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Exhibit 1
3,200,000 SHARES
SERVICE EXPERTS(R), INC.
COMMON STOCK
UNDERWRITING AGREEMENT
EQUITABLE SECURITIES CORPORATION
ALEX. XXXXX & SONS INCORPORATED
X.X. XXXXXXX & SONS, INC.
XXXXXX XXXXXX & COMPANY, INC. ____________, 1997
c/o Equitable Securities Corporation
Xxxxxxxxx Xxxx Xxxxxx, Xxxxx 000
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Service Experts(R), Inc., a Delaware corporation (the "Company"), and
certain stockholders of the Company named in Schedule B hereto (the "Selling
Stockholders") severally propose to sell to the underwriters named in Schedule A
hereto (the "Underwriters") an aggregate of 3,200,000 shares (the "Firm Shares")
of the common stock, $.01 par value (the "Common Stock"), of the Company. The
Firm Shares consist of 1,850,000 shares to be issued and sold by the Company and
1,350,000 shares outstanding to be sold by the Selling Stockholders as set forth
opposite their names in Schedule B hereto. The Company and certain of the
Selling Stockholders also propose to sell to the several Underwriters an
aggregate of up to 450,000 additional shares of the Company's Common Stock (the
"Option Shares") if requested by the Underwriters as provided in Section 3
below. You have advised the Company and the Selling Stockholders that Equitable
Securities Corporation ("Equitable") is authorized to enter into this Agreement
on behalf of the Underwriters. The Underwriters, severally and not jointly, are
willing to purchase the number of Firm Shares set forth opposite their names in
Schedule A, and their pro rata portion of the Option Shares if Equitable elects
to exercise the over-allotment option in whole or in part. The Company and the
Selling Stockholders are sometimes referred to herein collectively as the
"Sellers." The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein
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collectively called the "Shares." The Shares to be issued and sold by the
Company are sometimes referred to as the "Company Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter as follows:
(a) A registration statement on Form S-1 (File No. 333-_______) with
respect to the Shares has been filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations thereunder
(the "Rules and Regulations"), including a preliminary prospectus. Copies
of such registration statement and any amendments, including any
post-effective amendments, and all forms of the related prospectuses
contained therein and any supplements thereto, have been delivered to the
Underwriters. Such registration statement, including the prospectus, Part
II, all financial statements and schedules, exhibits, and all other
documents filed as or deemed to be a part thereto, as amended at the time
when it shall become effective and all information deemed to be a part
thereof as of the time of effectiveness pursuant to Rule 430A or Rule 434
of the Rules and Regulations, is herein referred to as the "Registration
Statement" and the prospectus included as part of the Registration
Statement on file with the Commission that discloses all the information
that was omitted from the prospectus on the effective date pursuant to Rule
430A or Rule 434 of the Rules and Regulations and in the form filed
pursuant to Rule 424(b) under the Securities Act is herein referred to as
the "Final Prospectus." The prospectus included as part of the Registration
Statement on the date when the Registration Statement became effective is
referred to herein as the "Effective Prospectus." Any prospectus included
as part of the Registration Statement and in any amendment thereto prior to
the effective date of the Registration Statement is referred to herein as a
"Preliminary Prospectus." For purposes of this Agreement, "Rules and
Regulations" mean the rules and regulations promulgated by the Commission
under either the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable.
(b) No order preventing or suspending the use of any Preliminary
Prospectus, Effective Prospectus or Final Prospectus has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other jurisdiction.
If the Registration Statement has become effective under the Securities
Act, no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceeding for that
purpose has been instituted or threatened or, to the best knowledge of the
Company, contemplated by the Commission or the securities authority of any
state or other jurisdiction.
(c) Each Preliminary Prospectus, at the time of filing thereof,
complied with the requirements of the Securities Act and the Rules and
Regulations, and did not include any untrue
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statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; except
that the foregoing does not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter specifically for use therein (it being
understood that the only information so provided is the information in
Section 15 of this Agreement). When the Registration Statement becomes
effective and at all times subsequent thereto up to and including the First
Closing Date (as hereinafter defined), (i) the Registration Statement, the
Effective Prospectus and Final Prospectus and any amendments or supplements
thereto will contain all statements which are required to be stated therein
in accordance with the Securities Act, the Exchange Act, and the Rules and
Regulations and will comply with the requirements of the Securities Act,
the Exchange Act and the Rules and Regulations, and (ii) neither the
Registration Statement, the Effective Prospectus, the Final Prospectus nor
any amendment or supplement thereto will include any untrue statement of
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; except that the
foregoing does not apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the only
information so provided is the information in Section 15 of this
Agreement).
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
full power and authority (corporate and other) to own or lease its
properties and conduct its business as it is currently being conducted;
each of the subsidiaries of the Company set forth on Exhibit 21 to the
Registration Statement (collectively, the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation and in good standing
under the laws of the jurisdiction of its incorporation, with full power
and authority (corporate and other) to own or lease its properties and
conduct its business as it is currently being conducted; the Company and
each of the Subsidiaries are duly qualified or authorized to transact
business as a foreign corporation in all jurisdictions in which the conduct
of its business or the ownership or leasing of property requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the financial condition, results of operations
or the business of the Company and the Subsidiaries taken as a whole. The
Company and its subsidiaries hold all licenses, consents and approvals, and
have satisfied all eligibility and other similar requirements imposed by
federal and state regulatory bodies, administrative agencies or other
governmental bodies, agencies or officials, in each case as material to the
conduct of the business in which it is engaged as described in the
Effective Prospectus and the Final Prospectus.
