1,976,059 Shares
SunSource Inc.
Common Stock
UNDERWRITING AGREEMENT
____________ __, 1998
XXXXXX BROTHERS INC.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX XXXX LLC
XXXX XXXXX XXXX XXXXXX, INCORPORATED,
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
SunSource Inc., a Delaware corporation (the "Company"), and
certain stockholders of the Company named in Schedule 2 hereto (the "Selling
Stockholders"), propose to sell an aggregate of 1,976,059 shares (the "Firm
Stock") of the Company's Common Stock, par value $.01 per share (the "Common
Stock"). Of the 1,976,059 shares of the Firm Stock, 500,000 are being sold by
the Company and 1,476,059 by the Selling Stockholders. In addition, the Company
proposes to grant to the Underwriters named in Schedule 1 hereto (the
"Underwriters") an option to purchase up to an additional 296,408 shares of the
Common Stock on the terms and for the purposes set forth in Section 3 (the
"Option Stock"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "Stock." This is to confirm the agreement
concerning the purchase of the Stock from the Company and the Selling
Stockholders by the Underwriters.
1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-2, and
amendments thereto, with respect to the Stock have (i) been
prepared by the Company in conformity with the requirements of
the Securities Act of 1933 (the "Securities Act") and the
rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities
Act; and a second registration statement on Form S-2 with
respect to the Stock (i) may also be prepared by the Company
in conformity with the requirements of the Securities
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Act and the Rules and Regulations and (ii) if to be so
prepared, will be filed with the Commission under the
Securities Act pursuant to Rule 462(b) of the Rules and
Regulations on the date hereof. Copies of the first such
registration statement and the amendments to such registration
statement, together with the form of any such second
registration statement, have been delivered by the Company to
you as the representatives (the "Representatives") of the
Underwriters. As used in this Agreement, "Effective Time"
means (i) with respect to the first such registration
statement, the date and the time as of which such registration
statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission and
(ii) with respect to any second registration statement, the
date and time as of which such second registration statement
is filed with the Commission, and "Effective Times" is the
collective reference to both Effective Times; "Effective Date"
means (i) with respect to the first such registration
statement, the date of the Effective Time of such registration
statement and (ii) with respect to any second registration
statement, the date of the Effective Time of such second
registration statement, and "Effective Dates" is the
collective reference to both Effective Dates; "Preliminary
Prospectus" means each prospectus included in any such
registration statement, or amendments thereof, before it
became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of
the Representatives pursuant to Rule 424(a) of the Rules and
Regulations; "Primary Registration Statement" means the first
registration statement referred to in this Section 1(a), as
amended at its Effective Time, "Rule 462(b) Registration
Statement" means the second registration statement, if any,
referred to in this Section 1(a), as filed with the
Commission, and "Registration Statements" means both the
Primary Registration Statement and any Rule 462(b)
Registration Statement, including in each case all information
contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations in
accordance with Section 6(a) hereof and deemed to be a part of
the Registration Statements as of the Effective Time of the
Primary Registration Statement pursuant to paragraph (b) of
Rule 430A of the Rules and Regulations; and "Prospectus" means
such final prospectus, as first filed with the Commission
pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules
and Regulations. Reference made herein to any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein
pursuant to Item 12 of Form S-2 under the Securities Act, as
of the date of such Preliminary Prospectus or the Prospectus,
as the case may be. The Commission has not issued any order
preventing or suspending the use of any Preliminary
Prospectus.
(b) The Primary Registration Statement conforms (and
the Rule 462(b) Registration Statement, if any, the Prospectus
and any further amendments or supplements to the Registration
Statements or the Prospectus, when they become effective or
are filed with the Commission, as the case may be, will
conform) in all respects to the requirements of the Securities
Act and the Rules and Regulations and do not and will not, as
of the applicable effective date (as to the Registration
Statements and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or
supplement thereto)
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contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided that no representation or warranty is made as to
information contained in or omitted from the Registration
Statements or the Prospectus in reliance upon and in
conformity with written information furnished to the Company
by the Selling Stockholders or through the Representatives by
or on behalf of any Underwriter specifically for inclusion
therein.
(c) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission conformed
in all material respects to the requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations of the Commission thereunder, and none of such
documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
(d) The Company and each of its subsidiaries (as
defined in Section 17) have been duly organized and are
validly existing in good standing under the laws of their
respective jurisdictions of organization, are duly qualified
to do business and are in good standing in each jurisdiction
in which their respective ownership or lease of property or
the conduct of their respective businesses requires such
qualification, except for jurisdictions in which the failure
to so qualify or be in good standing would not have a material
adverse effect on the condition (financial or other) or the
earnings, business affairs or prospects of the Company and its
subsidiaries, taken as a whole, and have all power and
authority necessary to own or hold their respective properties
and to conduct the businesses in which they are engaged; and
none of the subsidiaries of the Company other than SDI
Operating Partners, L.P. (the "Significant Subsidiary") is a
"significant subsidiary", as such term is defined in Rule 405
of the Rules and Regulations.
