EXHIBIT 1.1
5,200,000 Shares
PENTACON, INC.
Common Stock
UNDERWRITING AGREEMENT
March ___, 1998
BT ALEX. XXXXX INCORPORATED
XXXXXXXX & CO. INC.
XXXXXXX XXXXXX XXXXX INC.
As representatives of the
several Underwriters
named in Schedule I hereto
c/o BT Alex. Xxxxx Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
PENTACON, INC., a Delaware corporation (the "COMPANY"), proposes to
issue and sell 5,200,000 shares of its Common Stock, par value $.01 per share
(the "FIRM SHARES"), to the several underwriters named in Schedule I hereto (the
"UNDERWRITERS"). The Company also proposes to issue and sell to the several
Underwriters not more than an additional 780,000 shares of its Common Stock, par
value $.01 per share (the "ADDITIONAL SHARES"), if requested by the Underwriters
as provided in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter referred to collectively as the "SHARES". The shares of common stock
of the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the "COMMON STOCK".
SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Act, is hereinafter referred to as the
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"REGISTRATION STATEMENT"; and the prospectus in the form first used to confirm
sales of Shares is hereinafter referred to as the "PROSPECTUS". If the Company
has filed or is required pursuant to the terms hereof to file a registration
statement pursuant to Rule 462(b) under the Act registering additional shares of
Common Stock (a "RULE 462(B) REGISTRATION STATEMENT"), then, unless otherwise
specified, any reference herein to the term "Registration Statement" shall be
deemed to include such Rule 462(b) Registration Statement.
SECTION 2. AGREEMENTS TO SELL AND PURCHASE AND LOCK-UP AGREEMENTS. On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
at a price per Share of $_______ (the "PURCHASE PRICE") the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to an aggregate of 780,000 Additional
Shares from the Company at the Purchase Price. Additional Shares may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. The Underwriters may exercise their right
to purchase Additional Shares in whole or in part from time to time by giving
written notice thereof to the Company within 30 days after the date of this
Agreement. You shall give any such notice on behalf of the Underwriters and such
notice shall specify the aggregate number of Additional Shares to be purchased
pursuant to such exercise and the date for payment and delivery thereof, which
date shall be a business day (i) no earlier than two business days after such
notice has been given (and, in any event, no earlier than the Closing Date (as
hereinafter defined)) and (ii) no later than ten business days after such notice
has been given. If any Additional Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) which bears the same proportion to the total number of
Additional Shares to be purchased from the Company as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Shares.
The Company hereby agrees not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion of
the economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Underwriters pursuant to this Agreement and to
stockholders of the Founding Companies (as hereinafter defined) pursuant to the
Acquisition Agreements (as hereinafter defined), for a period of 180 days after
the date of the Prospectus without the prior written consent of BT Alex. Xxxxx
Incorporated. Notwithstanding the foregoing, during
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such period (i) the Company may issue shares of Common Stock in connection with
acquisitions after the thirtieth day following the date of the Prospectus, (ii)
the Company may grant stock options or other awards pursuant to the Company's
existing stock plan and (iii) the Company may issue shares of Common Stock upon
the exercise of an option or warrant or the conversion of a security outstanding
on the date hereof. The Company also agrees not to amend the provisions of
Section 15.1 of the Acquisition Agreements, or to waive or give its consent
thereunder, for a period of 180 days after the date of the Prospectus without
the prior written consent of BT Alex. Xxxxx Incorporated. The Company also
agrees not to file any registration statement with respect to any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days after the date of the Prospectus
without the prior written consent of BT Alex. Xxxxx Incorporated.
Notwithstanding the foregoing, during such period the Company may (i) file a
registration statement on Form S-8 with respect to shares issuable under the
Company's existing stock plan, and (ii) register 3,350,000 shares of Common
Stock under the Securities Act for use by the Company in future acquisitions.
The Company shall, prior to or concurrently with the execution of this
Agreement, deliver an agreement executed by (i) each of the directors and
officers of the Company and (ii) each stockholder listed on Annex I hereto to
the effect that such person will not, during the period commencing on the date
such person signs such agreement and ending 180 days after the date of the
Prospectus, without the prior written consent of BT Alex. Xxxxx Incorporated,
engage in any of the transactions described in the first sentence of this
paragraph.
