, including,
without limitation, the provisions of the Xxxxxxxx-Xxxxx Act of 2002.
B. Covenants of the Selling Stockholders. Each Selling Stockholder further
covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such Selling
Stockholder will not, without the prior written consent of BAS and Xxxxxx
Brothers (which consent may be withheld in their sole discretion), directly
or indirectly, sell, offer, contract or grant any option to sell (including
without limitation any short sale), pledge, transfer, establish an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of any shares of Common Stock, options
or warrants to acquire shares of Common Stock, or securities exchangeable
or exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Exchange Act) by such Selling Stockholder, or publicly announce
such Selling Stockholder's intention to do any of the foregoing, for a
period commencing on the date hereof and continuing through the close of
trading on the date 90 days after the date of the Prospectus.
Notwithstanding the foregoing, if (x) during the last 17 days of the 90-day
restricted period the Company issues an earnings release or material news
or a material event relating to the Company occurs, or (y) prior to the
expiration of the 90-day restricted period, the Company announces that it
will release earnings results during the 16-day period beginning on the
last day of the 90-day period, the restrictions imposed in this clause
shall continue to apply until the expiration of the 18-day period beginning
on the issuance of the earnings release or the occurrence of the material
news or material event.
(b) Delivery of Forms W-8 and W-9. To deliver to the Representatives
prior to the First Closing Date a properly completed and executed United
States Treasury Department Form W-8 (if the Selling Stockholder is a
non-United States person) or Form W-9 (if the Selling Stockholder is a
United States Person).
The Representatives, on behalf of the several Underwriters, may, in their
sole discretion, waive in writing the performance by the Company or any Selling
Stockholder of any one or more of the foregoing covenants or extend the time for
their performance. Notwithstanding the foregoing, each of the Representatives
agrees not to consent to any action proposed to be taken by the Company, any
Selling Stockholder or any other holder of the Company's securities that would
otherwise be prohibited by, or to waive compliance by the Company, any Selling
Stockholder or any such other security holder with the provisions of, Section
3(A)(k) or 3(B)(a) above or any lock-up agreement delivered pursuant to Section
5(l) below without giving each of the other Representatives at least 17 days
prior notice (or such shorter notice as each of the other Representatives may
deem acceptable to permit compliance with applicable provisions of NASD Conduct
Rule 2711(f) restricting publication and distribution of research and public
appearances by research analysts before and after the expiration, waiver or
termination of a lock-up agreement).
26
Section 4. Payment of Expenses. The Company agrees to pay all costs, fees
and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Shares to the Underwriters, (iv) all fees and expenses of the Company's
counsel, independent public or certified public accountants and other advisors,
(v) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement
(including financial statements, exhibits, schedules, consents and certificates
of experts), each Preliminary Prospectus and the Prospectus, and all amendments
and supplements thereto, and this Agreement, (vi) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Shares for offer and sale under the
state securities or blue sky laws or the provincial securities laws of Canada,
and, if requested by the Representatives, preparing and printing a "Blue Sky
Survey" or memorandum, and any supplements thereto, advising the Underwriters of
such qualifications, registrations and exemptions, (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, the NASD's review and approval of the
Underwriters' participation in the offering and distribution of the Shares,
(viii) the fees and expenses associated with including the Shares on the Tier I
of the Pacific Exchange, (ix) the transportation and other expenses incurred by
or on behalf of Company representatives in connection with presentations to
prospective purchasers of the securities, including the cost of any aircraft
chartered in connection with the road show and (x) all other fees, costs and
expenses referred to in Item 13 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the
Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel and their share of road show expenses (excluding the cost of
any aircraft chartered in connection with the road show).
The Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their obligations under this Agreement which are not otherwise specifically
provided for herein, including but not limited to (i) fees and expenses of
counsel and other advisors for such Selling Stockholders, (ii) fees and expenses
of the Custodian and (iii) expenses and taxes incident to the sale and delivery
of the Shares to be sold by such Selling Stockholders to the Underwriters
hereunder (which taxes, if any, may be deducted by the Custodian under the
provisions of Section 2 of this Agreement).