(e) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock or
partnership interests of each subsidiary of the Company have
been duly and validly authorized and issued and are fully paid
and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims.
(f) The unissued shares of the Stock to be issued and
sold by the Company to the Underwriters hereunder have been
duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable; and the Stock
will conform to the description thereof contained in the
Prospectus.
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(g) The execution, delivery and performance of this
Agreement by the Company and the consummation of the
transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is
bound or to which any of the properties or assets of the
Company or any of its subsidiaries is subject, nor will such
actions result in any violation of the provisions of the
charter or by-laws (or other comparable governing documents)
of the Company or any of its subsidiaries or any statute or
any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets; and
except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement.
(h) Except as described in the Prospectus, there are
no contracts, agreements or understandings between the Company
and any person granting such person the right (other than
rights which have been waived or satisfied) to require the
Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the
Registration Statements or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Securities Act.
(i) Except as described in 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 Rule 144A under,
or Regulations D or S of, the Securities Act, other than
shares issued pursuant to employee benefit plans, qualified
stock options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries
has sustained, since the date of the latest audited financial
statements included or incorporated by reference in the
Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and,
since such date, there has not been any change in the capital
stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any
development involving a prospective material adverse change,
in or affecting the general affairs, management, financial
position, stockholders' equity or results of
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operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus.
(k) The financial statements (including the related
notes and supporting schedules) filed as part of the
Registration Statements or included or incorporated by
reference in the Prospectus present fairly the financial
condition and results of operations of the entities purported
to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved.
(l) Coopers & Xxxxxxx L.L.P., who have certified
certain financial statements of the Company, whose reports
appear in the Prospectus or are incorporated by reference
therein and who have delivered the initial letter referred to
in Section 9(f) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(m) The Company and each of its subsidiaries have
good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned
by them, 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 its subsidiaries; and all real property and buildings held
under lease by the Company and its subsidiaries 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 its subsidiaries.
(n) The Company and each of its subsidiaries carry,
or are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as
is customary for companies engaged in similar businesses in
similar industries.
(o) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations,
copyrights and licenses necessary for the conduct of their
respective businesses and have no reason to believe that the
conduct of their respective businesses will conflict with, and
have not received any notice of any claim of conflict with,
any such rights of others.
(p) Except as described in the Prospectus, there are
no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
property or asset of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or
any of its subsidiaries, might have a material adverse effect
on the consolidated
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financial position, stockholders' equity, results of
operations, business or prospects of the Company and its
subsidiaries; and to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(q) The conditions for use of Form S-2, as set forth
in the General Instructions thereto, have been satisfied.
(r) There are no contracts or other documents which
are required to be described in the Prospectus or filed as
exhibits to either of the Registration Statements by the
Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to
either of the Registration Statements or incorporated therein
by reference as permitted by the Rules and Regulations.
(s) No relationship, direct or indirect, exists
between or among the Company on the one hand, and the
directors, officers, stockholders, customers or suppliers of
the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(t) No labor disturbance by the employees of the
Company exists or, to the knowledge of the Company, is
imminent which might be expected to have a material adverse
effect on the consolidated financial position, stockholders'
equity, results of operations, business or prospects of the
Company and its subsidiaries.
(u) The Company is in compliance in all material
respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension
plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
(v) The Company has filed all federal, state and
local income and franchise tax returns required to be filed
through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the
Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of its
subsidiaries, might have) a material adverse effect on the
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consolidated financial position, stockholders' equity, results
of operations, business or prospects of the Company and its
subsidiaries.
(w) Since the date as of which information is given
in the Prospectus through the date hereof, and except as may
otherwise be disclosed in the Prospectus, the Company has not
(i) issued or granted any securities, (ii) incurred any
liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the
ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or (iv)
declared or paid any dividend on its capital stock.
(x) Neither the Company nor any of its subsidiaries
(i) is in violation of its charter or by-laws (or other
comparable governing documents), (ii) is in default in any
material respect, and no event has occurred which, with notice
or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of
its properties or assets is subject or (iii) is in violation
in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its properties
or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its
properties or assets or to the conduct of its business.
(y) Neither the Company nor any of its subsidiaries,
nor any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of
its subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated
or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(z) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment
of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its subsidiaries (or, to
the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the properties now or
previously owned or leased by the Company or its subsidiaries
in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except
for any violation or remedial action which would not have, or
could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a
material adverse effect on the general affairs, management,
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; there has been
no material spill, discharge, leak, emission, injection,
escape, dumping or release of
8
any kind onto such property or into the environment
surrounding such property of any toxic wastes, medical wastes,
solid wastes, hazardous wastes or hazardous substances due to
or caused by the Company or any of its subsidiaries or with
respect to which the Company or any of its subsidiaries have
knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would
not have or would not be reasonably likely to have, singularly
or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a
material adverse effect on the general affairs, management,
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes" shall have the meanings specified in any
applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(aa) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations
of the Commission thereunder.