SECTION 3. TERMS OF PUBLIC OFFERING. The Company is advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. DELIVERY AND PAYMENT. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as BT Alex. Xxxxx Incorporated shall request no later
than two business days prior to the Closing Date or the applicable Option
Closing Date (as defined below), as the case may be. The Company shall deliver
the Shares, with any transfer taxes thereon duly paid by the respective Sellers,
to BT Alex. Xxxxx Incorporated through the facilities of The Depository Trust
Company ("DTC"), for the respective accounts of the several Underwriters,
against payment to the Company of the Purchase Price therefore by wire transfer
of Federal or other funds immediately available in New York City. The
certificates representing the Shares shall be made available for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the applicable Option Closing Date (as defined below), as the
case may be, at the office of DTC or its designated custodian (the "DESIGNATED
OFFICE"). The time and date of delivery and payment for the Firm Shares shall be
9:00 A.M., New York City time, on March ___, 1998 or such other time and date as
BT Alex. Xxxxx Incorporated and the Company shall agree in writing (the "CLOSING
DATE"). The time and date of delivery and payment for any Additional Shares to
be purchased by the Underwriters shall be 9:00 A.M., New York City time, on the
date specified in the applicable exercise notice given by you
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pursuant to Section 2 or such other time and date as BT Alex. Xxxxx Incorporated
and the Company shall agree in writing (an "OPTION CLOSING DATE").
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 8 of this Agreement
shall be delivered at the offices of Xxxxx & Xxxxx, L.L.P., Xxx Xxxxx Xxxxx, 000
Xxxxxxxxx, Xxxxxxx, Xxxxx and the Shares shall be delivered at the Designated
Office, all on the Closing Date or such Option Closing Date, as the case may be.
SECTION 5. AGREEMENTS OF THE COMPANY. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has been filed with the
Commission and (v) of the happening of any event during the period referred to
in Section 5(d) below which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires any additions
to or changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration Statement, the
Company will use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) To furnish to you four signed copies of the Registration Statement
as first filed with the Commission and of each amendment to it, including all
exhibits, and to furnish to you and each Underwriter designated by you such
number of conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period specified in Rule 424(b) under the Act; during the
period specified in Section 5(d) below, not to file any further amendment to the
Registration Statement and not to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
shall reasonably object after being so advised; and, during such period, to
prepare and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
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(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the opinion of counsel
for the Underwriters, it becomes 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
opinion of counsel for the Underwriters, it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the Prospectus so that
the statements in the Prospectus, as so amended or supplemented, will not in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with applicable law, and to furnish to each
Underwriter and to any dealer as many copies thereof as such Underwriter or
dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; PROVIDED, HOWEVER, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Prospectus, the Registration
Statement, any preliminary prospectus or the offering or sale of the Shares, in
any jurisdiction in which it is not now so subject.
(g) To mail or otherwise make generally available to its stockholders as
soon as practicable an earnings statement covering the twelve-month period
ending March 31, 1999 that shall satisfy the provisions of Section 11(a) of the
Act, and to advise you in writing when such statement has been so made
available.
(h) During the period of three years after the date of this Agreement,
to furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and the Subsidiaries (as hereinafter defined)
as you may reasonably request.
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(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the registration and delivery of
the Shares under the Act and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Registration Statement
(including financial statements and exhibits), any preliminary prospectus, the
Prospectus and all amendments and supplements to any of the foregoing, including
the mailing and delivering of copies thereof to the Underwriters and dealers in
the quantities specified herein, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) all costs of printing or producing this
Agreement and any other agreements or documents in connection with the offering,
purchase, sale or delivery of the Shares, (iv) all expenses in connection with
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any Preliminary and Supplemental Blue Sky Memoranda in connection
therewith (including the filing fees and fees and disbursements of counsel for
the Underwriters in connection with such registration or qualification and
memoranda relating thereto), (v) the filing fees in connection with the review
and clearance of the offering of the Shares by the National Association of
Securities Dealers, Inc., (vi) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to the listing of the Shares on
the New York Stock Exchange ("NYSE"), (vii) the cost of printing certificates
representing the Shares, (viii) the costs and charges of any transfer agent,
registrar and/or depositary, and (ix) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section.
(j) To use its best efforts to list, subject to notice of issuance, the
Shares on the NYSE and to maintain the listing of the Shares on the NYSE for a
period of three years after the date of this Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.
(1) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the Commission registering the Shares not so covered
in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
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(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 P.M.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or threatened by the Commission.
