COMPASS DIVERSIFIED HOLDINGS COMPASS GROUP DIVERSIFIED HOLDINGS LLC 5,100,000 Trust Shares UNDERWRITING AGREEMENT
Exhibit 1.01
EXECUTION COPY
COMPASS DIVERSIFIED HOLDINGS
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
5,100,000 Trust Shares
June 4, 2009
June 4, 2009
To the Manager named in Schedule I hereto
for the Underwriters named in Schedule II hereto
for the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
Compass Group Diversified Holdings LLC, a Delaware limited liability company (the “Company”),
for itself and as sponsor of Compass Diversified Holdings, a statutory trust formed under the laws
of the State of Delaware (the “Trust”), the Trust and Compass Group Management LLC, a Delaware
limited liability company (the “CODI Manager”), propose to issue and sell to the several
underwriters named in Schedule II hereto (the “Underwriters”), for whom you are acting as manager
(the “Manager”), the number of shares of the Trust set forth in Schedule I hereto (the “Firm
Shares”). The Company, for itself and as sponsor of the Trust, the Trust and the CODI Manager also
propose to issue and sell to the several Underwriters not more than the number of additional shares
of the Trust set forth in Schedule I hereto (the “Additional Shares”) if and to the extent that
you, as Manager of the offering, shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such shares of the Trust granted to the Underwriters in Section 3 hereof.
The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “Shares.”
The shares of the Trust to be outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the “Trust Stock.”
Immediately prior to the delivery of the Firm Shares and the Additional Shares, if any, to the
Underwriters, the Trust will issue the Firm Shares and the Additional Shares, if any, in exchange
for, and as consideration for, an equal number of limited liability company interests (the “New
Trust Interests”) of the Company that were designated as “Trust Interests” under the Company’s
Second Amended and Restated Operating Agreement, dated as of January 9, 2007, governing the Company
(the “Operating Agreement”). The limited liability company interests of the Company outstanding as
of the date hereof and to be outstanding after giving effect to the issuance of the New Trust
Interests are hereinafter referred to as the “Trust Interests”.
The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement, including a prospectus, (the file number of which is set forth in Schedule
I hereto) on Form S-3, relating to the securities (the “Shelf Securities”), including the Shares,
to be issued from time to time by the Company. The registration statement as amended to the date
of this Agreement, including the information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A or Rule 430B
under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as
the “Registration Statement”, and the related base prospectus covering the Shelf Securities filed
as part of such registration statement, in the form in which it has most recently been filed with
the Commission on or prior to the date of this Agreement is hereinafter referred to as the “Basic
Prospectus.” The Basic Prospectus, as supplemented by the prospectus supplement specifically
relating to the Shares in the form first used to confirm sales of the Shares (or in the form first
made available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule
173 under the Securities Act) is hereinafter referred to as the “Prospectus,” and the term
“preliminary prospectus” means any preliminary form of the Prospectus. For purposes of this
Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities
Act, “Time of Sale Prospectus” means the Basic Prospectus and any preliminary prospectus together
with the free writing prospectuses, if any, each identified in Schedule I hereto, and “broadly
available road show” means a “bona fide electronic road show” as defined in Rule 433(h)(5) under
the Securities Act that has been made available without restriction to any person. As used herein,
the terms “Registration Statement,” “Basic Prospectus,” “preliminary prospectus,” “Time of Sale
Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference
therein. The terms “supplement,” “amendment,” and “amend” as used herein with respect to the
Registration Statement, the Basic Prospectus, the Time of Sale Prospectus, any preliminary
prospectus or free writing prospectus shall include all documents subsequently filed by the Company
with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that are deemed to be incorporated by reference therein.
1. Representations and Warranties. The Company, for itself and as sponsor of the Trust,
represents and warrants to and agrees with the Underwriters that:
(a) The Registration Statement has become effective; 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) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated
by reference in the Time of Sale Prospectus or the Prospectus complied or will comply when so filed
in all material respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (ii) each part of the Registration Statement, when such part became
effective, did not contain, and each such part, as amended or supplemented, 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, (iii) the Registration
Statement as of the date hereof does 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, (iv) the Registration Statement and the Prospectus comply, and as amended or
supplemented, if applicable, will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder, (v) the Time of Sale Prospectus does
not, and at the time of each sale of the Shares in connection with the offering when the Prospectus
is not yet available to prospective purchasers and at the Closing Date (as defined in Section 4),
the Time of Sale Prospectus, as then amended or supplemented by
the Company, 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, (vi) each broadly available road show, if
any, when considered together with the Time of Sale Prospectus, does 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 and (vii) 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
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to statements or omissions in the Registration Statement, the Time of Sale Prospectus or the
Prospectus based upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Managers expressly for use therein.
(c) The Company is not an “ineligible issuer” in connection with the offering pursuant to
Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company is
required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with
the Commission in accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that the Company has
filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was
prepared by or behalf of or used or referred to by the Company complies or will comply in all
material respects with the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule I hereto forming part of the Time of Sale Prospectus, and electronic road
shows, if any, each furnished to you before first use, the Company has not prepared, used or
referred to, and will not, without your prior consent, prepare, use or refer to, any free writing
prospectus.
(d) The Company has been duly formed, is validly existing as a limited liability company
under the laws of the State of Delaware, is in good standing under the laws of the State of
Delaware and has the limited liability company power and authority to own its properties and
conduct its business as described in the Time of Sale Prospectus and the Prospectus. The Company
and each of the Businesses (as defined below) is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so qualified or be in good
standing would not, individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), prospects, net worth, management, earnings, cash flows,
business, operations or properties of the Company and the Businesses, taken as a whole, whether or
not arising from transactions in the ordinary course of business (a “Material Adverse Effect”).