(ab) The Company has not taken and will not take,
directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to
cause or result in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Stock.
2. Representations, Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder severally represents, warrants and agrees
that:
(a) The Selling Stockholder has, and immediately
prior to the First Delivery Date (as defined in Section 5
hereof) the Selling Stockholder will have, good and valid
title to the shares of Stock to be sold by the Selling
Stockholder hereunder on such date, free and clear of all
liens, encumbrances, equities or claims; and upon delivery of
such shares and payment therefor pursuant hereto, good and
valid title to such shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several
Underwriters;
(b) The Selling Stockholder has full right, power and
authority to enter into this Agreement; the execution,
delivery and performance of this Agreement by the Selling
Stockholder and the consummation by the Selling Stockholder of
the transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Selling Stockholder is a party or by
which the Selling Stockholder is bound or to which any of the
property or assets of the Selling Stockholder is subject, nor
will such actions result in any violation of the provisions of
the charter or by-laws (or other comparable governing
documents) of each Selling Stockholder or any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Selling
9
Stockholder or the property or assets of the Selling
Stockholder; and, except for the registration of the Stock
under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement by the Selling Stockholder and the consummation by
the Selling Stockholder of the transactions contemplated
hereby; and
(c) With respect to any statements or omissions made
in any Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information concerning the
Selling Stockholder furnished to the Company by the Selling
Stockholder specifically for use therein, the Primary
Registration Statement does not, and the Rule 462(b)
Registration Statement, if any, the Prospectus and any further
amendments or supplements to the Registration Statements or
the Prospectus will not, as of the applicable effective date
(as to the Registration Statements and any amendment thereto)
and as of the applicable filing date (as to the Prospectus and
any amendment or supplement thereto) contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading;
provided that, the aggregate amount payable by any Selling Stockholder for
breaches of representations and warranties and for indemnification or
reimbursement obligations pursuant to this Agreement shall in no case exceed the
net proceeds to such Selling Stockholder from the sale of the Stock.
3. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 500,000 shares of the
Firm Stock and each Selling Stockholder hereby agrees to sell the number of
shares of the Firm Stock set opposite its name in Schedule 2 hereto, severally
and not jointly, to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. Each
Underwriter shall be obligated to purchase from the Company, and from each
Selling Stockholder, that number of shares of the Firm Stock which represents
the same proportion of the number of shares of the Firm Stock to be sold by the
Company, and by each Selling Stockholder, as the number of shares of the Firm
Stock set forth opposite the name of such Underwriter in Schedule 1 represents
of the total number of shares of the Firm Stock to be purchased by all of the
Underwriters pursuant to this Agreement. The respective purchase obligations of
the Underwriters with respect to the Firm Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option
to purchase up to 296,408 shares of Option Stock. Such option is granted solely
for the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 5 hereof. Shares
10
of Option Stock shall be purchased severally for the account of the Underwriters
in proportion to the number of shares of Firm Stock set opposite the name of
such Underwriters in Schedule 1 hereto. The respective purchase obligations of
each Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no Underwriter shall be obligated to purchase Option
Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock shall be
$_____ per share.
The Company and the Selling Stockholders shall not be
obligated to deliver any of the Stock to be delivered on the First Delivery Date
or the Second Delivery Date (as hereinafter defined), as the case may be, except
upon payment for all the Stock to be purchased on such Delivery Date as provided
herein.
4. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of
the Firm Stock, the several Underwriters propose to offer the Firm Stock for
sale upon the terms and conditions set forth in the Prospectus; provided,
however, that no Stock registered pursuant to the Rule 462(b) Registration
Statement, if any, shall be offered prior to the Effective Time thereof.
5. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the office of Xxxxxxx Xxxxxxx &
Xxxxxxxx at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., New
York City time, on the third full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Company and the Selling Stockholders shall deliver or cause to be delivered
certificates representing the Firm Stock to the Representatives for the account
of each Underwriter against payment to or upon the order of the Company and the
Selling Stockholders of the purchase price by certified or official bank check
or checks payable in New York Clearing House (same-day) funds. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names and
in such denominations as the Representatives shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company and the Selling Stockholders shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of
this Agreement the option granted in Section 3 may be exercised by written
notice being given to the Company by the Representatives. Such notice shall set
forth the aggregate number of shares of Option Stock as to which the option is
being exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been
11
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as the "Second Delivery Date" and the
First Delivery Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at
the place specified in the first sentence of the first paragraph of this Section
5 (or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by certified or official bank
check or checks payable in New York Clearing House (same-day) funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names and
in such denominations as the Representatives shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the Second Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Rule 462(b) Registration
Statement, if necessary, in a form approved by the
Representatives and to file such Rule 462(b) Registration
Statement with the Commission on the date hereof; to prepare
the Prospectus in a form approved by the Representatives and
to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than 10:00 A.M., New York City time,
on the day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to
the Registration Statements or to the Prospectus prior to the
Second Delivery Date except as permitted herein; to advise the
Representatives, promptly after it receives notice thereof, of
the time when any amendment to either Registration Statement
has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to
furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statements or the Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain
its withdrawal;
12
(b) To furnish promptly to each of the
Representatives and to counsel for the Underwriters a signed
copy of each of the Registration Statements as originally
filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to the Representatives in New
York City such number of the following documents as the
Representatives shall request: (i) conformed copies of the
Registration Statements as originally filed with the
Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement and the computation of per
share earnings), (ii) each Preliminary Prospectus, the
Prospectus (not later than 10:00 A.M., New York City time, of
the day following the execution and delivery of this
Agreement) and any amended or supplemented Prospectus (not
later than 10:00 A.M., New York City time, on the day
following the date of such amendment or supplement) and (iii)
any document incorporated by reference in the Prospectus
(excluding exhibits thereto); and, if the delivery of a
prospectus is required at any time after the Effective Time of
the Primary Registration Statement in connection with the
offering or sale of the Stock (or any other securities
relating thereto) and if at such time any event shall have
occurred as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it
shall be necessary to amend or supplement the Prospectus in
order to comply with the Securities Act, to notify the
Representatives and, upon their request, to prepare and
furnish without charge to each Underwriter and to any dealer
in securities as many copies as the Representatives may from
time to time request of an amended or supplemented Prospectus
which will correct such statement or omission or effect such
compliance;
(d) To file promptly with the Commission any
amendment to the Registration Statements or the Prospectus or
any supplement to the Prospectus that may, in the judgment of
the Company or the Representatives, be required by the
Securities Act or requested by the Commission;
(e) Prior to filing with the Commission (i) any
amendment to either of the Registration Statements or
supplement to the Prospectus or any document incorporated by
reference in the Prospectus or (ii) any Prospectus pursuant to
Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the
Underwriters and obtain the consent of the Representatives to
the filing (which consent shall not be unreasonably withheld);
(f) As soon as practicable after the Effective Date
of the Primary Registration Statement, to make generally
available to the Company's security holders and to deliver to
the Representatives an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with
Section
13
11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) For a period of five years following the
Effective Date of the Primary Registration Statement, to
furnish to the Representatives copies of all materials
furnished by the Company to its shareholders and all public
reports and all reports and financial statements furnished by
the Company to the principal national securities exchange or
automatic quotation system upon which the Common Stock may be
listed or quoted pursuant to requirements of or agreements
with such exchange or system or to the Commission pursuant to
the Exchange Act or any rule or regulation of the Commission
thereunder;
(h) Promptly from time to time to take such action as
the Representatives may reasonably request to qualify the
Stock for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply
with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Stock; provided
that in connection therewith the Company shall not be required
to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(i) For a period of 90 days from the date of the
Prospectus, not to, directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be
expected to, result in the disposition or purchase by any
person at any time in the future of) any shares of Common
Stock or securities convertible into or exchangeable for
Common Stock (other than the Stock) or sell or grant options,
rights or warrants with respect to any shares of Common Stock
or securities convertible into or exchangeable for Common
Stock except for (i) the issuance of shares of Common Stock in
connection with acquisitions where the person receiving the
shares agrees to abide by this restriction, (ii) the grant of
employee stock options and (iii) the issuance of shares of
Common Stock to non-employee directors, or (2) enter into any
swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any
such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case without the prior written
consent of Xxxxxx Brothers Inc.; and to cause each officer and
director of the Company to furnish to the Representatives,
prior to the First Delivery Date, letter or letters, in form
and substance satisfactory to counsel for the Underwriters,
pursuant to which each such person shall represent that he has
not and agrees that he will not, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could
be expected to, result in the disposition or purchase by any
person at any time in the future of) any shares of Common
Stock or securities convertible into or exchangeable for
Common Stock or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such
14
shares of Common Stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in
each case for a period of 90 days from the date of the
Prospectus, without the prior written consent of Xxxxxx
Brothers Inc.;
(j) To apply the net proceeds from the sale of the
Stock being sold by the Company as set forth in the
Prospectus; and
(k) To take such steps as shall be necessary to
ensure that neither the Company nor any subsidiary shall
become an "investment company" within the meaning of such term
under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
7. Further Agreements of the Selling Stockholders. Each
Selling Stockholder agrees to deliver to the Representatives prior to the First
Delivery Date a properly completed and executed United States Treasury
Department Form W-9.