27
This Section 4 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, on the other hand.
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein on the First Closing Date and, with respect to the Optional
Shares, any Subsequent Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders set forth in Sections 1(A) and 1(B) hereof as of the date hereof
and as of the First Closing Date as though then made and, with respect to the
Optional Shares, as of the Subsequent Closing Date as though then made, to the
timely performance by the Company and the Selling Stockholders of their
respective covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representatives
shall have received from PricewaterhouseCoopers LLP, independent public or
certified public accountants for the Company, a letter dated the date
hereof addressed to the Underwriters, in form and substance satisfactory to
the Representatives, containing statements and information of the type
ordinarily included in accountant's "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 (or any
successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration
Statement and the Prospectus (and the Representatives shall have received
an additional ten conformed copies of such accountants' letter for each of
the several Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the
Optional Shares, the Subsequent Closing Date:
(i) the Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act)
in the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment
to the Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become effective;
28
(ii) no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment to the Registration Statement, shall be in effect and no
proceedings for such purpose shall have been instituted or, to the
Company's knowledge, threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the First Closing
Date and, with respect to the Optional Shares, the Subsequent Closing Date:
(i) in the judgment of the Representatives there shall not have
occurred any Material Adverse Change;
(ii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or
any of its subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act; and
(iii) there shall not have been any change or decrease specified in
the letter or letters referred to in paragraph (a) of this Section 5 which
is, in the sole judgment of the Representatives, so material and adverse as
to make it impractical or inadvisable to proceed with the offering or
delivery of the Shares as contemplated by the Registration Statement and
the Prospectus.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and any Subsequent Closing Date the Representatives shall have
received the favorable opinion of Xxxxxxxx & Xxxxx LLP, counsel for the
Company, dated as of such Closing Date, the form of which is attached as
Exhibit A (and the Representatives shall have received an additional ten
conformed copies of such counsel's legal opinion for each of the several
Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and any Subsequent Closing Date the Representatives shall have
received the favorable opinion of Debevoise & Xxxxxxxx LLP, counsel for the
Underwriters, dated as of such Closing Date, with respect to the validity
of the Shares and other related matters as the Representatives reasonably
may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters (and
the Representatives shall have received an additional ten conformed copies
of such counsel's legal opinion for each of the several Underwriters).
29
(f) Officers' Certificate. On each of the First Closing Date and any
Subsequent Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer
or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsections (b)(ii) and (c)(ii) of this Section 5, and
further to the effect that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants of the Company
set forth in Section 1(A) of this Agreement are true and correct with the
same force and effect as though expressly made on and as of such Closing
Date;
(iii) the Company has complied with all the agreements hereunder and
satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date;
(iv) all filings required to have been made pursuant to Rule 424 or
430A under the Securities Act have been made; and
(v) they have carefully examined the Registration Statement and the
Prospectus and, in their opinion, as of the effective date of the
Registration Statement and as of the date of such certificate, the
statements contained in the Registration Statement were true and correct,
and such Registration Statement and Prospectus did not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set
forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment.
(g) Bring-down Comfort Letter. On each of the First Closing Date and any
Subsequent Closing Date the Representatives shall have received from
PricewaterhouseCoopers LLP, independent public or certified public
accountants for the Company, a letter dated such date, in form and
substance satisfactory to the Representatives, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subSection (a) of this Section 5, except that the specified date referred
to therein for the carrying out of procedures shall be no more than three
business days prior to the First Closing Date or any Subsequent Closing
Date, as the case may be (and the Representatives shall have received an
additional ten conformed copies of such accountants' letter for each of the
several Underwriters).
30
(h) Opinion of Counsel for the Selling Stockholders. On each of the
First Closing Date and any Subsequent Closing Date the Representatives
shall have received the favorable opinion of Xxxxxxxx & Xxxxx LLP, counsel
for the Selling Stockholders, dated as of such Closing Date, the form of
which is attached as Exhibit B (and the Representatives shall have received
an additional ten conformed copies of such counsel's legal opinion for each
of the several Underwriters).