(e) The Company directly owns the outstanding voting securities of the entities enumerated on
Schedule IV hereto (such entities being referred to herein as the “Businesses”) in the percentages
shown in the Time of Sale Prospectus and the Prospectus. The Businesses are the only significant
subsidiaries of the Company as defined by Rule 1-02 of Regulation S-X. Each of the Businesses has
been duly organized, is validly existing as a corporation or limited
liability company, as applicable, in good standing under the laws of the jurisdiction of its
organization, has the requisite power and authority and possesses all certificates, authorizations,
licenses, permits and consents (“Permits”), including but not limited to, all Permits relating to
Environmental Laws (as defined below) that are material and necessary to own its property and to
conduct its business, in each case, as described in the Time of Sale Prospectus and the Prospectus,
and is duly qualified to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified, in good standing or to have such Permits would not
have a Material Adverse Effect. All the outstanding shares of capital stock of each of the
Businesses have been duly and validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Time of Sale Prospectus and the
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Prospectus, all
outstanding shares of capital stock of each of the Businesses owned by the Company are owned free
and clear of any perfected security interest or any other security interests, claims, liens or
encumbrances.
(f) As of the date of this Agreement, the CODI Manager owned all of the issued and
outstanding Allocation Interests (as defined in the Operating Agreement) of the Company, the Trust
owned all of the issued and outstanding Trust Interests (as defined in the Operating Agreement) of
the Company, and there were no other securities of the Company outstanding, without giving effect
to any issuances of securities contemplated herein. All of the Trust Interests and all of the
Allocation Interests currently outstanding are, and upon delivery of a number of New Trust
Interests to the Trust in exchange for the Shares to be issued by the Trust under this Agreement,
the Trust Interests will be, validly issued, fully paid and nonassessable and free of statutory and
contractual preemptive rights or rights of first refusal, and holders of the Shares shall not be
obligated personally for any of the debts, obligations or liabilities of the Company, whether
arising in contract, tort or otherwise. Except as described in the Time of Sale Prospectus and the
Prospectus, no person has the right, contractual or otherwise, to cause the Company or the Trust to
issue or sell to it any Trust Interests or other securities of the Company. No person has the
right, contractual or otherwise, to cause the Company or the Trust to issue or sell to it any
Allocation Interests.
(g) The Operating Agreement has been duly authorized, executed and delivered by the members
of the Company and is the valid and binding obligation of the Company and the members of the
Company. The Trust Interests and the Operating Agreement conform in all material respects to the
descriptions thereof set forth in the Time of Sale Prospectus and the Prospectus, and such
descriptions conform to the rights set forth in the instruments defining the same.
(h) The Company, as sponsor of the Trust, is authorized by the Amended and Restated Trust
Agreement of the Trust, dated as of December 21, 2007 and effective as of January 1, 2007 (the
“Trust Agreement”) among the Company, as sponsor, The Bank of New York (Delaware), a Delaware
banking corporation, as Delaware trustee, and the Regular Trustees, as defined therein, to act in
such capacity to execute and deliver this Agreement on behalf of the Trust, to cause the Trust to
issue the Shares to be sold under this Agreement, to sell and accept payment therefor, and
otherwise to consummate the transactions contemplated herein. This Agreement has been duly authorized, executed and delivered by the Company, for itself and
as sponsor of the Trust.
(i) Except as set forth in the Time of Sale Prospectus and the Prospectus, the Company, the
Trust and the Businesses are not and will not, as of the Closing Date and any Option Closing Date,
be restricted by their respective organizational documents or any indenture, mortgage, deed of
trust, loan or credit agreement, promissory note, lease, statutory trust, servicing agreement,
contract, arrangement, understanding, document or any other instrument (“Contract”) or any Permit
from declaring and paying any dividends or distribution on the Trust Interests, in the case of the
Company, on the Shares, in the case of the Trust, and to the Company, in the case of the
Businesses, in each case, in accordance with their respective organizational documents as set forth
in the Time of Sale Prospectus and the Prospectus, or that
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would restrict the payment of interest
on, or the repayment of principal of, any loans or advances by the Businesses to the Company.
(j) There are no Contracts between the Company and any person that would give rise to a claim
against the Company or any Underwriter for a brokerage commission, finder’s fee or similar payment
with respect to the offer and sale of the Shares.
(k) 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 Securities Act,
complied when so filed in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder.
(l) Except as disclosed in the Time of Sale Prospectus and the Prospectus, there are no
Contracts between the Company and any person granting such person the right 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 Shares registered pursuant to the Registration Statement.
(m) Subsequent to the respective dates as of which information is given in each of the
Registration Statement, the Time of Sale Prospectus and the Prospectus, (i)the Trust, the Company
and each of the Businesses have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction; (ii)each of the Trust, the Company and the
Businesses has not purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock other than ordinary and
customary dividends; and (iii)there has not been any material change in the capital stock,
short-term debt or long-term debt of the Trust, the Company and each of the Businesses, except in
each case as described in each of the Registration Statement, the Time of Sale Prospectus and the
Prospectus, respectively.
(n) No consent, approval, authorization, or order of, or filing with, any domestic or foreign
regulatory, administrative or governmental agency, body or authority, any domestic or foreign
self-regulatory authority, or any similar agency, or any court, or arbitration body or agency
(domestic or foreign) (each, a “Governmental Authority”), is required in connection with the issue
and sale of the Shares by the Company and the Trust hereunder, except such as have been obtained
and made under the Securities Act, such as may be required under state
securities laws or such as may be required under the bylaws or rules and regulations of the
Financial Industry Regulatory Authority (“FINRA”).
(o) There are no statutes, regulations or Contracts which are required to be described in or
filed as exhibits to the Registration Statement which have not been so described or filed as
required. The statements in the Time of Sale Prospectus and the Prospectus under the headings
“Risk Factors”, “Description of Shares” and “Material U.S. Federal Income Tax Considerations”,
insofar as such statements summarize legal matters, agreements, documents or proceeding discussed
therein, are accurate and fair summaries of such legal matters, agreements, documents of
proceedings.
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(p) No labor problem or dispute with the employees of the Company or any of the Businesses
exists or, to the Company’s knowledge, is threatened or imminent, that would reasonably be expected
to have a Material Adverse Effect, except as set forth in or contemplated in the Time of Sale
Prospectus and the Prospectus (exclusive of any supplement thereto).