8. Expenses. The Company agrees to pay (a) the costs incident
to the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statements and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statements as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the costs of reproducing and distributing this Agreement; (e) the
costs of distributing the terms of agreement relating to the organization of the
underwriting syndicate and selling group to the members thereof by mail, telex
or other means of communication; (f) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of sale of the Stock; (g) any applicable listing or other fees; (h) the
reasonable fees and expenses of qualifying the Stock under the securities laws
of the several jurisdictions as provided in Section 6(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including related reasonable
fees and expenses of counsel to the Underwriters); and (i) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that, except as provided in this Section 8 and in
Section 13 , the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters and the Selling Stockholders shall pay the fees and expenses of
their counsel and any transfer taxes in connection with the sale of their Stock
to the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Stockholders contained herein, to the performance by the Company
and the Selling Stockholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:
15
(a) The Rule 462(b) Registration Statement, if any,
and the Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order
suspending the effectiveness of either of the Registration
Statements or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the
Commission for inclusion of additional information in either
of the Registration Statements or the Prospectus or otherwise
shall have been complied with.
(b) No Underwriter shall have discovered and
disclosed to the Company on or prior to such Delivery Date
that either of the Registration Statements or the Prospectus
or any amendment or supplement thereto contains any untrue
statement of a fact which, in the opinion of Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Underwriters, is material or omits
to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the Stock, the Registration Statements and the
Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to counsel for the Underwriters,
and the Company and the Selling Stockholders shall have
furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such
matters.
(d) Xxxxxx, Xxxxx & Xxxxxxx LLP shall have furnished
to the Representatives its written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) The Company and the Significant
Subsidiary have been duly organized and are validly
existing as corporations (or limited partnerships) in
good standing under the laws of their respective
jurisdictions of organization.
(ii) The Company has an authorized
capitalization as set forth in the Prospectus, and
all of the issued shares of capital stock of the
Company (including the shares of Stock being
delivered on such Delivery Date) have been duly and
validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof
contained in the Prospectus; all of the partnership
interests in the Significant Subsidiary are owned,
directly or indirectly, by the Company;
(iii) There are no preemptive or other rights
to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of the
Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such
counsel;
16
(iv) To the best of such counsel's knowledge
and other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a
party or of which any property or asset of the
Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any
of its subsidiaries, might have a material adverse
effect on the consolidated financial position,
stockholders' equity, results of operations, business
or prospects of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) The Primary Registration Statement was
declared effective under the Securities Act as of the
date and time specified in such opinion, the Rule
462(b) Registration Statement, if any, was filed with
the Commission on the date specified therein, the
Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of either of the Registration
Statements has been issued and, to the knowledge of
such counsel, no proceeding for that purpose is
pending or threatened by the Commission;
(vi) The Registration Statements, as of their
respective Effective Dates, and the Prospectus, as of
its date, and any further amendments or supplements
thereto, as of their respective dates, made by the
Company prior to such Delivery Date (other than the
financial statements and other financial data
contained therein, as to which such counsel need
express no opinion) complied as to form in all
material respects with the requirements of the
Securities Act and the Rules and Regulations; and the
documents incorporated by reference in the Prospectus
(other than the financial statements and related
schedules therein, as to which such counsel need
express no opinion), when they were filed with the
Commission complied as to form in all material
respects with the requirements of the Exchange Act
and the rules and regulations of the Commission
thereunder;
(vii) To the best of such counsel's knowledge,
there are no contracts or other documents which are
required to be described in the Prospectus or filed
as exhibits to the Registration Statements by the
Securities Act or by the Rules and Regulations which
have not been described or filed as exhibits to the
Registration Statements or incorporated therein by
reference as permitted by the Rules and Regulations;
(viii) This Agreement has been duly authorized,
executed and delivered by the Company;
(ix) The issue and sale of the shares of
Stock being delivered on such Delivery Date by the
Company and the compliance by the Company with all of
the provisions of this Agreement and the consummation
of the
17
transactions contemplated hereby will not conflict
with or result in a breach or violation of any of the
terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to
such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of
the properties or assets of the Company or any of its
subsidiaries is subject, nor will such actions result
in any violation of the provisions of the charter or
by-laws (or other comparable governing documents) of
the Company or any of its subsidiaries or any statute
or any order, rule or regulation known to such
counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets;
and, except for the registration of the Stock under
the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable
state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or
filing or registration with, any such court or
governmental agency or body is required for the
execution, delivery and performance of this Agreement
by the Company and the consummation of the
transactions contemplated hereby; and
(x) To the best of such counsel's knowledge
and other than as set forth in the Prospectus, there
are no contracts, agreements or understandings
between the Company and any person granting such
person the right (other than rights which have been
waived or satisfied) to require the Company to file a
registration statement under the Securities Act with
respect to any securities of the Company owned or to
be owned by such person or to require the Company to
include such securities in the securities registered
pursuant to the Registration Statements or in any
securities being registered pursuant to any other
registration statement filed by the Company under the
Securities Act.
In rendering such opinion, such counsel may (i) state
that its opinion is limited to matters governed by
the Federal laws of the United States of America, the
laws of the Commonwealth of Pennsylvania and the
General Corporation Law of the State of Delaware.