(i) Opinion of General Counsel of the Company. On each of the First
Closing Date and any Subsequent Closing Date the Representatives shall have
received the favorable opinion of the General Counsel of the Company, dated
as of such Closing Date, the form of which is attached as Exhibit C (and
the Representatives shall have received an additional ten conformed copies
of such General Counsel's legal opinion for each of the several
Underwriters).
(j) Selling Stockholders' Certificate. On each of the First Closing Date
and any Subsequent Closing Date the Representatives shall receive a written
certificate executed by the Attorney-in-Fact of each Selling Stockholder,
dated as of such Closing Date, to the effect that:
(i) the representations, warranties and covenants of such Selling
Stockholder set forth in Section 1(B) and Section 3(B) of this Agreement
are true and correct with the same force and effect as though expressly
made by such Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date.
(k) Selling Stockholders' Documents. On the date hereof, the Company and
the Selling Stockholders shall have furnished for review by the
Representatives copies of the Powers of Attorney and Custody Agreements
executed by each of the Selling Stockholders and such further information,
certificates and documents as the Representatives may reasonably request.
31
(l) Lock-Up Agreements. On or prior to the date hereof, the Company
shall have furnished to the Representatives an agreement in the form of
Exhibit D hereto from each director, officer and each other beneficial
owner of Common Stock listed on Schedule C hereto, and such agreement shall
be in full force and effect on each of the First Closing Date and any
Subsequent Closing Date.
(m) New Credit Facility. The closing of the New Credit Facility shall
have occurred concurrently with the offering of the Shares.
(n) Tender Offer and Consent Solicitation; Supplemental Indenture. The
tender offer and consent solicitation for the Notes shall have been
consummated (except with respect to the payment of consideration to holders
of Notes) concurrently with the offering of the Shares and the supplemental
indenture relating thereto shall have been duly executed.
(o) Listing. The Shares have been approved for listing on the Tier I of
the Pacific Exchange, subject to official notice of issuance.
(p) Additional Documents. On or before each of the First Closing Date
and any Subsequent Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions
as they may reasonably require for the purposes of enabling them to pass
upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Shares, at any time prior to the Subsequent Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
Section 6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, Section 11
or Section 17, or if the sale to the Underwriters of the Shares on the First
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company or the Selling Stockholders to perform any agreement
herein or to comply with any provision hereof, the Company agrees to reimburse
the Representatives and the other Underwriters (or such Underwriters as have
terminated this Agreement with respect to themselves), severally, upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Representatives and the Underwriters in connection with the proposed purchase
and the offering and sale of the Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.
32
Section 7. Effectiveness of this Agreement. This Agreement shall not become
effective until the later of (i) the execution of this Agreement by the parties
hereto and (ii) notification by the Commission to the Company of the
effectiveness of the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement, to the extent it has been
executed by the parties thereto, may be terminated by any party by notice to
each of the other parties hereto, and any such termination shall be without
liability on the part of (a) the Company or the Selling Stockholders to any
Underwriter, except that the Company and the Selling Stockholders shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 4 and 6 hereof, (b) of any Underwriter to the Company or
the Selling Stockholders, or (c) of any party hereto to any other party except
that the provisions of Section 8 and Section 9 shall at all times be effective
and shall survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter, its officers and employees, and each person,
if any, who controls any Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A
under the Securities Act, 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 (ii) upon any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) or any marketing materials
and anything used on the road show, 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,
and to reimburse each Underwriter and each such controlling person for any and
all expenses (including the fees and disbursements of counsel chosen by BAS) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the indemnity agreement set forth in this paragraph shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto); provided,
further, that the Company will not be liable to any Underwriter with respect to
any Prospectus to the extent that the Company shall sustain the burden of
proving that any such loss, liability, claim, damage or expense resulted from
the fact that such Underwriter, in contravention of a requirement of this
Agreement or applicable law, sold Shares to a person to whom such Underwriter
failed to send or give, at or prior to the Closing Date, a copy of the
Prospectus, as then amended or supplemented if (i) the Company has previously
furnished copies thereof (sufficiently in advance of the Closing Date to allow
for distribution by the Closing Date) to the Underwriter and the loss,
liability, claim, damage or expense of such Underwriter resulted from an untrue
statement or omission of a material fact contained in or omitted from the
Preliminary Prospectus which was corrected in the Prospectus as, if applicable,
amended or supplemented prior to the Closing Date and such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person and (ii) such failure to give or send such Prospectus by the
Closing Date to the party or parties asserting such loss, liability, claim,
damage or expense would have constituted the sole defense to the claim asserted
by such person. The indemnity agreement set forth in this paragraph shall be in
addition to any liabilities that the Company may otherwise have.