(b)(i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, 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, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A) 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 and (B) will comply in all material respects with the Act and (iv)
the Prospectus does not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(d) Each of the Company and its subsidiaries (including each of the
entities identified as "FOUNDING COMPANIES" in SCHEDULE II), each of which
(together with any of its subsidiaries) will become a subsidiary of the Company
on the Closing Date pursuant to the acquisition to be consummated on the First
Closing Date (as herein defined) as described in the Registration Statement (the
"ACQUISITIONS")(collectively, the "SUBSIDIARIES") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as described in the Prospectus and to own, lease and operate its
properties, and is duly qualified and is in good standing as a foreign
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corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of the Subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of the Subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) After giving effect to the Acquisitions, all the outstanding shares
of capital stock of the Company will have been duly authorized and validly
issued and will be fully paid, non-assessable and not subject to any preemptive
or similar rights; and the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided by this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such shares of capital stock of the Company (including the Shares)
will not be subject to any preemptive or similar rights.
(g) After giving effect to the Acquisitions, all of the outstanding
shares of capital stock of each of the Company and the Subsidiaries will have
been duly authorized and validly issued and will be fully paid and
non-assessable, and will be owned by the Company, directly or indirectly through
one or more of the Subsidiaries, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature except for the pledge by
Company of all of the stock of the Subsidiaries pledged to Nations Bank N.A.
pursuant to the Credit Agreement as hereinafter defined.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(i) Neither the Company nor any of the Subsidiaries is (i) in violation
of its respective charter or by-laws or (ii) in default in the performance of
any obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or their respective property is bound, except with respect to
item (ii) for such defaults that would not reasonably be expected to have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries, taken as a whole.
(j) The execution, delivery and performance of this Agreement by the
Company, each Agreement and Plan of Reorganization relating to the Acquisitions,
which have been included as exhibits to the Registration Statement, including
the waivers of termination rights, waiver agreements and recontribution
agreements relating to the Acquisitions (the "ACQUISITION
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AGREEMENTS"), by the Company and the Subsidiaries and the Credit Agreement to be
entered into between the Company and Nations Bank N.A. (the "CREDIT AGREEMENT")
by the Company, the compliance by the Company with all the provisions hereof and
thereof, and the consummation of the transactions contemplated hereby and
thereby, will not (i) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except for the filings of certificates of merger in connection with the
Acquisitions and except such as have been obtained under the Act or as may be
required under the securities or Blue Sky laws of the various states), (ii)
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, (a) the charter or by-laws of the Company or any of the
Subsidiaries or (b) any indenture, loan agreement, mortgage, lease or other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries or their respective
property is bound, (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over the Company, any of the Subsidiaries or
their respective property or (iv) result in the suspension, termination or
revocation of any Authorization (as defined below) of the Company or any of the
Subsidiaries or any other impairment of the rights of the holder of any such
Authorization; except with respect to item (ii)(b) for such conflicts, breaches
or defaults which if existing would not reasonably be expected to have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries, taken as a whole.
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of the
Subsidiaries is or could be a party or to which any of their respective property
is or could be subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(1) Except as described in the Acquisition Agreements, neither the
Company nor any of the Subsidiaries has violated any foreign, federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS") or any provisions of the Employee Retirement
Income Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a material adverse effect on the business, prospects,
financial condition or results of operation of the Company and the Subsidiaries,
taken as a whole.
(m) Each of the Company and the Subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
Authorization) of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such
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filing or notice would not, singly or in the aggregate, have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and the Subsidiaries, taken as a whole. Each such Authorization
is valid and in full force and effect and each of the Company and its
subsidiaries is in substantial compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and, to the knowledge of the
Company, no event has occurred (including, without limitation, the receipt of
any notice from any authority or governing body) which allows or, after notice
or lapse of time or both, would allow, revocation, suspension or termination of
any such Authorization or results or, after notice or lapse of time or both,
would result in any other material impairment of the rights of the holder of any
such Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of the Subsidiaries; except where such failure
to be valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly or
in the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and the
Subsidiaries, taken as a whole.
(n) To the knowledge of the Company, there are no costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization granted thereunder, any
related constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and the Subsidiaries, taken as a whole.
(o) This Agreement has been duly authorized, executed and delivered by
the Company.
(p) At the Closing Date, the Credit Agreement will have been duly
authorized, executed and delivered by the Company and will be a legal, valid and
binding agreement of the Company, enforceable in accordance with its terms,
except as that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles (regardless of
whether that enforceability is considered in a proceeding in equity or at law).