Such counsel shall also have furnished to the
Representatives a written statement, addressed to the
Underwriters and dated such Delivery Date, in form
and substance satisfactory to the Representatives, to
the effect that (x) such counsel has acted as counsel
to the Company on a regular basis and has acted as
counsel to the Company in connection with the
preparation of the Registration Statements, and (y)
based on the foregoing, no facts have come to the
attention of such counsel which lead it to believe
that (I) the Registration Statements, as of their
respective Effective Dates, contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or
necessary in order to make the statements
18
therein not misleading, or that the Prospectus
contains any untrue statement of a material fact or
omits to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading or (II)
any document incorporated by reference in the
Prospectus, when they were filed with the Commission
contained any untrue statement of a material fact or
omitted to state any material fact necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading. The foregoing opinion and statement may
be qualified by a statement to the effect that such
counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements
contained in the Registration Statements or the
Prospectus except for the statements made in the
Prospectus under the caption "Description of Capital
Stock", insofar as such statements relate to the
Stock and concern legal matters.
(e) Counsel for the Selling Stockholders shall have
furnished to the Representatives his written opinion addressed
to the Underwriters and dated the First Delivery Date, in form
and substance satisfactory to the Representatives, to the
effect that:
(i) Each Selling Stockholder has full right,
power and authority to enter into this Agreement and
to perform its obligations hereunder.
(ii) The execution, delivery and performance
of this Agreement by each Selling Stockholder and the
consummation by each Selling Stockholder of the
transactions contemplated hereby will not conflict
with or result in a breach or violation in any
material respect of any of the terms or provisions
of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel
to which any Selling Stockholder is a party or by
which any Selling Stockholder is bound or to which
any of the property or assets of any Selling
Stockholder is subject, nor will such actions result
in any violation of the provisions of the charter or
by-laws (or other comparable governing documents) of
any Selling Stockholder, or any statute or any order,
rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction
over any Selling Stockholder or the property or
assets of any Selling Stockholder; and, except for
the registration of the Stock under the Securities
Act and such consents, approvals, authorizations,
registrations or qualifications as may be required
under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or
filing or registration with, any such court or
governmental agency or body is required for the
execution, delivery and performance of this Agreement
by any Selling Stockholder and the consummation by
any Selling Stockholder of the transactions
contemplated hereby; and
19
(iii) This Agreement has been duly authorized,
executed and delivered by or on behalf of each
Selling Stockholder.
In rendering such opinion, such counsel may state that his
opinion is limited to matters governed by the Federal laws of
the United States of America and the laws of the State of New
York.
(f) With respect to the letter of Coopers & Xxxxxxx
LLP delivered to the Representatives concurrently with the
execution of this Agreement (the "initial letter"), the
Company shall have furnished to the Representatives a letter
(the "bring-down letter") of such accountants, addressed to
the Underwriters and dated such Delivery Date (i) confirming
that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date
not more than five days prior to the date of the bring-down
letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered
by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial
letter.
(g) The Company shall have furnished to the
Representatives a certificate, dated such Delivery Date, of
its Chairman of the Board, its President or a Vice President
and its chief financial officer stating that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and
correct as of such Delivery Date; the Company has
complied with all its agreements contained herein;
and the conditions set forth in Section 9(a) have
been fulfilled;
(ii) (A) Neither the Company nor any of its
subsidiaries has sustained since the date of the
latest audited financial statements included or
incorporated by reference in the Prospectus any loss
or interference with its business from fire,
explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or
court or governmental action, order or decree,
otherwise than as set forth or contemplated in the
Prospectus or (B) since such date there has not been
any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in
or affecting the general affairs, management,
financial position, stockholders' equity or results
of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the
Prospectus; and
(iii) They have carefully examined the
Registration Statements and the Prospectus and, in
their opinion (A) the Registration Statements, as of
20
their respective Effective Dates, and the Prospectus,
as of each of the Effective Dates, did not include
any untrue statement of a material fact and did not
omit to state any material fact required to be stated
therein or necessary to make the statements therein
not misleading, and (B) since the Effective Date of
the Primary Registration Statement, no event has
occurred which should have been set forth in a
supplement or amendment to either of the Registration
Statements or the Prospectus.
(h) Each Selling Stockholder shall have furnished to
the Representatives on the First Delivery Date a certificate,
dated the First Delivery Date, signed by, or on behalf of, the
Selling Stockholder stating that the representations,
warranties and agreements of the Selling Stockholder contained
herein are true and correct as of the First Delivery Date and
that the Selling Stockholder has complied with all agreements
contained herein to be performed by the Selling Stockholder at
or prior to the First Delivery Date.
(i) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii)
since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Representatives, so
material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery Date on
the terms and in the manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations and (ii) no such organization shall
have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any
of the Company's debt securities.