(e) The capitalization of the Company as of December 31, 1996, is as
set forth under the caption "Capitalization" in the Effective Prospectus,
and the Company's capital stock conforms to the description thereof
contained under the caption "Description of Capital Stock" in the Effective
Prospectus. All the outstanding shares of capital stock, including the
shares of
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Common Stock to be sold by the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable. None
of the issued shares of capital stock of the Company have been issued in
violation of any preemptive or similar rights. No person or entity holds a
right to require or participate in the registration under the Securities
Act of shares of Common Stock of the Company which right has not been
waived by the holder thereof as to the offering contemplated hereby and by
the Registration Statement, or satisfied by participation by such holder in
the offering. No person or entity has any preemptive or other right of
participation or first refusal with respect to any of the Shares or the
issue and sale thereof by the Company or the sale of Shares by the Selling
Stockholders, which rights have not been waived. The Company's Common Stock
is registered with the Commission under Section 12(b) or 12(g) of the
Exchange Act.
(f) The outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and such shares of capital stock in each Subsidiary are
wholly owned by the Company free and clear of all liens, encumbrances and
security interests; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding, except to the extent set forth in the
Registration Statement, the Preliminary Prospectus, and the Effective
Prospectus, including the exhibits thereto. The Subsidiaries are the only
subsidiaries, direct or indirect, of the Company.
(g) Ernst & Young LLP, who have certified certain financial statements
of the Company and its consolidated subsidiaries, are, and were during the
periods covered by their reports included in the Registration Statement and
the Effective Prospectus, independent public accountants as required by the
Securities Act and the Rules and Regulations.
(h) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules included in the
Registration Statement, present fairly the financial position, the results
of operations and cash flows of the Company and its Subsidiaries, on a
consolidated basis, at the dates and for the periods presented. These
financial statements have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis throughout
the periods indicated, and all adjustments necessary for a fair
presentation of results for such periods have been made. The pro forma
financial statements set forth in the Registration Statement fairly present
the information required to be presented therein, and such statements meet
the requirements of the Securities Act. The selected financial and
statistical data set forth in the Prospectus under the captions "Selected
Consolidated Financial Data," "Selected Pro Forma Consolidated Financial
Data," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Principal and Selling Stockholders" fairly
present, on the basis stated in the Preliminary Prospectus and the
Effective Prospectus, the information set forth therein.
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(i) Neither the Company nor any of the Subsidiaries is or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under its Articles of Incorporation or Bylaws (or similar
organizational instruments) or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by
which it or any of its properties is bound except for such defaults as do
not have a material adverse effect on the business or financial condition
of the Company and the Subsidiaries taken as a whole. The consummation of
the transactions contemplated herein and the fulfillment of the terms
hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, (i) any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any
Subsidiary is a party, except for any such breach or default which would
not have a material adverse effect on the Company or any of the
Subsidiaries, singly or in the aggregate, (ii) the Articles of
Incorporation or Bylaws of the Company or any Subsidiary, or (iii) any
order, rule or regulation applicable to the Company or any Subsidiary of
any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or any Subsidiary or
any of their respective properties or assets.
(j) The Company has full legal right, power and authority to enter
into this Agreement and to sell and deliver the Company Shares to the
Underwriters as provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms.
(k) Each approval, consent, order, authorization, designation,
declaration or filing by or with any court or regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions contemplated herein (except such additional steps as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") or may be necessary to qualify the Shares for public offering by
the Underwriters under state securities or blue sky laws), has been or will
be obtained or made as of the Closing Date (as defined below) and is or
will be in full force and effect as of the Closing Date (as defined below).
All consents and waivers from all other persons required in connection with
the execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated herein have been obtained or
made and are in full force and effect as of the Closing Date (as defined
below).
(l) Other than as disclosed in the Preliminary Prospectus and the
Effective Prospectus, there is no litigation, arbitration, claim, audit,
proceeding or investigation pending or, to the knowledge of the Company,
threatened or contemplated in which the Company or any of the Subsidiaries
is a party or of which any of their respective properties or assets are the
subject which, if determined adversely to the Company or any such
Subsidiary, would individually or in the aggregate have a material, adverse
effect on the condition (financial or otherwise), results of operations,
business or prospects of the Company and the Subsidiaries taken as a whole.
Neither the Company nor any of the Subsidiaries is in violation of, or in
default with respect to, any
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statute, rule, regulation, order, judgment or decree, which violation might
have a material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company and the
Subsidiaries taken as a whole.
(m) The Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except
such as are disclosed in the Preliminary Prospectus and the Effective
Prospectus or which would not have a material, adverse effect on the
business or financial condition of the Company and the Subsidiaries taken
as a whole; and any real property and buildings held under lease by the
Company or any of its Subsidiaries are held under valid, existing and
enforceable leases, with such exceptions as are disclosed in the
Preliminary Prospectus and the Effective Prospectus or which would not have
a material, adverse effect on the business or financial condition of the
Company and the Subsidiaries taken as a whole.
(n) The Company and the Subsidiaries have filed all foreign, federal,
state and local income, excise and franchise tax returns which have been
required to be filed and have paid all taxes indicated as due on said
returns and all assessments and charges received by them or any of them to
the extent that such have become due and payable. No material deficiency
with respect to any such return has been assessed or proposed.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Effective Prospectus, (i) neither the
Company nor any of the Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into any transactions, other
than transactions in the ordinary course business, that are material to the
Company and the Subsidiaries, (ii) the Company has not purchased any of its
outstanding capital stock or declared, paid or otherwise made any dividend
or distribution of any kind on its capital stock, (iii) there has not been
any material change in the capital stock, long-term debt or short-term debt
of the Company or any of the Subsidiaries, and (iv) there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition (financial or otherwise),
results of operations, business or prospects of the Company and the
Subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business, in each case other than as disclosed in the
Registration Statement and the Effective Prospectus. The Company and the
Subsidiaries have no material contingent obligations which are not
disclosed in the Registration Statement and the Effective Prospectus.