(q) The execution and delivery of, and the performance by the Company,
the Founding Companies and the shareholders of each Founding Company of their
respective obligations under, the Acquisition Agreements to which they are
parties, respectively, have been duly and validly authorized by the Company, the
Founding Companies and the shareholders of each Founding Company and each
Acquisition Agreement has been duly executed and delivered by the Company and
each Founding Company and Founding Company shareholder which is a party to such
agreement, and constitutes the legal, valid and binding agreement of the Company
and each such Founding Company and Founding Company shareholder, enforceable in
accordance with its terms, except as that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
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equitable principles (regardless of whether that enforceability is considered in
a proceeding in equity or at law) except that no representation is made as to
the enforceability of the waiver agreements and recontribution agreements
relating to the Acquisitions.
(r) Ernst & Young L.L.P. are independent public accountants with respect
to the Company and the Subsidiaries as required by the Act.
(s) McGladrey & Xxxxxx, LLP are independent public accountants with
respect to Alatec, Inc. as required by the Act.
(t) The historical financial statements included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), together
with related schedules and notes, present fairly the financial position, results
of operations and changes in financial position of each of the Company, Alatec
Products, Inc. and its subsidiaries, AXS Solutions, Inc. and its subsidiaries,
Maumee Industries, Inc. and its subsidiaries and Sales Systems, Limited and its
subsidiaries on the basis stated therein at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company. The PRO FORMA financial statements of the Company and the Subsidiaries
and the related notes thereto set forth in the Registration Statement and the
Prospectus (and any supplement or amendment thereto) have been prepared on a
basis consistent with the historical financial statements of the Company and the
Subsidiaries, give effect to the assumptions used in the preparation thereof on
a reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Registration Statement and the
Prospectus. Such PRO FORMA financial statements have been prepared in accordance
with the applicable requirements of Rule 11-02 of Regulation S-X promulgated by
the Commission. The other PRO FORMA financial and statistical information and
data set forth in the Registration Statement and the Prospectus (and any
supplement or amendment thereto) are, in all materials respects, accurately
presented and prepared on a basis consistent with the PRO FORMA financial
statements. No other financial statements or supporting schedules, other than
the Financial Data Schedule required by Item 601(c) of Regulation S-K under the
Securities Act, are required to be included in the Registration Statement. As of
the date of the Prospectus, neither the Company nor any of the Subsidiaries is
planning any probable acquisitions (other than the Acquisitions) for which
disclosure of pro forma financial information in the Prospectus is required by
the Act.
(u) The Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
11
(v) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company or to require the Company
to include such securities with the Shares registered pursuant to the
Registration Statement.
(w) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and the
Subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of the Subsidiaries
and (iii) neither the Company nor any of the Subsidiaries has incurred any
material liability or obligation, direct or contingent, except for trade
payables and other similar liabilities incurred in the ordinary course of
business.
(x) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 97-198, Laws of Florida).
(y) Each certificate signed by any officer of the Company and delivered
at the closing to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the Underwriters as
to the matters covered thereby.
(z) Upon completion of the Acquisitions and filing of the releases as
contemplated in connection therewith, the Company and the Subsidiaries will have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company and the Subsidiaries taken as a whole, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the Prospectus or such as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries; and any real property and
buildings held under lease by the Company and the Subsidiaries and which are
material to the business of the Company and the Subsidiaries, taken as a whole,
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries, in each case except as described in the Prospectus.
(aa) The Company and each of the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of the Subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance
12
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers at a cost that would not have a material adverse effect on the
business, prospects, financial conditions or results of operations of the
Company and the Subsidiaries, taken as a whole.
(bb) No relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company of any of the Subsidiaries
on the other hand, which is required by the Act to be described in the
Registration Statement or the Prospectus which is not so described.
(cc) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or threatened against the Company or
any of the Subsidiaries before the National Labor Relations Board or any state
or local labor relations board, (ii) strike, labor dispute, slowdown or stoppage
pending or threatened against the Company or any of the Subsidiaries or (iii)
union representation question existing with respect to the employees of the
Company and the Subsidiaries, except for such actions specified in clause (i),
(ii) or (iii) above, which, singly or in the aggregate, would not have material
adverse effect on the business, prospects, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole. To the best of
the Company's knowledge, no collective bargaining organizing activities are
taking place with respect to the Company or any of the Subsidiaries.