(k) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the
Commission,
21
by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets in the United States shall
be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of
the Stock being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(l) The NASD, upon review of the terms of the public
offering of the Stock, shall not have objected to the
participation by any of the Underwriters in such offering or
asserted any violation of the By-Laws of the NASD.
(m) The Stock to be purchased on the Delivery Date by
the Underwriters shall be listed on the New York Stock
Exchange.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance satisfactory to
counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter and each Selling Stockholder, their respective officers and
employees and each person, if any, who controls any Underwriter or any Selling
Stockholder within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, Selling
Stockholder, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
either of the Registration Statements or the Prospectus, or in any amendment or
supplement thereto, or (B) in any blue sky application or other document
prepared or executed by the Company (or based upon any written information
furnished by the Company) specifically for the purpose of qualifying any or all
of the Stock under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, either of the Registration Statements or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (iii) any act or failure to act or any alleged act or failure
to act by any Underwriter or Selling Stockholder in connection with, or relating
in any manner to, the Stock or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause
22
(i) or (ii) above (provided that the Company shall not be liable under this
clause (iii) to the extent that it is determined in a final judgment by a court
of competent jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or omitted to
be taken by such Underwriter or Selling Stockholder through its gross negligence
or willful misconduct), and shall reimburse each Underwriter, each Selling
Stockholder and each such officer, employee and controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Underwriter,
Selling Stockholder, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application in reliance upon and in conformity with the written information
furnished to the Company through the Representatives by or on behalf of any
Underwriter or from any Selling Stockholder specifically for inclusion therein
and described in Section 10(f).
(b) The Selling Stockholders, severally in proportion to the
number of shares of Stock to be sold by each of them hereunder, shall indemnify
and hold harmless the Company and each Underwriter, their respective officers
and employees and each person, if any, who controls the Company or any
Underwriter within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which the Company or that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus,
either of the Registration Statements or the Prospectus, or in any amendment or
supplement thereto, or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, either of the Registration Statements or the Prospectus,
or in any amendment or supplement thereto, any material fact required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with the written information furnished to the Company from the
Selling Stockholders specifically for inclusion therein and described in Section
10(f), and shall reimburse the Company, each Underwriter, and each such officer,
employee and controlling person for any legal or other expenses reasonably
incurred by the Company or that Underwriter, officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; provided, further, that the aggregate amount payable by any Selling
Stockholder for such indemnification or reimbursement and for breaches of
representations and warranties pursuant to this Agreement shall in no case
exceed the net proceeds to such Selling Stockholder from the sale of the Stock.
The foregoing indemnity agreement is in addition to any liability which the
Selling Stockholders may otherwise have to the Company, any Underwriter or any
such officer, employee or controlling person.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and each Selling Stockholder, their
respective officers, employees and
23
directors and each person, if any, who controls the Company or such Selling
Stockholder within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company, such Selling Stockholder or any such officer, employee,
director or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, either of the
Registration Statements or the Prospectus, or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, either of the Registration
Statements or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with the written
information furnished to the Company through the Representatives by or on behalf
of that Underwriter specifically for inclusion therein and described in Section
10(f), and shall reimburse the Company, such Selling Stockholder and any such
officer, employee, director, or controlling person for any legal or other
expenses reasonably incurred by the Company, such Selling Stockholder or any
such officer, employee, director, or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company, such Selling Stockholder or any such officer,
employee, director, or controlling person.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 10 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company.
24
(e) If the indemnification provided for in this Section 10
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 10(a), 10(b) or 10(c) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company, the Selling Stockholders and the Underwriters
from the offering of the Stock 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, the Selling Stockholders and the
Underwriters with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, 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 with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Stock purchased under this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the shares of the Stock
purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Stockholders or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 10(e) were to be 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 into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 10(e) shall be deemed to include, for
purposes of this Section 10(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10(e), (i) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission and (ii) no
Selling Stockholder shall be required to contribute any amount in excess of the
amount by which the amount of net proceeds received by such Selling Stockholder
from the sale by such Selling Stockholder of its portion of the Stock pursuant
to this Agreement exceeds the amount of any damages which such Selling
Stockholder has otherwise paid or become liable to pay by reason of any 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 10(e) are several in proportion to their
respective underwriting obligations and not joint.
25
(f) The Underwriters severally confirm that the statements
with respect to the public offering of the Stock set forth on the cover page of,
and under the caption "Underwriting" in, the Prospectus are correct and
constitute the only information furnished in writing to the Company by or on
behalf of the Underwriters specifically for inclusion in the Registration
Statements and the Prospectus. Each of the Selling Stockholders severally
confirm that the statements with respect to such Selling Stockholder set forth
under the caption "Security Ownership of Certain Beneficial Owners, Management
and Selling Stockholders" in the Prospectus are correct and for purposes of
Sections 2(c) and 10(b) constitute the only information furnished in writing to
the Company by or on behalf of such Selling Stockholder specifically for
inclusion in the Registration Statement and the Prospectus.