(p) The Company and each of the Subsidiaries operate their businesses
in material conformity with all of the statutes, common laws, ordinances,
decrees, orders, rules and regulations of the jurisdictions in which each
such entity is conducting business. Without limiting the foregoing, the
Company and each of the Subsidiaries own or possess and the Company and
each of the Subsidiaries are in material compliance with the terms,
provisions, and conditions of all permits, licenses, franchises, operating
certificates, orders, authorizations,
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registrations, qualifications, consents or approvals of any court,
arbitrator or arbitral body, or any federal, state, local or foreign
governmental agency, instrumentality or similar organization, domestic or
foreign (hereinafter each individually a "Permit" and collectively,
"Permits") necessary to own and use the properties and assets of the
Company and each of the Subsidiaries, respectively, and to operate their
respective businesses in all locations in which these businesses are
currently being operated and as described in the Effective Prospectus and
the Final Prospectus; as to the Company and each Subsidiary, each Permit is
in full force and effect and there is no litigation, arbitration, audit,
claim, investigation or other proceeding pending or, to the Company's
knowledge, threatened which may cause any Permit of and from all
authorities to be revoked, withdrawn, canceled, suspended or not renewed.
Neither the Company nor any of the Subsidiaries is aware of any existing or
imminent matter that may have a material adverse effect on any of their
operations or business prospects other than as specifically disclosed in
the Preliminary Prospectus and the Effective Prospectus. No director,
officer, agent or employee of the Company or any of the Subsidiaries, or to
the Company's knowledge any other person associated with or acting for or
on behalf of the Company or any of the Subsidiaries, has directly or
indirectly made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public,
regardless of form, whether in money, property or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable
treatment for business obtained, or (iii) to obtain special concessions or
for special concessions already obtained for or in respect of the Company.
(q) Neither the Company nor any of the Subsidiaries is in violation of
any federal or state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of hazardous or toxic
material. Neither the Company nor any of the Subsidiaries is in violation
of any federal or state law or regulation relating to environmental
regulation, including, but not limited to, laws and regulations
implementing the Clean Air Act, as amended. The Company and each Subsidiary
have received all permits, licenses or other approvals required of them
under applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective businesses,
and the Company and each Subsidiary are in compliance with all the terms
and conditions of any such permit, license or approval, except any
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not, singly
or in the aggregate, result in a material adverse change in or affecting
the condition (financial or otherwise), of the Company and the Subsidiaries
taken as a whole, except as described in the Preliminary Prospectus and the
Effective Prospectus.
(r) The Company and each of the Subsidiaries own or possess adequate
licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service xxxx
applications, tradenames, copyrights, trade secrets and know-how or other
information (collectively, "Intellectual Property") described in the
Preliminary
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Prospectus and the Effective Prospectus as owned by or used by it or which
is necessary to the conduct of its business as now conducted or proposed to
be conducted as described in the Preliminary Prospectus and the Effective
Prospectus. Neither the Company nor any of the Subsidiaries is aware of any
infringement of or conflict with the rights or claims of others with
respect to any of the Company's or any Subsidiaries' Intellectual Property
which management of the Company believes could have a material adverse
effect on the condition (financial or otherwise), business or prospects of
the Company and the Subsidiaries taken as a whole. Neither the Company nor
any of the Subsidiaries is aware of any infringement of any of the
Company's or any of the Subsidiaries' Intellectual Property rights by any
third party which management of the Company believes could have a material
adverse effect on the condition (financial or otherwise), business or
prospects of the Company and the Subsidiaries taken as a whole.
(s) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the
Shares.
(t) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the Company is not, nor
will be, subject to regulation under the Investment Company Act of 1940.
(u) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, An Act Relating to Disclosure of Doing Business with Cuba, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in
any Prospectus, if any, concerning the Company's business with Cuba or with
any person or affiliate located in Cuba changes in any material way, the
Company will provide the Department with notice of such business or change,
as appropriate, in a form acceptable to the Department.
(v) None of the employees of the Company or the Subsidiaries are
covered by collective bargaining agreements. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the best knowledge
of the Company, is threatened or imminent that could result in a material
adverse change in or affecting the condition, financial or otherwise, of
the Company and the Subsidiaries taken as a whole, except as described in
the Preliminary Prospectus and the Effective Prospectus.
(w) The Company and each of the Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; all such policies of insurance insuring the
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Company and each of the Subsidiaries and their respective businesses,
assets, employees, officers and directors are in full force and effect;
there are no claims by the Company or any Subsidiary under any such policy
as to which any insurer is denying liability or defending under a
reservation of rights clause; neither the Company nor any Subsidiary has
been refused any insurance coverage sought or applied for; and neither the
Company nor any Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely change or affect the condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole, except as described in the
Preliminary Prospectus and the Effective Prospectus.
(x) No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or
any other Subsidiary of the Company, except as described in the Preliminary
Prospectus and the Effective Prospectus.
(y) The Company and each of the Subsidiaries 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 accountability of assets of
the Company and the Subsidiaries; (iii) access to said assets is permitted
only in accordance with management's general or specific authorizations;
and (iv) the recorded accountability for said assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(z) All offers and sales of the Company's capital stock prior to the
date hereof were at all relevant times exempt from the registration
requirements of the Securities Act or were duly registered under the
Securities Act, and were the subject of an available exemption from the
requirements of all applicable state securities or Blue Sky laws or were
duly registered thereunder.
(aa) The Company has obtained for the benefit of the Company and the
Underwriters from each of the persons listed on Schedule C a written
agreement that for a period of 120 days from the date of this Agreement,
they will not, without the prior written consent of the Underwriters,
offer, pledge, sell, contract to sell, grant any option for the sale of or
otherwise dispose of (or announce any offer, pledge, sale, grant of an
option to purchase or other disposition), directly or indirectly, any
shares of Common Stock of the Company, or securities convertible into,
exercisable for or exchangeable for, any shares of Common Stock or
derivative therefrom owned by them.