(q) Neither the Company nor any of the Businesses is in violation of or default under, and
neither the issue and sale of the Trust Stock or the Trust Interests hereunder nor the consummation
of any other of the transactions herein contemplated (including the issuance and sale of the Shares
and the use of the proceeds from the sale of the Shares as described in the Time of Sale Prospectus
and the Prospectus under the heading “Use of Proceeds”), nor the fulfillment of the terms hereof
has or will conflict with or result in a breach or violation of, constitute a default under, or
imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of
the Businesses pursuant to, (i) the Certificate of Formation or Operating Agreement of the Company
or the charter or bylaws, or similar organizational documents, of any of the Businesses, (ii) any
federal, state, local and foreign law, statute, rule, regulation and ordinance, or any decision,
directive or order of any Governmental Authority (“Laws”), including but not limited to all Laws
relating to the protection of human health and safety, the environment or hazardous or toxic
substances or wastes or pollutants or contaminants (collectively, “Environmental Laws”), applicable
to the Company and the Businesses or (iii) the terms of any Contract to which the Company or any of
the Businesses is a party or by which the Company or any of the Businesses is bound or pursuant to
which any of the properties of the Company or any of the Businesses are subject, except in the case
of (ii) and (iii), where any such violations or defaults would not, individually or in the
aggregate, have a Material Adverse Effect.
(r) Except as disclosed in the Time of Sale Prospectus and the Prospectus, (i) each of the
Company and the Businesses has good and valid title to all property and assets owned by it that are
necessary to conduct its respective business as described in the Time of Sale Prospectus and the
Prospectus and (ii) each of the Company and the Businesses holds any leased real or personal
property under valid and enforceable leases that are necessary to conduct its respective business
as described in the Time of Sale Prospectus and the Prospectus, except to the extent that the
failure to have such good and valid title or hold such valid and enforceable leases would not have
a Material Adverse Effect. Immediately prior to the consummation of the transactions contemplated
herein, the Company will own and will have good and valid title to the Shares to be sold hereunder,
free and clear of any lien, charge or encumbrance; and upon delivery of such Shares to the
Underwriters and payment of the Purchase Price therefor as herein
contemplated, the Underwriters will receive good and valid title to the Shares purchased by
them from the Company, free and clear of any lien, charge or encumbrance.
(s) Each of the Company and the Businesses owns or possesses adequate trademarks, trade names
and other rights to inventions, know-how, patents, copyrights, trade secrets and other intellectual
property (collectively, “Intellectual Property Rights”) that it purports to own and that are
necessary to conduct its respective business as described in the Time of Sale Prospectus and the
Prospectus and none of the Company or the Businesses have received any notice of any claim of
infringement of or conflict with asserted rights of others with respect to any Intellectual
Property Rights, except to the extent that the failure to own or possess such
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Intellectual Property
Rights or where such claim of infringement of such conflict with asserted rights of others would
not have a Material Adverse Effect.
(t) The Company is not, and will not, after giving effect to the offering and sale of the
Shares and the application of the proceeds as described in the Time of Sale Prospectus and the
Prospectus, be an “investment company” within the meaning of the Investment Company Act of 1940, as
amended, and the Commission’s rules and regulations thereunder.
(u) There are no legal or governmental proceedings pending or, to the knowledge of the
Company, threatened to which the Company, the Trust or any of the Businesses is a party or to which
any of the properties of the Company, the Trust or any of the Businesses is subject (i) other than
proceedings accurately described in all material respects in the Time of Sale Prospectus and
proceedings that would not have a Material Adverse Effect, or that would not have a material
adverse effect on the power or ability of the Company or the Trust to perform their obligations
under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus
or (ii) that are required to be described in the Registration Statement or the Prospectus and are
not so described.
(v) The Company, the Trust and each of the Businesses has filed all tax returns that are
required to be filed or has requested extensions thereof (except in any case in which the failure
to so file would not have a Material Adverse Effect) and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty that is currently
being contested in good faith or as would not have a Material Adverse Effect.
(w) The consolidated financial statements, together with related schedules, exhibits and
notes, included in the Time of Sale Prospectus, the Prospectus and the Registration Statement
present fairly the financial condition, results of operations, cash flows and changes in financial
position of the Trust, the Company and the Businesses on the basis stated therein at the respective
dates or for the respective periods to which they apply; such statements and related schedules,
exhibits and notes have been prepared in accordance with United States generally accepted
accounting principles consistently applied throughout the periods involved, except as may be
expressly disclosed therein. The summary financial data set forth under the caption “Summary
Financial Data” in the Time of Sale Prospectus, the Prospectus and the Registration Statement
presents fairly the information shown therein, and has been compiled on a basis consistent with
that of the related financial statements included in the Time of Sale Prospectus, the Prospectus
and the Registration Statement.
(x) The Company and each of the Businesses maintain 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. The Company and the Businesses have
not become aware of any material weakness in their internal control over financial reporting
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and
there has been no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting since December 31, 2008.
(y) The Company and the Businesses maintain “disclosure controls and procedures” (as such
term is defined in Rule 13a-15(e) under the Exchange Act) which are (i) designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms and that material information relating to the Company and the
Businesses is made known to the Company’s principal executive officer and principal financial
officer by others within the Company and the Businesses to allow timely decisions regarding
disclosure, and (ii) effective in all material respects to perform the functions for which they
were established. Based on the evaluation of the Company’s and each Business’s disclosure controls
and procedures described above, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the Company’s ability to
record, process, summarize and report financial data or any material weaknesses in internal
controls or (ii) any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company’s internal controls. Since the most recent evaluation
of the Company’s disclosure controls and procedures described above, there have been no significant
changes in internal controls or in other factors that could significantly affect internal controls.
(z) There is and has been no failure on the part of the Company and, to the knowledge of the
Company, any of the Company’s directors or officers, in their capacities as such, to comply with
any provision of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”) and the rules and
regulations promulgated thereunder, including Section 402 relating to loans and Sections 302 and
906 relating to certifications.
(aa) Each of the Company and the Businesses maintains insurance covering its respective
properties, operations, personnel and businesses as it reasonably believes to be financially
responsible in amounts it reasonably deems adequate.
(bb) Except as disclosed in the Time of Sale Prospectus and the Prospectus, subsequent to the
respective dates as of which such information is given or included in the Time of Sale Prospectus
and the Prospectus, there has not occurred, or been any event, circumstance or development that
could result in, any material adverse change in the condition (financial or otherwise), prospects,
net worth, management, earnings, operations, cash flows, business, operations or properties of the
Company and the Businesses, taken as a whole.