33
Each of the Selling Stockholders, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Selling Stockholders), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430A under the Securities Act, 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 (ii) upon any untrue statement
or alleged untrue statement of a material fact contained 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, and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by BAS) as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the indemnity agreement
set forth in this paragraph shall apply only with reference to information
furnished in writing by or on behalf of such Selling Stockholder expressly for
use in the Registration Statement, any Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto). The indemnity agreement set forth in
this paragraph shall be in addition to any liabilities that the Selling
Stockholders may otherwise have. The liability of each Selling Stockholder under
the indemnity agreement set forth in this paragraph shall be limited to the
total net proceeds from the offering of the Common Shares pursuant to this
Agreement received by such Selling Stockholder.
34
(b) Indemnification of the Company, its Directors and Officers and the
Selling Stockholders. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Selling Stockholders and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject,
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company and the Selling Stockholders by the Representatives on
behalf of such Underwriter expressly for use therein; and to reimburse the
Company, or any such director, officer, Selling Stockholder or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer, Selling Stockholder or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. Each of the Company and
the Selling Stockholders hereby acknowledges that the only information that the
Representatives have furnished to the Company expressly for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto) are the statements set forth in the second to
last paragraph of the cover page regarding delivery of the Shares and, under the
heading "Underwriting," (i) the sentences in the third paragraph related to the
offering price of the Shares to the public and concessions, (ii) the first five
paragraphs under "--Stabilization" and (iii) the paragraph under "--Passive
Market Making"; and the Underwriters confirm that such statements are correct.
The indemnity agreement set forth in this Section 8(b) shall be in addition to
any liabilities that each Underwriter may otherwise have.
35
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the failure
so to notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any liability which it may have for
contribution or any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (BAS in the case of Section 8(b) and Section 9), representing
the indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
36
(d) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
Section 9. Contribution. If the indemnification provided for in Section 8
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders, on the
one hand, and the Underwriters, on the other hand, from the offering of the
Shares pursuant to this Agreement or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders,
on the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the Shares
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Company and the
Selling Stockholders, and the total underwriting discount received by the
Underwriters, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate offering price of the Shares as set forth on
such cover. The relative fault of the Company and the Selling Stockholders, 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 or any such inaccurate or alleged inaccurate representation or warranty
relates to information supplied by the Company or the Selling Stockholders, on
the one hand, or 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.
37
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 8(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8(c) for purposes of indemnification.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 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 in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Shares underwritten by it
and distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule A. For
purposes of this Section 9, each officer and employee of an Underwriter and each
person, if any, who controls an Underwriter within the meaning of the Securities
Act and the Exchange 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 with the meaning of the Securities Act and the Exchange Act shall have
the same rights to contribution as the Company. In no event shall the liability
of a Selling Stockholder under this Section 9 exceed the amount that such
Selling Stockholder would have been required to pay under Section 8(a) had such
indemnification been available thereunder.