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(bb) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
2. Representations and Warranties of the Selling Stockholders. Each of the
Selling Stockholders, severally and not jointly, represents and warrants to each
Underwriter as follows:
(a) Each Selling Stockholder is the lawful owner of the number of
Shares to be sold thereby, and on the Closing Date (as defined herein) each
Selling Stockholder will have good and clear title to such Shares, free of
all restrictions on transfer, liens, encumbrances, security interests and
claims, and full right, power and authority to effect the sale and delivery
of such Shares; and upon the delivery of and payment for such Shares
pursuant to this Agreement, good and clear title to these Shares will pass
to the Underwriters, free of all restrictions on transfer, liens,
encumbrances, security interests and claims.
(b) Each Selling Stockholder has, and on the Closing Date will have,
full legal right, power and authority to enter into this Agreement, and to
sell, assign, transfer and deliver the Shares in the manner provided
herein. This Agreement has been duly authorized, executed and delivered by
one or more of the Attorneys-in-Fact on behalf of each Selling Stockholder,
and this Agreement is a valid and binding agreement of each Selling
Stockholder enforceable against each Selling Stockholder in accordance with
its terms, except as rights to indemnity and contribution hereunder may be
limited by applicable law.
(c) Each Selling Stockholder has duly executed and delivered the
Custody Agreement and Power of Attorney in the forms previously delivered
to the Underwriters, appointing ______________ and ______________, and each
of them as each Selling Stockholder's attorney-in-fact (the
"Attorney-in-Fact"), and the respective Custody Agreement and Power of
Attorney are valid and binding agreements of such Selling Stockholder. The
Attorney-in-Fact is authorized to execute, deliver and perform this
Agreement on behalf of the Selling Stockholder, and to deliver the Shares
to be sold by such Selling Stockholder hereunder, to accept payment
therefor and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement. Certificates, in suitable form for transfer
by delivery or accompanied by duly executed instruments of transfer or
assignment in blank, representing the Shares to be sold by such Selling
Stockholder hereunder have been deposited with the Custodian pursuant to
the Custody Agreement for the purpose of delivery pursuant to this
Agreement. Such Selling Stockholder agrees that the shares of Common Stock
represented by the certificates on deposit with the Custodian are subject
to the interest of the Underwriters hereunder, that the arrangements made
for such custody and the appointment of the Attorney-in-Fact are to that
extent irrevocable, and that the obligations of such Selling Stockholder
hereunder shall not be terminated except as provided in this Agreement and
the Custody Agreement. If such Selling Stockholder should die or become
incapacitated or if any other event should occur, before the
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delivery of the Shares of such Selling Stockholder hereunder, the
certificates for such Shares deposited with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions of
this Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.
(d) All authorizations and consents necessary for the execution and
delivery of this Agreement, the Custody Agreement, and Power of Attorney on
behalf of such Selling Stockholder and for the sale and delivery of the
Shares to be sold by such Selling Stockholder hereunder had been given or
obtained, except as may be required by the Securities Act or state
securities laws; and the performance of this Agreement, the Custody
Agreement, and Power of Attorney and the consummation of the transactions
contemplated hereby and thereby by each Selling Stockholder will not result
in a breach or violation of, or conflict with, any of the terms or
provisions of, or constitute a default by a Selling Stockholder under, any
indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or instrument to
which the Selling Stockholder or any of his or its properties is bound, any
statute, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to such Selling Stockholder or any
of his properties.
(e) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action designed to, or which might reasonably
be expected to, cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares pursuant to the distribution contemplated by this Agreement, and
other than as permitted by the Securities Act, such Selling Stockholder has
not distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares.
(f) To the knowledge of such Selling Stockholder, the representations
and warranties of the Company contained in Section 1 of this Agreement are
true and correct; such Selling Stockholder has reviewed and is familiar
with the Registration Statement as originally filed with the Commission and
the Preliminary Prospectus contained therein; the Preliminary Prospectus
does not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
such Selling Stockholder is not prompted to sell the Shares to be sold by
such Selling Stockholder by any information concerning the Company that is
not set forth in the Preliminary Prospectus or the Effective Prospectus.
(g) At the time the Registration Statement becomes effective (i) such
parts of the Registration Statement and any amendments and supplements
thereto as specifically refer to such Selling Stockholder will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (ii) such parts of the Preliminary Prospectus and
Effective Prospectus as specifically refer to such Selling Stockholder will
not include an untrue statement of a material fact or omit to state a
material
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fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory body, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement by such Selling Stockholder, and the
consummation by such Selling Stockholder of the transactions herein
contemplated (other than as required by the Securities Act or by state
securities laws).
(i) For a period of 120 days from the effective date of the
Registration Statement, such Selling Stockholder will not, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of any shares of Common Stock, other than to the
Underwriters pursuant to this Agreement, without the prior written consent
of Equitable, on behalf of the Underwriters.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986,
as amended, with respect to the transactions herein contemplated, such
Selling Stockholder agrees to deliver to you prior to or at the First
Closing Date (as hereinafter defined), a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
3. Purchase and Sale of the Shares.
(a) On the basis of the representations, warranties, and covenants
contained in this Agreement, and subject to its terms and conditions, (i)
the Company agrees to issue and sell 1,850,000 Firm Shares, (ii) each
Selling Stockholder agrees, severally and not jointly, to sell the number
of Firm Shares set forth opposite such Selling Stockholder's name in
Schedule B, and (iii) each Underwriter agrees, severally and not jointly,
to purchase from the Company and each of the Selling Stockholders, at a
purchase price of $_____ per share, the number of Firm Shares set forth
opposite the name of each Underwriter in Schedule A hereof. The obligations
of the Company and the Selling Stockholder shall be several and not joint.