(cc) Neither the Company nor, to its knowledge, any of its affiliates has taken or will take,
directly or indirectly, any action that constituted, or any action designed to, or that might
reasonably be expected to cause or result in, stabilization or manipulation of the price of any
security of the Trust to facilitate the sale or resale of the Shares.
(dd) To the Company’s knowledge, no officer, director or nominee for director or 5% or
greater shareholder of the Company has a direct or indirect affiliation or association with any
member of FINRA.
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(ee) Neither the Company nor any of Businesses nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of the Businesses, is aware
of or has taken any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA. The Company, the Businesses and, to the knowledge
of the Company, their affiliates have conducted their businesses in compliance with the FCPA and
have instituted and maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.
(ff) Neither the Company nor any of Businesses nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any the Businesses is currently
the subject of any sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”). The Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the activities of any
person that is the subject of any sanctions administered by OFAC.
(gg) The operations of the Company and the Businesses are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements and the
money laundering statutes and the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any of
the Businesses with respect to the Money Laundering Laws is pending or, to the best knowledge of
the Company, threatened.
2. Representations and Warranties of the Trust. The Company, as sponsor of the Trust,
represents and warrants to and agrees with the several Underwriters that:
(a) The Trust has been duly created and is validly existing and in good standing as a
statutory trust under the laws of the State of Delaware, has the trust power and authority to
conduct its business as described in the Time of Sale Prospectus and Prospectus and is not
required to be qualified or authorized to do business in any other jurisdiction.
(b) There are 31,525,000 shares of Trust Stock outstanding as of the date of this Agreement.
All of the shares of Trust Stock currently outstanding are, and upon delivery of the Shares to be
sold under this Agreement, all of the shares of Trust Stock will be, duly authorized, validly
issued, fully paid and nonassessable and free of statutory and contractual preemptive rights or
rights of first refusal, and holders of the Shares will have the same personal liability as holders
of shares of a private corporation for profit organized under the Delaware General Corporation Law
(“DGCL”). Except as described in the Time of Sale Prospectus and the
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Prospectus, no person has the
right, contractual or otherwise, to cause the Trust to issue or sell to it any shares of Trust
Stock or other securities of the Trust.
(c) The Trust Agreement has been duly authorized, executed and delivered by the Company and
the Regular Trustees and is a valid and binding obligation of the Company and the Regular Trustees.
The Shares and the Trust Agreement conform in all material respects to the descriptions thereof in
the Time of Sale Prospectus and the Prospectus, and such descriptions conform to the rights set
forth in the instruments defining the same.
(d) As of the Closing Date and any Option Closing Date, the Trust shall have an authorized
and outstanding capitalization as set forth under the heading of the Time of Sale Prospectus and
the Prospectus entitled “Pro Forma Capitalization” (subject, in the case of the Closing Date and in
the event that the Closing Date and the Option Closing Date occur concurrently, to the issuance of
the Additional Shares, and subject, in the case of the Option Closing Date, to the issuance of the
Additional Shares).
(e) Except as disclosed in the Time of Sale Prospectus and the Prospectus, there are no
Contracts between the Trust and any person granting such person the right to require the Trust to
file a registration statement under the Securities Act with respect to any securities of the Trust
owned or to be owned by such person or to require the Trust to include such securities in the
Shares registered pursuant to the Registration Statement.
(f) The Trust has all power and authority necessary to execute and deliver this Agreement and
the Shares, and to perform its obligations hereunder; and the issue and sale of the Shares
hereunder have not and will not conflict with or result in a breach or violation of, constitute a
default under, or imposition of any lien, charge or encumbrance upon any property or assets of the
Trust, the Company or any of the Businesses pursuant to (A) the Certificate of Trust of the Trust
or the Trust Agreement, (B) any Laws applicable to the Trust or the Businesses, or (C) the terms of
any Contract to which the Trust, the Company or any of the Businesses is a party or by which the
Trust, the Company or any of the Businesses is bound or pursuant to which any of the properties of
the Trust, the Company or any of the Businesses are subject.
(g) The Trust is not, and will not, after giving effect to the offering and sale of the
Shares and the application of the proceeds as described in the Time of Sale Prospectus and the
Prospectus, be an “investment company” within the meaning of the Investment Company Act of 1940, as
amended, and the Commission’s rules and regulations thereunder.
3. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several
Underwriters, and each Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Company the respective numbers of Firm Shares set forth in Schedule II hereto
opposite its name at $8.36325 per share (the “Purchase Price”).
On the basis of the representations and warranties contained in this Agreement, and subject to
its terms and conditions, the Company agrees to sell to the Underwriters the Additional Shares, and
the Underwriters shall have the right to purchase, severally and not jointly, up to the
10
number of
Additional Shares set forth in Schedule I hereto at the Purchase Price. You may exercise this
right on behalf of the Underwriters in whole or from time to time in part by giving written notice
not later than 30 days after the date of the Prospectus. Any exercise notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on which such shares
are to be purchased. Each purchase date must be at least one business day after the written notice
is given and may not be earlier than the closing date for the Firm Shares nor later than ten
business days after the date of such notice. Additional Shares may be purchased as provided in
Section 5 hereof solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. On each day, if any, that Additional Shares are to be purchased (an
“Option Closing Date”), each Underwriter agrees, severally and not jointly, to purchase the number
of Additional Shares (subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the total number of Additional Shares to be purchased
on such Option Closing Date as the number of Firm Shares set forth in Schedule II hereto opposite
the name of such Underwriter bears to the total number of Firm Shares.
4. Public Offering. The Company is advised by you that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public upon the terms set forth in the
Prospectus.
5. Payment and Delivery. Payment for the Firm Shares shall be made to the Company in Federal
or other funds immediately available in New York City on the closing date and time set forth in
Schedule I hereto, or at such other time on the same or such other date, not later than the fifth
business day thereafter, as may be designated in writing by you. The time and date of such payment
are hereinafter referred to as the “Closing Date”.
Payment for any Additional Shares shall be made to the Company in Federal or other funds
immediately available in New York City on the date specified in the corresponding notice described
in Section 3 or at such other time on the same or on such other date, in any event not later than
the tenth business day thereafter, as may be designated in writing by you.