(dd) The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ee) All material tax returns required to be filed by the Company and
each of the Subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of the Subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
Neither the Company nor any of the Subsidiaries will incur any federal or state
income tax liability by reason of any of the Acquisitions.
SECTION 7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
its directors, its officers and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the Exchange Act), from and against
any and all losses, claims, damages, liabilities and judgments (including,
without
13
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Underwriter furnished in writing
to the Company by such Underwriter through you expressly for use therein;
PROVIDED, HOWEVER, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter who
failed to deliver a Prospectus (as then amended or supplemented, provided by the
Company to the several Underwriters in the requisite quantity and on a timely
basis to permit proper delivery on or prior to the Closing Date) to the person
asserting any losses, claims, damages and liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if such material misstatement or omission
or alleged material misstatement or omission was cured in such Prospectus and
such Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to such Underwriter but only with
reference to information relating to such Underwriter furnished in writing to
the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and 7(b), the Underwriter shall not be required to assume
the defense of such action pursuant to this Section 7(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized
14
in writing by the indemnifying party, (ii) the indemnifying party shall have
failed to assume the defense of such action or employ counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnified party and
the indemnifying party, and the indemnified party shall have been advised by
such counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the indemnified party). In any such case,
the indemnifying party shall not, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by BT
Alex. Xxxxx Incorporated, in the case of parties indemnified pursuant to Section
7(a), and by the Company, in the case of parties indemnified pursuant to Section
7(b). The indemnifying party shall indemnify and hold harmless the indemnified
party from and against any and all losses, claims, damages, liabilities and
judgments by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the settlement
is entered into more than twenty business days after the indemnifying party
shall have received a request from the indemnified party for reimbursement for
the fees and expenses of counsel (in any case where such fees and expenses are
at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 7 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 7(d)(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 7(d)(i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds
15
from the offering (after deducting underwriting discounts and commissions, but
before deducting expenses) received by the Company, and the total underwriting
discounts and commissions received by the Underwriters, bear to the total price
to the public of the Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) 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 the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
Notwithstanding the foregoing, no Underwriter shall be entitled to
contribution under this Section 7(d) with respect to any losses, claims,
damages, liabilities or judgments caused by any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such Underwriter failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the several Underwriters in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the Closing Date) to the person asserting any losses, claims, damages and
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and such Prospectus was required by law to
be delivered at or prior to the written confirmation of sale to such person.
16
(f) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions.
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or to the knowledge of the Company contemplated by the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Xxxx X. Xxxxxxx and Xxxxx Xxxxxxx, in their capacities
as the Chief Executive Officer and Senior Vice President and Chief Financial
Officer, respectively, of the Company, confirming the matters set forth in
Sections 6(w), 8(a) and 8(b) and that the Company has complied with all of the
agreements and satisfied all of the conditions herein contained and required to
be complied with or satisfied by the Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of the Subsidiaries and (iii) neither the Company nor any of the
Subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 8(d)(i),
8(d)(ii) or 8(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) You shall have received on the Closing Date an opinion (in a form
reasonably satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Xxxxxxx & Xxxxx L.L.P., counsel for the Company, to the effect
that:
(i) the Company has been duly incorporated and the Company and
each of the Subsidiaries is validly existing as a corporation in good
standing under the laws of its
17
jurisdiction of incorporation and has the corporate power and authority
to conduct its business as described in the Prospectus and to own, lease
and operate its properties;
(ii) each of the Company and the Subsidiaries is duly qualified
and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole;
(iii) all the outstanding shares of capital stock of the Company
have been duly authorized by all necessary corporate action on the part
of the Company and are validly issued and are fully paid, non-assessable
and to their knowledge not subject to any preemptive or similar rights;
(iv) the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided by
this Agreement, will be validly issued, fully paid and non-assessable,
and the issuance of such Shares will not to their knowledge be subject
to any preemptive or similar rights;
(v) all of the outstanding shares of capital stock of each of the
Subsidiaries are owned by the Company, directly or indirectly through
one or more subsidiaries, to the knowledge of such counsel, free and