(b) On the basis of the representations, warranties, and covenants
contained in this Agreement, and subject to its terms and conditions, the
Company and the Selling Stockholders hereby grant to the several
Underwriters an option to purchase, solely for the purpose of covering
over-allotments made in connection with the distribution and sale of the
Firm Shares, the Option Shares, in amounts and proportions to be determined
by the Company, at the purchase price per share as set forth in clause (a)
of this Section 3. The maximum number of Option Shares to be sold by the
Company and certain of the Selling Stockholders (as set forth on Schedule
B) is 450,000. The option granted hereby may be exercised in whole or in
part at any time (but only once) upon written notice delivered by
the Underwriters to the Company and the Selling Stockholders within 30
days after the date of this
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Agreement setting forth the aggregate number of Option Shares to be
purchased and the time and date for delivery and payment for such Option
Shares, as determined by the Underwriters, but in no event earlier than
either the First Closing Date (as defined in Section 5(a) below) or the
second full business day after the exercise of such option, nor later than
the tenth business day after the date of such notice (such time and date
being referred to herein as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the First Closing Date,
the notice of exercise shall set the First Closing Date as the Option
Closing Date. Upon exercise of the option, the Company and the Selling
Stockholders shall become obligated to sell to the Underwriters, and,
subject to the terms and conditions of this Agreement, the Underwriters
shall become obligated, severally and not jointly, to purchase, for the
account of each Underwriter, from the Company and the Selling Stockholders,
the number of Option Shares specified in such notice. Option Shares shall
be purchased for the accounts of the Underwriters in proportion to the
number of Firm Shares set forth opposite such Underwriter's name in
Schedule A hereto, except that the respective purchase obligations of each
Underwriter shall be adjusted so that no Underwriter shall be obligated to
purchase fractional Option Shares.
4. Offering by the Underwriters. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon after the
effective date of the Registration Statement as the Underwriters deem it
advisable to do so. The Firm Shares are to be offered to the public at the
offering price set forth in the Prospectus. To the extent, if at all, that any
Option Shares are purchased pursuant to Section 3 hereof, the Underwriters will
offer them to the public on the foregoing terms. It is further understood that
Equitable will act on behalf of the Underwriters in the offering and sale of the
Shares in accordance with an Agreement Among Underwriters entered into by
Equitable and the several other Underwriters.
5. Delivery of and Payment for the Shares. Certificates in definitive form
for the Shares to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as Equitable may request upon at
least two business days' prior notice to the Company, shall be delivered by or
on behalf of the Company and the Selling Stockholders to Equitable for the
account of each Underwriter, against payment by such Underwriter on its behalf
of the purchase price therefor by: (i) official bank check or checks (payable in
same day funds) payable to the order of the Company and the Custodian (for the
Selling Stockholders), as their interests appear; or (ii) wire transfer of same
day available funds to an account designated in writing by the Company upon at
least two business days notice. In lieu of physical delivery of certificates
representing the Shares, the Shares may be posted to The Depository Trust
Company account of Equitable for further transfer to the account of the
respective Underwriters against payment of the purchase price for the Shares as
described above. The closing of the sale and purchase of the Shares shall be
held at the offices of Xxxxxxxx & Xxx, PLC, 000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxxx 00000, except that if certificates representing the Shares
are physically delivered to the Underwriters, such delivery shall be made at the
office of The Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The time and date of such delivery and payment shall be, (a) with respect
to the Firm Shares, at 9:00 a.m., Nashville time, on the third full business day
after the execution of this Agreement or at such other time and date as the
Underwriters, the
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Company, and the Selling Stockholders may agree upon in
writing, and, (b) with respect to the Option Shares, at 9:00 a.m., Nashville
time, on the date specified by the Underwriters in the written notice given by
the Underwriters of the election of the Underwriters to purchase all or part of
such Option Shares, or at such other time and date as the Underwriters, the
Company, and the Selling Stockholders may agree upon in writing. Such time and
date for delivery of the Firm Shares is herein called the "First Closing Date",
such time and date for delivery of the Option Shares, if not the First Closing
Date, is herein called the "Option Closing Date", and each such time and date
for delivery is herein called a "Closing Date". Such certificates will be
available for inspection no later than 9:30 a.m., New York City time, on the
business day preceding the respective Closing Date at the office of The
Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such
other location in New York, New York specified by Equitable in writing at least
two business days prior to such Closing Date. It is understood that the
Underwriters may (but shall not be obligated to) make payment on behalf of any
Underwriter or Underwriters for the Shares to be purchased by such Underwriter
or Underwriters. No such payment shall relieve such Underwriter or Underwriters
from any of its or their obligations hereunder.
6. Covenants of the Company. The Company covenants and agrees with each of
the Underwriters that:
(a) The Company shall (i) use its best efforts to cause the
Registration Statement to become effective under the Securities Act as soon
as practicable after the execution and delivery of this Agreement; or (ii)
if the Registration Statement has been declared effective prior to the
execution and delivery of this Agreement, comply with the provisions of and
make all requisite filings with the Commission pursuant to Rules 424, 430A,
and 434 of the Rules and Regulations and to notify the Underwriters
promptly (in writing, if requested) of all such filings.