The Firm Shares and the Additional Shares shall be registered in such names and in such
denominations as you shall request in writing not later than one full business day prior to the
Closing Date or the applicable Option Closing Date, as the case may be, for the respective accounts
of the several Underwriters, with any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price
therefor.
6. Conditions to the Underwriters’ Obligations. The several obligations of the Underwriters
are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date:
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(i) there shall not have occurred any downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded any of the securities of
the Trust, the Company or any of the Businesses by any “nationally recognized statistical rating
organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
and
(ii) there shall not have occurred any change, or been any event, circumstance or
development that could result in, any material adverse change in the condition (financial or
otherwise), prospects, net worth, management, earnings, operations, cash flows, business,
operations or properties of the Company and the Businesses, taken as a whole, from that set
forth in the Time of Sale Prospectus as of the date of this Agreement that, in your judgment, is
material and adverse and that makes it, in your judgment, impracticable to market the Shares on
the terms and in the manner contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing
Date and signed by an executive officer of the Company, to the effect set forth in Section 6(a)(i)
above and to the effect that (i) the representations and warranties of the Trust and the Company
contained in this Agreement are true and correct as of the Closing Date, (ii) the Trust and the
Company have complied with all of the agreements and satisfied all of the conditions on its part to
be performed or satisfied hereunder on or before the Closing Date, (iii) the Prospectus, and any
supplement thereto, has been filed in the manner and within the time period required by Rule
424(b), (iv) each free writing prospectus, if any, identified on Schedule I hereto and any other
material required to be filed by the Company pursuant to Rule 433 under the Securities Act has been
filed with the Commission within the applicable time periods prescribed for such filings by Rule
433, (v) the Registration Statement has become effective and (vi) no stop order suspending the
effectiveness of the Registration Statement, or any notice objecting to its use, has been issued
and no proceedings for that purpose have been instituted or threatened by the Commission.
The officer signing and delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of Squire, Xxxxxxx &
Xxxxxxx L.L.P., outside counsel for the Company, dated the Closing Date, to the effect that:
(i) (A) the Registration Statement has become effective, (B) to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration Statement, or any notice
objecting to its use, has been issued and no proceedings for that purpose have been instituted
or threatened by the Commission and (C) the Registration Statement, the Time of Sale Prospectus
and the Prospectus (other than the financial statements and other financial and statistical
information contained therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements of the Securities Act;
12
(ii) each of the Businesses has been duly organized and is a validly existing corporation
or limited liability company in good standing under the laws of the jurisdiction of its
organization, with full power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Time of Sale Prospectus and the
Prospectus; and each of the Businesses is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction that requires such qualification.
(iii) based solely on such counsel’s review of the minute books, stock transfer books,
certificates of incorporation, by-laws or other organizational documents of each of the
Businesses, all of the issued and outstanding capital stock or ownership interests of each of
the Businesses have been duly authorized and validly issued and are fully paid and
nonassessable, and, all outstanding capital stock or ownership interests of the Businesses as
set forth in the Time of Sale Prospectus and the Prospectus as owned by the Company, are owned
by the Company free and clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interest, claim, lien or encumbrance except for
such security interests, claims, liens or encumbrances as required by the credit agreement,
dated as of November 21, 2006, as amended, among the Company, the financial institutions named
therein and Madison Capital Funding LLC, as agent;
(iv) the Trust’s and the Company’s authorized equity capitalization is as set forth in the
Time of Sale Prospectus and the Prospectus and the capital stock and equity interests,
respectively, of the Trust and the Company conform in all material respects to the descriptions
thereof contained in the Time of Sale Prospectus and the Prospectus; the currently outstanding
Allocation Interests and Trust Interests of the Company have been duly and validly authorized
and issued and are fully paid and nonassessable; and the New Trust Interests have been duly
authorized and, upon delivery of the New Trust Interests to the Trust in exchange for the Shares
to be issued by the Trust under this Agreement, will be, validly issued, fully paid and
nonassessable; the Shares are duly listed and admitted and authorized for trading, subject to
official notice of issuance, on Nasdaq Global Select Market; the holders of outstanding Trust
Interests of the Company are not entitled to preemptive or other rights to subscribe for the
Shares; and, except as set forth in the Time of Sale Prospectus and the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of capital stock of or
ownership interests in the Trust or the Company are outstanding;
(v) there is no pending or, to the knowledge of such counsel, threatened action, suit or
proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any of the Businesses or its or their property
of a character required to be disclosed in the Registration Statement which would reasonably be
expected to result in a Material Adverse Effect, or to materially and adversely affect the
consummation of the transactions contemplated in this Agreement or the performance of the
Company or the Trust of their obligations hereunder and that is not adequately disclosed in the
Time of Sale Prospectus;
(vi) the statements relating to legal matters, documents or proceedings included in (A)
the Time of Sale Prospectus and the Prospectus under the captions “Risk
13
Factors”, “Description
of Shares” and “Material U.S. Federal Income Tax Considerations” and (B) the Prospectus under
the caption “Underwriters”, in each case, fairly summarize in all material respects such
matters, documents or proceedings;
(vii) to such counsel’s knowledge, there are no statutes, regulations or Contracts which
are required to be described in or filed as an exhibit to the Registration Statement, which have
not been so described or filed as required, and the descriptions thereof thereto are correct in
all material respects;
(viii) this Agreement has been duly authorized, executed and delivered by the Trust and
the Company;
(ix) neither the Trust nor the Company is or, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the Time of Sale
Prospectus and the Prospectus, will be, an “investment company” as defined in the Investment
Company Act of 1940, as amended;
(x) no consent, approval, authorization, filing with or order of any court or governmental
agency or body is required in connection with the transactions contemplated herein, except such
as have been obtained under the Securities Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and distribution of the Shares by the
Underwriters in the manner contemplated in this Agreement and in the Time of Sale Prospectus and
the Prospectus and such other approvals (specified in such opinion) as have been obtained;
(xi) neither the issue and sale of the Shares, nor the consummation of any other of the
transactions herein contemplated (including the use of the proceeds from the sale of the Shares
as described in the Time of Sale Prospectus and the Prospectus under the heading “Use of
Proceeds”) nor the fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or its subsidiaries pursuant to, (i) the charter or by-laws or similar
organizational documents of the Company, the Trust or the Businesses, (ii) the terms of any
Contract to which the Trust, the Company or any of the Businesses is a party or bound or to
which any of their property is subject of which such counsel are aware, or (iii) any statute,
law, rule, regulation, judgment, order or decree applicable to Trust, the Company or any of the
Businesses of any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Trust, the Company or any of the Businesses or
any of their properties; and
(xii)(A) in the opinion of such counsel (1) each document filed pursuant to the Exchange
Act and incorporated by reference in the Time of Sale Prospectus or the Prospectus (except for
the financial statements and financial schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) appeared on its face to
be appropriately responsive as of its filing date in all material respects to the requirements
of the Exchange Act and the applicable rules and regulations of the Commission thereunder, and
(2) the Registration Statement and the Prospectus (except for the financial statements and
financial schedules and other financial and statistical data
14
included therein as to which such counsel need not express any opinion) appear on their face to
be appropriately responsive in all material respects to the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder, and (B) nothing has come
to the attention of such counsel that causes such counsel to believe that (1) any part of the
Registration Statement, when such part became effective (except for the financial statements and
financial schedules and other financial and statistical data included therein as to which such
counsel need not express any belief) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (2) the Registration Statement (except for the financial
statements and financial schedules and other financial and statistical data included therein as
to which such counsel need not express any belief) on the date of this Agreement contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (3) the Time of Sale
Prospectus (except for the financial statements and financial schedules and other financial and
statistical data included therein, as to which such counsel need not express any belief) as of
the date of this Agreement or as amended or supplemented, if applicable, as of the Closing Date
contained or contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made not misleading or (4) the Prospectus (except for the
financial statements and financial schedules and other financial and statistical data included
therein, as to which such counsel need not express any belief) as amended or supplemented, if
applicable, as of the Closing Date contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made not misleading.