38
Section 10. Default of One or More of the Several Underwriters. If, on the
First Closing Date or the Subsequent Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Shares that
it or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed 10% of the aggregate number of the
Shares to be purchased on such date, the other Underwriters shall be obligated,
severally, in the proportions that the number of Firm Shares set forth opposite
their respective names on Schedule A bears to the aggregate number of Firm
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as may be specified by the Representatives with the
consent of the non-defaulting Underwriters, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date. If, on the First Closing Date or the Subsequent Closing Date, as
the case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares and the aggregate number of Shares with respect to which such
default occurs exceeds 10% of the aggregate number of Shares to be purchased on
such date, and arrangements satisfactory to the Representatives and the Company
for the purchase of such Shares are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, Section 6, Section 8 and Section 9
shall at all times be effective and shall survive such termination. In any such
case either the Representatives or the Company shall have the right to postpone
the First Closing Date or the Subsequent Closing Date, as the case may be, but
in no event for longer than seven days in order that the required changes, if
any, to the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 11. Termination of this Agreement. Prior to the First Closing Date
this Agreement may be terminated by the Representatives by notice given to the
Company and the Selling Stockholders if at any time (i) trading or quotation in
any of the Company's securities shall have been suspended or limited by the
Commission, by the Nasdaq SmallCap Market or by the Pacific Exchange, or trading
in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York or Delaware authorities; (iii) there shall
have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in United States' or international
political, financial or economic conditions, as in the judgment of the
Representatives is material and adverse and makes it impracticable to market the
Shares in the manner and on the terms described in the Prospectus or to enforce
contracts for the sale of securities; or (iv) the Company shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Representatives may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured. Any termination pursuant to
this Section 11 shall be without liability on the part of (a) the Company or the
Selling Stockholders to any Underwriter, except that the Company and the Selling
Stockholders shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 4 and 6 hereof, or (b) any Underwriter
to the Company or the Selling Stockholders.
39
Section 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders, as
the case may be, and will survive delivery of and payment for the Shares sold
hereunder and any termination of this Agreement.
Section 13. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
and
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Liability Management Group
40
and
CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Legal Department
with a copy to each of:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xx, Esq.
and
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Company:
Synagro Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, XX, Esq.
with a copy to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
41
If to the Selling Stockholders:
Synagro Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, XX, Esq.
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
Section 14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Shares as such from any of the Underwriters merely by reason of such
purchase.
Section 15. Partial Unenforceability. The invalidity or unenforceability of
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
Section 16. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 17. Failure of One or More of the Selling Stockholders to Sell and
Deliver Shares. If one or more of the Selling Stockholders shall fail to sell
and deliver to the Underwriters the Shares to be sold and delivered by such
Selling Stockholders at the First Closing Date pursuant to this Agreement, then
the Underwriters may at their option, by written notice from the Representatives
to the Company and the Selling Stockholders, either (i) terminate this Agreement
without any liability on the part of any Underwriter or, except as provided in
Sections 4, 6, 8 and 9 hereof, the Company or the Selling Stockholders, or (ii)
purchase the shares which the Company and other Selling Stockholders have agreed
to sell and deliver in accordance with the terms hereof. If one or more of the
Selling Stockholders shall fail to sell and deliver to the Underwriters the
Shares to be sold and delivered by such Selling Stockholders pursuant to this
Agreement at the First Closing Date or the Subsequent Closing Date, then the
Underwriters shall have the right, by written notice from the Representatives to
the Company and the Selling Stockholders, to postpone the First Closing Date or
any Subsequent Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected.
42
Section 18. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Section headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business
person who was adequately represented by counsel during negotiations regarding
the provisions hereof, including, without limitation, the indemnification
provisions of Section 8 and the contribution provisions of Section 9, and is
fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the
risks in light of the ability of the parties to investigate the Company, its
affairs and its business in order to assure that adequate disclosure has been
made in the Registration Statement, any Preliminary Prospectus and the
Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
The Company and the Selling Stockholders acknowledge and agree that each of
the Underwriters is acting solely in the capacity of an arm's length contractual
counterparty to the Company and the Selling Stockholders with respect to the
offering of Shares contemplated hereby (including in connection with determining
the terms of the offering) and not as a financial advisor, agent or fiduciary to
the Company, the Selling Stockholders or any other person. Additionally, the
Underwriters are not advising the Company, the Selling Stockholders or any other
person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company and the Selling Stockholders have consulted with their
own advisors concerning such matters and shall be responsible for making their
own independent investigation and appraisal of the transactions contemplated
hereby, and the Underwriters shall have no responsibility or liability to the
Company or the Selling Stockholders with respect thereto. Any review by the
Underwriters of the Company, the transactions contemplated hereby or other
matters relating to such transactions will be performed solely for the benefit
of the Underwriters and shall not be on behalf of the Company or the Selling
Stockholders.