(b) The Company will (i) advise the Underwriters and the Selling
Stockholders promptly when the Registration Statement or any post-effective
amendment thereto shall have become effective; (ii) advise the Underwriters
and the Selling Stockholders promptly of the receipt of any comments from
the Commission; (iii) advise the Underwriters and the Selling Stockholders
promptly of any request by the Commission for any amendment of or
supplement to the Registration Statement, the Effective Prospectus or the
Final Prospectus or for additional information; (iv) prepare and file with
the Commission, promptly upon the Underwriters' request, any amendments of
or supplements to the Registration Statement, the Effective Prospectus or
the Final Prospectus which, in the Underwriters' opinion, may be necessary
or advisable in connection with the distribution of the Shares and will use
its best efforts to cause any such amendment to the Registration Statement
to be declared effective as promptly as possible; (v) not file any
amendment of the Registration Statement, or supplement to the Effective
Prospectus or the Final Prospectus unless the Underwriters have received a
reasonable time to review any such proposed amendment or supplement or to
which the Underwriters shall have objected in writing; (vi) advise the
Underwriters and the Selling Stockholders promptly of the issuance by the
Commission or any jurisdiction or other regulatory body of any stop order
or other order suspending the effectiveness of the Registration Statement,
suspending or preventing the use of
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any Preliminary Prospectus, the Effective Prospectus or the Final
Prospectus or suspending the qualification of the Shares for offering or
sale in any jurisdiction, or of the institution of any proceedings for any
such purpose; and (vii) use its best efforts to prevent the issuance of any
stop order or other such order and, should a stop order or other such order
be issued, to obtain as soon as possible the lifting thereof. Any advice
delivered by the Company, if requested by the Underwriters or any Selling
Stockholder, shall be confirmed in writing.
(c) Prior to any public offering of the Shares, the Company will take
or cause to be taken all necessary action and furnish to counsel for the
Underwriters such information as may be required in connection with
qualifying the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Underwriters may designate, and the
Company will continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Shares; provided, however,
that in no event in connection therewith shall the Company be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not presently qualified as a
foreign corporation.
(d) The Company will furnish, without charge, to the Underwriters six
(6) signed copies of the Registration Statement as first filed with the
Commission and of each amendment to it including all exhibits, and will
furnish to the Underwriters and to each Selling Stockholder the number of
conformed copies of the Registration Statement so filed and of each
amendment, without exhibits, as the Underwriters or any Selling Stockholder
may reasonably request.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter, for such period as in the opinion of counsel
for the Underwriters, delivery of a prospectus in connection with sales by
an Underwriter or a dealer is required under the Securities Act, the
Company will deliver to, or upon the order of, the Underwriters as many
copies of the Prospectus (and of any amendments or supplements to it), as
such Underwriter or dealer may reasonably request.
(f) Within the time during which a Final Prospectus relating to the
Shares is required to be delivered under the Securities Act, the Company
will comply with the Securities Act and the Rules and Regulations, as now
or hereafter amended or as in effect from time to time, so far as is
necessary to permit the continuance of sales of or dealing in the Shares as
contemplated in this Agreement and the Final Prospectus. If during such
period any event occurs as a result of which, in the judgment of the
Company or in the opinion of counsel for the Underwriters or of counsel for
the Selling Stockholders, it becomes necessary to amend or supplement the
Final Prospectus in order to make the statements therein, in the light of
the circumstances existing when the Final Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary to amend or supplement
the Final Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Final Prospectus, so that the
statements in the Final Prospectus as so amended or supplemented will not,
in the light of the circumstances existing when it is so delivered, be
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16
misleading, or so that the Final Prospectus will comply with applicable
law, and to furnish to each Underwriter and to such dealers as the
Underwriters shall specify, such number of copies thereof as such
Underwriter or dealer may request and to furnish to counsel for the Selling
Stockholders such numbers of copies as such counsel may request (provided,
however, that, subsequent to the date nine months after the Registration
Statement becomes effective, any such amendment or supplement shall be at
the expense of the Underwriters.).
(g) The Company shall make generally available to its securityholders,
in the manner contemplated by Rule 158(b) under the Securities Act, as
promptly as practicable and in any event no later than 45 days after the
end of its fiscal quarter in which the first anniversary of the effective
date of the Registration Statement occurs, an earnings statement covering a
period of at least twelve months beginning after the effective date of the
Registration Statement and complying with the provisions of Section 11(a)
of the Securities Act, and will advise the Underwriters in writing when
such statement has been made available.
(h) The Company will furnish to its securityholders annual reports
containing financial statements audited by independent public accountants
and quarterly reports for the first three quarters of each fiscal year
containing unaudited financial statements and financial information. During
the period of five years from the date hereof, the Company will deliver to
the Underwriters and, upon request, to each of the other Underwriters, (i)
copies of each annual report of the Company and each other report
(financial or otherwise) furnished by the Company to its securityholders
and (ii) as soon as they are available, a copy of each report or other
publicly available information of the Company mailed by the Company to its
securityholders generally or filed with any securities exchange, the
Commission, or the NASD.
(i) Except pursuant to this Agreement or with the prior written
consent of Equitable, on behalf of the Underwriters, for a period of 120
days after the date of the Prospectus, the Company will not, and the
Company has provided to the Underwriters agreements executed by those
persons listed on Schedule C which provide that for a period of 120 days
from the date of the Prospectus, such person or entity will not, directly
or indirectly, offer for sale, sell, grant any options, rights or warrants
with respect to any shares of Common Stock, securities convertible into
Common Stock or any capital stock of the Company, or otherwise dispose of
any shares of Common Stock or such other securities or capital stock;
except that the Company may issue, or grant options to purchase, shares of
Common Stock pursuant to any option plan existing on the date hereof and
described in the Final Prospectus, and in connection with acquisitions of
new businesses, issue shares of Common Stock registered under the Company's
registration statement on Form S-4 provided that all such shares issued in
connection with acquisitions of new businesses are subject to the
restrictions set forth in this Section.
(j) If at any time during the 2 day period after the Registration
Statement is declared effective, any rumor, publication or event relating
to or affecting the Company shall occur as a result of which, in the
opinion of the Underwriters, the market price for the Shares has been or is
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likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the Final
Prospectus), the Company will, to the extent permitted under applicable
law, after written notice from the Underwriters advising it of such effect,
promptly prepare, consult with the Underwriters concerning the substance
of, and disseminate a press release or other public statement, reasonably
satisfactory to the Underwriters, responding to or commenting on such
rumor, publication or event.