(d) The Underwriters shall have received on the Closing Date an opinion of Xxxxxxxx, Xxxxxx &
Finger, P.A., outside counsel for the Company, dated the Closing Date, to the effect that:
(i) the Trust has been duly created and is validly existing in good standing as a
statutory trust under the Delaware Statutory Trust Act and all filings required under the laws
of the state of Delaware with respect to the creation and valid existence of the Trust as a
statutory trust have been made;
(ii) under the Delaware Statutory Trust Act and the Trust Agreement, the Trust has the
trust power and authority to (x) own its property and conduct its business, all as described in
the Registration Statement and Prospectus and (y) execute and deliver this Agreement and perform
its obligations hereunder;
(iii) the provisions of the Trust Agreement are permitted under the Delaware Statutory
Trust Act and the Trust Agreement constitutes a valid and binding obligation of the Company and
the Trustees (as defined in the Trust Agreement), enforceable against the Company and the
Trustees in accordance with its terms;
(iv) under the Delaware Statutory Trust Act and the Trust Agreement, (x) the execution and
delivery by the Trust of this Agreement and the performance by the Trust of its obligations
hereunder have been duly authorized by all necessary trust action on the part of
15
the Trust, and (y) the Company is authorized to execute and deliver this Agreement on
behalf of the Trust;
(v) the shares of Trust Stock outstanding prior to the issuance of the Shares have been
duly authorized and are validly issued, fully paid and nonassessable;
(vi) the Shares have been duly authorized by the Trust Agreement and, when issued and
delivered by the Trust upon receipt of payment therefor, in accordance with the Trust Agreement
and as contemplated by the Registration Statement, will be duly and validly issued and will be
fully paid and nonassessable undivided beneficial interests in the assets of the Trust will be
entitled to the benefits of the Trust Agreement. Holders of the Shares as beneficial owners of
the Trust will be entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the DGCL;
(vii) under the Delaware Statutory Trust Act and the Trust Agreement, the issuance of the
Shares is not subject to preemptive or other similar rights; the issuance and sale by the Trust
of the Shares, the execution, delivery and performance by the Trust of the Underwriting
Agreement, the consummation by the Trust of the transactions contemplated thereby and compliance
by the Trust with its obligations thereunder (A) do not violate (i) any of the provisions of the
Certificate or the Trust Agreement or (ii) any Delaware law or administrative regulation
thereunder which is applicable to the Trust, and (B) do not require any consent, approval,
license, authorization or validation of, or filing or registration with, any Delaware
legislative, administrative or regulatory body under the laws or administrative regulations of
the State of Delaware (other than the filing of the Certificate of Trust);
(viii) under the Delaware Statutory Trust Act, the certificate attached to the Trust
Agreement as Exhibit A to such opinion is an appropriate form of certificate to evidence
ownership of the Shares;
(ix) the Company has been duly formed and is validly existing in good standing as a
limited liability company under the Delaware Limited Liability Company Act (6 Del. C. §
18-101, et seq.) (the “LLC Act”).
(x) under the LLC Act and the Operating Agreement, the Company has all necessary limited
liability company power and authority to enter into this Agreement and to conduct its business
as described in the Prospectus;
(xi) under the LLC Act and the Operating Agreement, the form of Trust Interest certificate
attached to the Operating Agreement as Exhibit A to such agreement is an appropriate form of
certificate to evidence ownership of the Trust Interests. Under the LLC Act, the Operating
Agreement and the resolutions, the New Trust Interests have been duly authorized and, when
issued and delivered against payment of the consideration as set forth in the Operating
Agreement and this Agreement, the New Trust Interests will be validly issued, fully paid and,
subject to the qualifications set forth in paragraph (xii) below, nonassessable limited
liability company interests in the Company and the holders of such New Trust Interests will be
entitled to the benefits of the Operating Agreement;
16
(xii) the holders of Trust Interests shall not be obligated personally for any of the
debts, obligations or liabilities of the Company, whether arising in contract, tort or
otherwise, solely by reason of being a member of the Company, except as a holder of Trust
Interests may be obligated to repay any funds wrongfully distributed to it (we note that a
holder of Trust Interests may be obligated pursuant to the Operating Agreement to provide to the
transfer agent sufficient indemnity in connection with the issuance of replacement Trust
Interest certificates);
(xiii) under the LLC Act and the Operating Agreement, the execution and delivery by the
Company of this Agreement and the performance by the Company of its obligations thereunder have
been duly authorized by all necessary limited liability company action on the part of the
Company;
(xiv) the Operating Agreement constitutes a legal, valid and binding agreement of the
Members (as defined in the Operating Agreement), and is enforceable against the Members, in
accordance with its terms;
(xv) the issuance and sale by the Company of the Trust Interests, the execution, delivery
and performance by the Company of this Agreement, the consummation by the Company of the
transactions contemplated by this Agreement, and the compliance by the Company with its
obligations under this Agreement, (A) do not violate (i) any provisions of the Certificate of
Formation of the Company or the Operating Agreement or (ii) any Delaware law or administrative
regulation thereunder which is applicable to the Company, and (B) do not require the consent,
approval, license, authorization or validation of, or filing or registration with, any Delaware
legislative, administrative or regulatory body under the laws or administrative regulations of
the State of Delaware.