clear of any perfected security interest other than that granted
pursuant to the Credit Agreement;
(vi) this Agreement has been duly authorized by all necessary
corporate action on the part of the Company, executed and delivered by
the Company;
(vii) each of the Acquisition Agreements has been duly authorized
by all necessary corporate action on the part of the Company, executed
and delivered by the Company and is a legal, valid and binding agreement
of the Company, enforceable in accordance with its terms, except as that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles (regardless of
whether that enforceability is considered in a proceeding in equity or
at law);
(viii) the Credit Agreement has been duly authorized by all
necessary corporate action on the part of the Company, executed and
delivered by the Company and is a legal, valid and binding agreement of
the Company, enforceable in accordance with its terms, except as that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles (regardless of
whether that enforceability is considered in a proceeding in equity or
at law);
18
(ix) the authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof
contained in the Prospectus;
(x) the Registration Statement has become effective under the
Act; to the knowledge of such counsel, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose have
been instituted or threatened by the Commission;
(xi) the statements under the captions "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Results
of Operations--Combined Combined Liquidity and Capital Resources,"
"Business--Government Regulation," "Management--Employment Agreements,"
"Management--Stock Plan," "Certain Transactions--Organization of the
Company," "Certain Transactions--Transactions Involving Certain
Officers, Directors and Stockholders," "Description of Capital Stock,"
"Shares Eligible for Future Sale" and "Underwriting" in the Prospectus
and Items 14 and 15 of Part II of the Registration Statement, insofar as
such statements constitute a summary of the legal matters or documents
referred to therein, fairly present the information set forth therein,
in each case in all material respects;
(xiii) the execution, delivery and performance of this Agreement
by the Company, the Acquisition Agreements by the Company and the Credit
Agreement by the Company, the compliance by the Company with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) require any consent,
approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various states), (B)
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws of the Company or any of
the Subsidiaries or any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Company and the
Subsidiaries, taken as a whole, to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries or their respective property is bound, (C) except as
described in the Prospectus, violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any of
the Subsidiaries or their respective property or (D) result in the
suspension, termination or revocation of any Authorization of the
Company or any of the Subsidiaries or any other impairment of the rights
of the holder of any such Authorization;
(xiv) to the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company or
any of the Subsidiaries or to which any of their respective property is
or could be subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or of
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that are not so
described or filed as required;
19
(xv) to the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened that (A) questions the
validity of any Acquisition Agreement or any action taken or to be taken
by any Founding Company or any stockholder of any Founding Company in
connection with the Acquisition Agreements, at law or in equity, and (B)
if adversely determined, would have a material adverse effect (1) on the
business, prospects, financial condition or results of operation of any
Founding Company, (2) on the ability of any Founding Company to perform
its obligations under the Acquisition Agreement to which it is a party
or (3) on the ability of any stockholder of any Founding Company to
perform his, her or its obligations under the Acquisition Agreement to
which he, she or it is a party.
(xvi) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended;
(xvii) to the knowledge of such counsel, except as described in
the Prospectus, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement;
(xviii) each of the mergers contemplated by the Acquisition
Agreements has been consummated pursuant to the terms of the Acquisition
Agreement related thereto, and each of the certificates or articles of
merger relating thereto comply with the applicable requirements of the
laws of the state of incorporation of the Founding Company party to the
applicable merger and of the State of Delaware; and
(xix) the Registration Statement and the Prospectus and any
supplement or amendment thereto, as of its effective date (except for
the financial statements and schedules (including the notes thereto and
the auditors' reports thereon) and other financial data included therein
as to which no opinion need be expressed) comply in all material
respects as to form with the Act.
Such opinion shall also include a statement to the effect
that although such counsel did not independently verify, are not passing
upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except to the extent stated in paragraphs
(f)(ix) and (f)(xi) above), they advise you that no facts have come to
their attention which lead them to believe that the Registration
Statement (other than (i) the financial statements (including the notes
thereto and the auditors' report thereon) included therein, and (ii) the
other financial and statistical information included therein, as to
which such counsel need express no opinion), as of its effective date,
contained any untrue statement of a material fact or omitted
20
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus (other
than (i) the financial statements (including the notes thereto and the
auditors' report thereon) included therein and (ii) the other financial
and statistical information included therein), as of its date and as of
the Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
The opinion of Xxxxxxx & Xxxxx L.L.P. described in Section 8(e) above
shall be rendered to you at the request of the Company and shall so state
therein.