43
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company and the Custodian the enclosed copies
hereof, whereupon this instrument, along with all counterparts hereof, shall
become a binding agreement in accordance with its terms.
Very truly yours,
SYNAGRO TECHNOLOGIES, INC.
By: _________________________
Name:
Title:
GTCR FUND VII, L.P.
GTCR CAPITAL PARTNERS, L.P.
GTCR CO-INVEST, L.P.
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
TCW/CRESCENT MEZZANINE TRUST II
TCW LEVERAGED INCOME TRUST, L.P.
TCW LEVERAGED INCOME TRUST II, L.P.
TCW LEVERAGED INCOME TRUST IV., L.P.
ENVIRONMENTAL OPPORTUNITIES FUND, L.P.
By:________________________
Attorney-in-fact
44
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives as of the date first above written.
BANC OF AMERICA SECURITIES LLC
XXXXXX BROTHERS INC.
CIBC WORLD MARKETS CORP.
Acting as Representatives of the
several Underwriters named in the
attached Schedule A.
By: Banc of America Securities LLC
By:
------------------------------
Managing Director
By: Xxxxxx Brothers Inc.
By:
------------------------------
Managing Director
45
SCHEDULE A
Number of Firm
Shares to be
Underwriters Purchased
----------------------------------------------------------------- --------------
Banc of America Securities LLC................................... 11,880,000
Xxxxxx Brothers Inc. ............................................ 11,880,000
CIBC World Markets Corp.......................................... 4,290,000
Xxxxxxx Xxxxx & Associates, Inc.................................. 2,475,000
Xxxxxxx Xxxxxx Xxxxxx, Inc ...................................... 2,475,000
----------
Total................................................... 33,000,000
SCHEDULE B
Maximum
Number of
Number of Optional
Firm Shares Shares to
Selling Stockholder to be Sold be Sold
------------------------------------------------------- ------------ ----------
GTCR FUND VII, L.P..................................... 19,077,266 3,984,883
GTCR CAPITAL PARTNERS, L.P............................. 174,653 36,482
GTCR CO-INVEST, L.P.................................... 1,365,876 285,306
TCW/CRESCENT MEZZANINE PARTNERS II, L.P................ 1,541,705 322,033
TCW/CRESCENT MEZZANINE TRUST II........................ 373,709 78,061
TCW LEVERAGED INCOME TRUST, L.P. ...................... 159,618 33,341
TCW LEVERAGED INCOME TRUST II, L.P. ................... 159,618 33,341
TCW LEVERAGED INCOME TRUST IV., L.P. .................. 159,618 33,341
ENVIRONMENTAL OPPORTUNITIES FUND, L.P. ................ 685,611 143,211
Total.............................................. 23,697,674 4,950,000
SCHEDULE C
Lock-Up Signatories
1. Xxxxxx X. Xxxxxxx
2. Xxxx Xxxxxxxxx
3. Xxxx Xxxxxxx
4. Xxxxxx Xxxx
5. Xxxx XxXxxxxxx
6. Xxxx X. Xxxxxx
7. Xxxx X. Rome
8. Xxxxx X. Xxxxxx
9. Xxxxxxx X. Xxxx
10. Xxxxxxx Xxxx Xxxxxxx
11. Xxxxxx Blintz
12. Xxxxx Xxxxxxxxxx
13. Xxxxxxx Xxxx
14. Xxxxxx X. Xxxxx
15. Xxxxx Xxxxxxx
16. Xxxxxxx X. Xxxxxx
17. Xxxxxx Xxxxxxx
18. Xxxxxxx Ch'uan-k'xx Xxxxx
19. Xxxx Xxxxxxxx
20. Xxxxxx Xxxxx, 2nd