(e) The Underwriters shall have received on the Closing Date an opinion of Cravath, Swaine &
Xxxxx LLP, counsel for the Underwriters, dated the Closing Date, in form and substance reasonably
satisfactory to the Manager.
The opinions of counsel for the Company described in Section 6(c) and 6(d) above shall be
rendered to the Underwriters at the request of the Company and shall so state therein.
(f) The Underwriters 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 the Manager, from Xxxxx Xxxxxxxx LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants’ “comfort letters” to
underwriters with respect to the financial statements and certain financial information contained
in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided that the
letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.
(g) The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you
and the persons and entities listed on Schedule V hereto relating to sales and certain other
dispositions of shares of Trust Stock or certain other securities, delivered to you on or before
the date hereof, shall be in full force and effect on the Closing Date.
17
The several obligations of the Underwriters to purchase 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 the Additional Shares to be sold on such Option Closing Date and other matters related
to the issuance of such Additional Shares.
7. Covenants of the Company. The Company, for itself and as sponsor of the Trust, covenants
with each Underwriter as follows:
(a) To furnish to you, without charge, a signed copy of the Registration Statement (including
exhibits thereto and documents incorporated by reference therein) and to deliver to each of the
Underwriters during the period mentioned in Section 7(e) or 7(f) below, as many copies of the Time
of Sale Prospectus, the Prospectus, any documents incorporated by reference therein and any
supplements and amendments thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus
or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not
to file any such proposed amendment or supplement to which you reasonably object.
(c) To furnish to you a copy of each proposed free writing prospectus, including any
electronic road shows, to be prepared by or on behalf of, used by, or referred to by the Company
and not to use or refer to any proposed free writing prospectus to which you reasonably object.
(d) Not to take any action that would result in an Underwriter, the Trust or the Company
being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free
writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would
not have been required to file thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a
time when the Prospectus is not yet available to prospective purchasers and any event shall occur
or condition exist as a result of which it is necessary to amend or supplement the Time of Sale
Prospectus in order to make the statements therein, in the light of the circumstances, not
misleading, or if any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration Statement then on file, or
if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time
of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time
of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of
Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with
applicable law.
18
(f) If, during such period after the first date of the public offering of the Shares as in
the opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred
to in Rule 173(a) of the Securities Act) is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule
173(a) of the Securities Act) 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, file with the Commission and furnish, at its own expense, to
the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to
which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is
delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will
comply with applicable law.
(g) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as you shall reasonably request; 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.
(h) To make generally available to the Company’s security holders and to you as soon as
practicable an earning statement covering a period of at least twelve months beginning with the
first fiscal quarter of the Company occurring after the date of this Agreement which shall satisfy
the provisions of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(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
Trust’s and Company’s counsel and the Trust’s and Company’s accountants in connection with the
registration and delivery of the Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or
on behalf of, used by, or referred to by the Company and amendments and supplements to any of the
foregoing, including the filing fees payable to the Commission relating to the Shares (within the
time required by Rule 456(b)(1), if applicable), all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (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) the cost
of printing or producing any Blue Sky or Legal Investment memorandum in connection with the offer
and sale of the Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as provided in Section
7(g) hereof, including filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the Blue Sky or Legal
Investment memorandum, (iv) all
19
filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred
in connection with the review and qualification of the offering of the Shares by FINRA, (v) all
costs and expenses incident to listing the Shares on the Nasdaq Global Select Market and any other
national securities exchanges and foreign stock exchanges, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor presentations on any
“road show” undertaken in connection with the marketing of the offering of the Shares, including,
without limitation, expenses associated with the preparation or dissemination of any electronic
road show, expenses associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in connection with the
road show, (ix) the document production charges and expenses associated with printing this
Agreement and (x) 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. It is understood,
however, that except as provided in this Section 7, Section 9 entitled “Indemnity and Contribution”
and the last paragraph of Section 11 below, the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock transfer taxes payable on resale
of any of the Shares by them and any advertising expenses connected with any offers they may make.
(j) If the third anniversary of the initial effective date of the Registration Statement
occurs before all the Shares have been sold by the Underwriters, prior to the third anniversary to
file a new shelf registration statement and to take any other action necessary to permit the public
offering of the Shares to continue without interruption; references herein to the Registration
Statement shall include the new registration statement declared effective by the Commission;
(k) To prepare a final term sheet, substantially in the form provided for in Schedule III
hereto, relating to the offering of the Shares, containing only information that describes the
final terms of the offering in a form consented to by the Manager, and to file such final term
sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date
the final terms have been established for the offering of the Shares.
(l) The Company also covenants with each Underwriter that, without the prior written consent
of the Manager identified in Schedule I with the authorization to release this lock-up on behalf of
the Underwriters, it will not, during the restricted period set forth in Schedule I hereto, (1)
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, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Trust Stock or any securities convertible into or
exercisable or exchangeable for Trust Stock or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of ownership of the
Trust Stock, whether any such transaction described in clause (1) or (2) above is to be settled by
delivery of Trust Stock or such other securities, in cash or otherwise or (3) file any registration
statement with the Commission relating to the offering of any shares of Trust Stock or any
securities convertible into or exercisable or exchangeable for Trust Stock. The foregoing sentence
shall not apply to (a) the Shares to be sold hereunder, (b)
20
the issuance by the Company of shares of Trust Stock upon the exercise of an option or warrant
or the conversion of a security outstanding on the date hereof of which the Underwriters have been
advised in writing, or (c) the establishment of a trading plan pursuant to Rule 10b5-1 under the
Exchange Act for the transfer of shares of Trust Stock, provided that such plan does not provide
for the transfer of Trust Stock during the 90-day restricted period. Notwithstanding the
foregoing, if (1) during the last 17 days of the 90-day restricted period the Company issues an
earnings release or material news or a material event relating to the Company occurs; or (2) prior
to the expiration of the 90-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the 90-day period, the
restrictions imposed by this agreement shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence of the material news or
material event. The Company shall promptly notify the Manager of any earnings release, news or
event that may give rise to an extension of the initial 90-day restricted period.