(k) Neither the Company nor any of its officers, directors of
affiliates, will take, directly or indirectly, any action designed to cause
or result in, or which might constitute or be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
(l) The Company will cause the Shares to be approved for quotation on
the Nasdaq Stock Market's National Market System at each Closing Date and
for at least one year from the date of this Agreement.
(m) The Company will apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(n) The Company will use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it
prior to the Closing Date or the Option Closing Date, as the case may be,
and to satisfy all conditions precedent to the delivery of the Shares.
7. Cost and Expenses. The Company will pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereby are consummated or this Agreement is terminated
pursuant to Section 12 hereof, including without limitation all costs and
expenses incident to (i) the fees, disbursements and expenses of the Company's
and Selling Stockholders' counsel and accountants in connection with the
registration of the Shares under the Securities Act and all other expenses in
connection with the preparation, printing and, if applicable, filing of the
Registration Statement (including all amendments thereto), any Preliminary
Prospectus, the Effective Prospectus, and the Final Prospectus, this Agreement
and any Blue Sky memoranda; (ii) the delivery of copies of the foregoing
documents to the Underwriters; (iii) the filing fees of the Commission and the
NASD relating to the Shares; (iv) the preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Shares, including transfer
agent's and registrar's fees; (v) the qualification of the Shares for offering
and sale under state securities and Blue Sky laws, including filing fees and
fees and disbursements of counsel for the Underwriters relating thereto; (vi)
any listing of the Shares on the Nasdaq National Market System and (vii) any
expenses for travel, lodging and meals incurred by the Company in connection
with any meetings with prospective investors in the Shares. It is understood,
however, that, except as provided in this Section 7, Section 9, and Section 12
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, stock transfer taxes on resale of any of the Shares
by them, and any advertising expenses relating to the offer and sale of the
Shares.
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8. Conditions of the Underwriters' Obligations. The several obligations of
the Underwriters to purchase and pay for the Shares to be delivered on each
Closing Date shall be subject, in their discretion, to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained herein as of the date hereof and as of such Closing Date as if made on
and as of such Closing Date, to the accuracy of the statements of the Company's
officers made pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholders of all their covenants and obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement as amended to date has not become
effective prior to the execution of this Agreement, such Registration
Statement shall have been declared effective not later than 10:00 a.m.,
Nashville time, on the date of this Agreement or such later date and/or
time as shall have been consented to by the Underwriters in writing. The
Final Prospectus and any amendment or supplement thereto shall have been
filed with the Commission pursuant to Rules 424, 430A, and 434 within the
applicable time period prescribed for such filing and in accordance with
Section 6(a) of this Agreement; no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued
and no proceedings for that purpose shall have been instituted, threatened
or, to the knowledge of the Company and the Underwriters, contemplated by
the Commission; and all requests for additional information on the part of
the Commission shall have been complied with to the reasonable satisfaction
of the Underwriters.
(b) No Underwriter shall have advised the Company that the
Registration Statement, Preliminary Prospectus, the Effective Prospectus or
Final Prospectus, or any amendment or any supplement thereto, contains an
untrue statement of fact which, in the opinion of the Underwriters, is or
may be material, or omits to state a fact which, in the opinion of the
Underwriters, is or may be material and is or may be required to be stated
therein or is or may be necessary to make the statements therein not
misleading and the Company shall not have cured such untrue statement or
omission.
(c) The Underwriters shall have received the opinion of Xxxxxx Xxxxxxx
Xxxxxx & Xxxxx, a Professional Limited Liability Company, counsel for the
Company, addressed to the Underwriters, dated the Closing Date, to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with the corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement and the Effective Prospectus and the Final Prospectus and to
enter into this Agreement and perform its obligations hereunder. The
Company is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each other
jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification, except where the
failure to so qualify would
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not have a material adverse effect on the financial position, results
of operations or business of the Company and its Subsidiaries.
(ii) Each of the Subsidiaries of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement, the
Effective Prospectus, and the Final Prospectus. None of the
Subsidiaries is qualified to transact business as a foreign
corporation, and none owns or leases property or conducts any business
in any jurisdiction so as to require such qualification, except where
the failure to so qualify would not have a material adverse effect on
the financial position, results of operations or business of the
Company and its Subsidiaries.
(iii) The Company's authorized, issued and outstanding capital
stock as of the date of the Final Prospectus is as disclosed therein.
All of such outstanding shares of Common Stock of the Company,
including the shares to be sold by the Selling Stockholders, have been
duly authorized and validly issued, are fully paid and nonassessable
and conform to the description of such capital stock contained in the
Prospectus and Final Prospectus. None of such issued shares of capital
stock of the Company or any of its Subsidiaries has been issued or is
owned or held in violation of any statutory preemptive rights of
Stockholders or, to the best of such counsel's knowledge, any other
rights to purchase, and no person or entity (including any holder of
outstanding shares of capital stock of the Company or the
Subsidiaries) has any preemptive or other rights to subscribe for any
of such shares.
(iv) All of the outstanding shares of capital stock of each of
the Company's Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned beneficially
by the Company free and clear of all liens, security interests,
pledges, charges, encumbrances, Stockholders' agreements, voting
trusts, defects, equities or claims known to such counsel. To such
counsel's knowledge, other than the subsidiaries listed on Exhibit 21
to the Registration Statement, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, limited
liability company, joint venture or other association other than as
disclosed in the Effective Prospectus and the Final Prospectus.
(v) Except as disclosed in the Preliminary Prospectus, the
Effective Prospectus, and the Final Prospectus, there are no
outstanding (A) securities or obligations of the Company or any of its
Subsidiaries convertible into or exchangeable for any capital stock of
the Company or any of its Subsidiaries, (B) warrants, rights or
options to subscribe for or purchase from the Company or any of its
Subsidiaries any such capital stock or any such convertible or
exchangeable securities or obligations, or
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(C) obligations of the Company or any of its Subsidiaries to issue any
shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.