(f) You shall have received on the Closing Date a copy of the opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of each of the local counsel for each of the Founding Companies delivered
pursuant to the Acquisition Agreement to which such Founding Company is a party,
in the form annexed thereto, accompanied by a letter dated the Closing Date and
addressed to you from such counsel stating that you are entitled to rely on such
opinion as if it were addressed to you; provided that references in such form to
the due authorization, execution and delivery of such Acquisition Agreement
shall be modified to include the waivers of termination rights, waiver
agreements and recontribution agreements relating to such Acquisition Agreement.
(g) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Xxxxx & Xxxxx, L.L.P., counsel for the Underwriters, as to the
matters referred to in Sections 8(e)(iv), 8(e)(vi), 8(e)(xi) (but only with
respect to the statements under the caption "Description of Capital Stock" and
"Underwriting") and the last paragraph in section 8(e).
In giving such opinions with respect to the matters covered by the last
paragraph in section 8(e), Xxxxxxx & Xxxxx L.L.P. and Xxxxx & Xxxxx, L.L.P. may
state that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(h) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from Ernst & Young L.L.P., independent
public accountants, containing the information and statements of the type
ordinarily included in accountants "comfort letters" to Underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(i) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from McGladrey & Xxxxxx, LLP,
independent public accountants, containing the information
21
and statements of the type ordinarily included in accountants "comfort letters"
to Underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(j) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(k) On the First Closing Date the Acquisitions shall have been
consummated on the terms set forth in the Registration Statement and the
Acquisition Agreements, without waiver or modification of any material terms or
provisions of any Acquisition Agreement, except as may be approved by you.
(l) The Shares shall have been duly listed, subject to notice of
issuance, on the NYSE.
(m) The Company shall not have failed on or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required to be
performed or complied with by the Company on or prior to the Closing Date.
(n) Each of Xxxxxx X. List, Xxxx X. XxXxxxx, Xxxxxxx X. Xxxxxx and
Xxxxxxxx X. Xxxxxx, Xx. shall have entered into employment agreements (in form
and substance satisfactory to you) with their respective Founding Companies.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
SECTION 9. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or
22
other governmental authority which in your opinion materially and adversely
affects, or will materially and adversely affect, the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion which
the number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; PROVIDED that in no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any Underwriter has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you
and the Company for purchase of such Firm Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter and the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
date, the non-defaulting Underwriters shall have the option to (i) terminate
their obligation hereunder to purchase such Additional Shares or (ii) purchase
not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase on such date in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
SECTION 10. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to
Pentacon, Inc., 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, and (ii) if
to any Underwriter or to you, to you c/o BT Alex. Xxxxx
23
Incorporated, Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company or any person controlling the Company, (ii)
acceptance of the Shares and payment for them hereunder and (iii) termination of
this Agreement.
If for any reason the Shares are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 9), the Company agrees to reimburse the several
Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them in connection with the
proposed offering of the Shares. Notwithstanding any termination of this
Agreement, the Company shall be liable for all expenses which it has agreed to
pay pursuant to Section 5(i) hereof. The Company also agrees to reimburse the
several Underwriters, their directors and officers and any persons controlling
any of the Underwriters for any and all fees and expenses (including, without
limitation, the fees disbursements of counsel) reasonably incurred by them in
connection with enforcing their rights hereunder (including, without limitation,
pursuant to Section 7 hereof).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Underwriters, the
Underwriters' directors and officers, any controlling persons referred to
herein, the Company's directors and the Company's officers who sign the
Registration Statement and their respective successors and assigns, all as and
to the extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Shares from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
24
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
PENTACON, INC.
By:__________________________
Title:
BT ALEX. XXXXX INCORPORATED
XXXXXXXX & CO. INC.
XXXXXXX XXXXXX XXXXX INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By BT ALEX. XXXXX INCORPORATED
By_____________________________
25
SCHEDULE I
NUMBER OF FIRM SHARES
UNDERWRITERS TO BE PURCHASED
--------------------------------- ------------------------
BT Alex. Xxxxx Incorporated
Xxxxxxxx & Co. Inc.
Xxxxxxx Xxxxxx Xxxxx Inc.
------------
TOTAL
SCHEDULE II
FOUNDING COMPANIES
Alatec Products, Inc.
AXS Solutions, Inc.
Capital Bolt & Supply, Inc.
Maumee Industries, Inc.
Sales Systems Limited
Annex I
Xxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxxx Xxxxxxx
Xxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
Xxxxxx X. List
Xxxx X. XxXxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxx
Xxxxxxx Xxxxx
Xxxxxx X. Xxxx
MGCV
1