11. Defaulting Underwriters. If, on either Delivery Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Stock which the defaulting Underwriter agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Stock set opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting Underwriters in Schedule
1 hereto; provided, however, that the remaining non-defaulting Underwriters
shall not be obligated to purchase any of the Stock on such Delivery Date if the
total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of shares of the Stock to be purchased on such Delivery Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of shares of the Stock which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 3. If the foregoing maximums
are exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date. If
the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Stock)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company or the Selling Stockholders, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 8 and 13. As used in this Agreement, the term "Underwriter" includes,
for all purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule 1 hereto who, pursuant to this Section 11,
purchases Firm Stock which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company and the Selling
Stockholders for damages caused by its default. If other underwriters are
obligated or agree to purchase the Stock of a defaulting or withdrawing
Underwriter, either the Representatives or the Company may postpone the First
Delivery Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Underwriters
may be necessary in the Registration Statement, the Prospectus or in any other
document or arrangement.
26
12. Termination. The obligations of the Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company and the Selling Stockholders prior to delivery of and payment for the
Firm Stock if, prior to that time, any of the events described in Sections 9(i),
9(j), 9(k), 9(l) or 9(m) shall have occurred or if the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If (a) the
Company or any Selling Stockholder shall fail to tender the Stock for delivery
to the Underwriters for any reason permitted under this Agreement, or (b) the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement (including the termination of this Agreement pursuant to Section
), the Company and the Selling Stockholders will severally, in proportion to the
12 number of shares of Stock to be sold, reimburse the Underwriters for the
reasonable fees and expenses of their counsel and for such other out-of-pocket
expenses as shall have been reasonably incurred by them in connection with this
Agreement and the proposed purchase of the Stock, and upon demand the Company
and the Selling Stockholders shall pay their proportionate share of the full
amount thereof to the Representatives. If this Agreement is terminated pursuant
to Section 11 by reason of the default of one or more Underwriters, neither the
Company nor any Selling Stockholder shall be obligated to reimburse any
defaulting Underwriter on account of those expenses.
14. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission to Xxxxxx
Brothers Inc., Three World Financial Center, New York, New
York 10285, Attention: Syndicate Department (Fax: 212-528-
8822);
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention:
Vice President-Finance (Fax: (000) 000-0000);
(c) if to any Selling Stockholder, shall be delivered
or sent by mail, telex or facsimile transmission to such
Selling Stockholder at the address set forth on Schedule 2
hereto;
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Selling Stockholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Xxxxxx Brothers Inc. on behalf of the Representatives.
15. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Selling Stockholders and their respective successors. This Agreement and the
terms and provisions hereof are for the sole
27
benefit of only those persons, except that (1) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the officers and employees of each
Underwriter or each Selling Stockholder and the person or persons, if any, who
control each Underwriter or each Selling Stockholder within the meaning of
Section 15 of the Securities Act, (2) the representations, warranties,
indemnities and agreements of the Selling Stockholders contained in this
Agreement shall also be deemed to be for the benefit of the officers and
employees of the Company or each Underwriter and the person or persons, if any,
who control the Company or each Underwriter within the meaning of Section 15 of
the Securities Act and (3) the indemnity agreement of the Underwriters contained
in Section 10(c) of this Agreement shall be deemed to be for the benefit of
directors, officers and employees of the Company or each Selling Stockholder and
any person controlling the Company or each Selling Stockholder within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 15, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Stockholders and the
Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Stock and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
17. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
19. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
20. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
28
If the foregoing correctly sets forth the agreement among the
Company, the Selling Stockholders and the Underwriters, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
SUNSOURCE INC.
By: _____________________________________
The Selling Stockholders:
XXXXXX LTD I, INC.
By: _____________________________________
XXXXXX BROTHERS CAPITAL PARTNERS I
LB I Group Inc., general partner
By: ____________________________
XXXXXX/SDI, INC.
By: _____________________________________
Accepted:
XXXXXX BROTHERS INC.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX XXXX LLC
XXXX XXXXX XXXX XXXXXX, INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
XXXXXX BROTHERS INC.
By By: _____________________________________
Authorized Representative
SCHEDULE 1
Number of Shares
Underwriters of Firm Stock
------------ -------------
Xxxxxx Brothers Inc.................................
Xxxxxx X. Xxxxx & Co. Incorporated
Xxxxxx Xxxx LLC
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
---------
Total.......................................... 1,976,059
=========
SCHEDULE 2
Name and address* of Selling Stockholders Number of Shares
----------------------------------------- ----------------
Xxxxxx LTD I, Inc. 27,138
Xxxxxx Brothers Capital Partners I 910,921
Xxxxxx/SDI, Inc. 538,000
---------
Total........................................ 1,476,059
=========
------------------------
*The address of each of the Selling Stockholders is:
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _______________