8. Covenants of the Underwriters. Each Underwriter severally covenants with the Trust and the
Company not to take any action that would result in the Trust or the Company being required to file
with the Commission under Rule 433(d) a free writing prospectus prepared by or on behalf of such
Underwriter that otherwise would not be required to be filed by the Trust or the Company
thereunder, but for the action of the Underwriter.
9. Indemnity and Contribution. (a) The Company and the Trust, jointly and severally, agree
to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and
each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and
against any and all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the
Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the
Securities Act, any Trust or Company information that the Trust or the Company has filed, or is
required to file, pursuant to Rule 433(d) under the Securities Act, or the Prospectus or any
amendment or supplement thereto, 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 or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Trust, the Regular Trustees and the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Trust and the Company to such Underwriter, but only with reference to
information relating to such Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use in the Registration Statement, any preliminary prospectus, the Time
of Sale Prospectus, any issuer free writing prospectus or the Prospectus or any amendment or
supplement thereto.
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(c) In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to Section 9(a) or 9(b),
such person (the “indemnified party”) shall promptly notify the person against whom such indemnity
may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by the Manager
authorized to appoint counsel under this Section set forth in Schedule I hereto, in the case of
parties indemnified pursuant to Section 9(a), and by the Company, in the case of parties
indemnified pursuant to Section 9(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such indemnified party,
unless (i) such settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding and (ii) does not include any
statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) To the extent the indemnification provided for in Section 9(a) or 9(b) is unavailable to
an indemnified party or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion
as is appropriate to reflect the relative benefits received by the Trust and 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 9(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 9(d)(i) above but
also the relative fault of the Trust and the Company, on the one hand, and of the Underwriters, on
the other hand, in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Trust and the Company, on the one hand, and the Underwriters, on
the other hand, in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the
22
Shares (before deducting expenses) received by the Trust and the Company and the total
underwriting discounts and commissions received by the Underwriters bear to the aggregate initial
public offering price of the Shares set forth in the Prospectus. The relative fault of the Trust
and 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 by the Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Underwriters’ respective
obligations to contribute pursuant to this Section 9 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in Section 9(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 9(d) shall be deemed to include, subject to the limitations set forth above,
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 9, 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 that 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 Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 9 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.
(f) The indemnity and contribution provisions contained in this Section 9 and the
representations, warranties and other statements of the Trust and the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i) any termination of
this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter or by or on behalf of the Trust or
the Company, its officers or directors or any person controlling the Trust or the Company and (iii)
acceptance of and payment for any of the Shares.
10. Termination. The Underwriters may terminate this Agreement by notice given by you to the
Company, if, after the execution and delivery of this Agreement and prior to the Closing Date, (i)
trading generally shall have been suspended or materially limited on, or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Select Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) trading of any securities of the Company shall have been suspended on any exchange or
in any over-the-counter market, (iii) a material disruption in securities settlement, payment or
clearance services in the United States shall have occurred, (iv) any moratorium on commercial
banking activities shall have been declared by
23
Federal or New York State authorities or (v) there shall have occurred any outbreak or
escalation of hostilities, or any change in financial markets or any calamity or crisis that, in
your judgment, is material and adverse and which, singly or together with any other event specified
in this clause (v), makes it, in your judgment, impracticable or inadvisable to proceed with the
offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Time of
Sale Prospectus or the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate
number of the Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite their respective
names in Schedule II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase
the Shares 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 Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such number of Shares 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 on such date,
and arrangements satisfactory to you and the Company for the purchase of such Firm Shares are not
made within 36 hours after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company. In any such case 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, in the Time of Sale
Prospectus, in the Prospectus or in 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 Option
Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or
(ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase 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
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them, because of any
failure or refusal on the part of the Trust or the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the Trust or the Company shall be
unable to perform its obligations under this Agreement, the Trust and the Company will, jointly and
severally, reimburse the Underwriters or such Underwriters as have so terminated this
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Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection
with this Agreement or the offering contemplated hereunder.
12. Entire Agreement. (a) This Agreement, together with any contemporaneous written
agreements and any prior written agreements (to the extent not superseded by this Agreement) that
relate to the offering of the Shares, represents the entire agreement between the Trust, the
Company and the Underwriters with respect to the preparation of any preliminary prospectus, the
Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of
the Shares.
(b) Each of the Trust and the Company acknowledges that in connection with the offering of
the Shares: (i) the Underwriters have acted at arms length, are not agents of, and owe no
fiduciary duties to, the Trust or the Company or any other person, (ii) the Underwriters owe the
Company only those duties and obligations set forth in this Agreement and prior written agreements
(to the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have
interests that differ from those of the Trust and the Company. Each of the Trust and the Company
waives to the full extent permitted by applicable law any claims it may have against the
Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of
the Shares.
13. Counterparts. This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument.
14. Applicable Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
16. Notices. All communications hereunder shall be in writing and effective only upon receipt
and if to the Underwriters shall be delivered, mailed or sent to you at the address set forth in
Schedule I hereto; and if to the Trust or the Company shall be delivered, mailed or sent to the
address set forth in Schedule I hereto.
[signature page follows]
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| Very truly yours, COMPASS DIVERSIFIED HOLDINGS |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| COMPASS GROUP DIVERSIFIED HOLDINGS LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| COMPASS GROUP MANAGEMENT LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Accepted as of the date first written
above. Xxxxxx Xxxxxxx & Co. Incorporated Acting severally on behalf of itself and the several Underwriters named in Schedule II hereto. XXXXXX XXXXXXX & CO. INCORPORATED |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