(vi) The Shares to be issued and sold by the Company have been
duly authorized and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
nonassessable, will conform to the description of the Common Stock
contained in the Effective Prospectus and the Final Prospectus, and no
statutory preemptive rights of Stockholders or, to the best of such
counsel's knowledge, any other rights to purchase exist with respect
to any of the Shares or the issue and sale thereof; the certificates
evidencing the Shares comply with all applicable requirements of
Delaware law; and the Shares have approved for quotation on the Nasdaq
Stock Market's National Market System.
(vii) Except as disclosed in the Effective Prospectus and the
Final Prospectus, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
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
Statement (or any such right has been effectively waived) or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(viii) All offers and sales of the Company's capital stock by the
Company prior to the date hereof were at all relevant times duly
registered under the Securities Act or exempt from the registration
requirements of the Securities Act and were duly registered or the
subject of an available exemption from the registration requirements
of the applicable state securities or Blue Sky laws.
(ix) The execution and delivery by the Company of this Agreement
and the consummation of the transactions contemplated herein do not
and will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws, as amended, of the Company, or any agreement,
lease, contract, indenture, instrument or obligation of the Company,
filed as an exhibit to the Registration Statement.
(x) The issue and sale of the Shares being issued at the Closing
Date and the performance of this Agreement and the consummation of the
transactions herein contemplated will not conflict with, or (with or
without the giving of notice or the passage of time or both) 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, lease or other agreement or instrument known to such
counsel to which the Company or
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21
any of its Subsidiaries is a party or to which any of their respective
properties or assets is subject, nor will such action conflict with or
violate any provision of the Certificates of Incorporation or Bylaws,
as amended, of the Company or any of its Subsidiaries or any statute,
rule or regulation or any order, judgment or decree of any court or
governmental agency or body known to such counsel having jurisdiction
over the Company or any of its Subsidiaries or any of their respective
properties or assets.
(xi) The Company and its Subsidiaries good title to all personal
property owned by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and
defects except such as are disclosed in the Effective Prospectus and
the Final Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
Subsidiaries; and any real property and buildings held under lease by
the Company or any of its Subsidiaries are held by the Company or
Subsidiary under valid, existing and enforceable leases with the
exceptions as are disclosed in the Effective Prospectus and the Final
Prospectus or are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
or Subsidiary.
(xii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution
and delivery by the Company of this Agreement and the consummation of
the transactions contemplated by this Agreement (other than as may be
required by the NASD or as required by state securities and Blue Sky
laws as to which such counsel need express no opinion), except such as
have been obtained or made, and except such that, if not obtained,
would not have a material adverse effect on the business or financial
condition of the Company and the Subsidiaries taken as a whole. No
consents or waivers from any other person are required in connection
with the execution and delivery by the Company of this Agreement and
the consummation of the transactions contemplated herein except such
as have been obtained or made.
(xiii) To counsel's knowledge and other than as disclosed in the
Preliminary Prospectus, the Effective Prospectus, and the Final
Prospectus, there is no litigation, arbitration, claim, proceeding or
investigation pending or threatened in which the Company or any of its
Subsidiaries is a party or of which any of their respective properties
or assets is the subject which, if determined adversely to the Company
or the affected Subsidiary, would individually or in the aggregate
have a material adverse effect on the financial position, results of
operations or business of the Company and its Subsidiaries; and, to
counsel's knowledge, neither the Company nor any of its Subsidiaries
is in violation of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except as described in the
Effective Prospectus and Final
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Prospectus, nor is the Company or any Subsidiary required to take any
action in order to avoid any such violation or default.
(xiv) This Agreement has been duly authorized, executed, and
delivered by the Company.
(xv) The Registration Statement, the Preliminary Prospectus, the
Effective Prospectus and the Final Prospectus and each amendment or
supplement thereto (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion),
as of their respective effective or issue dates, complied as to form
in all material respects with the requirements for registration
statements on Form S-1 under the Securities Act and the Rules and
Regulations. The descriptions in the Registration Statement and the
Preliminary Prospectus, the Effective Prospectus, and the Final
Prospectus of statutes, legal and governmental proceedings or
contracts, and other documents are accurate in all material respects
and fairly present the information required to be shown; and counsel
does not know of any statutes, legal or governmental proceedings or
contracts and other documents required to be described in the
Registration Statement, the Preliminary Prospectus, the Effective
Prospectus or the Final Prospectus that are not described as required
to be described therein or to be filed as exhibits to the Registration
Statement which are not described and filed as required.
(xvi) The Registration Statement is effective under the
Securities Act; any required filing of the Effective Prospectus and
the Final Prospectus pursuant to Rules 424, 430A and 434 has been made
in the manner and within the time period required by such Rules; and
no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and, to counsel's
knowledge, no proceedings for that purpose have been instituted or
threatened or are contemplated by the Commission.
(xvii) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940.
Counsel shall also state that, based upon their involvement in the
preparation of the Registration Statement as described in its opinion, no facts
have come to their attention which cause them to believe that the Registration
Statement, or any amendment thereto made prior to the Closing Date, on its
Effective Date and as of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Preliminary Prospectus, the Effective Prospectus or the
Final Prospectus 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 light of the circumstances under which they were made,
not misleading
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(provided, however, that counsel need make no statement regarding
the financial statements and related schedules and other financial data
contained in the Registration Statement, any amendment thereto, or the
Preliminary Prospectus, the Effective Prospectus and the Final Prospectus).
In rendering its opinion, counsel may rely, as to matters of fact, to the
extent that counsel deems proper, on certificates of responsible officers of the
Company and public officials and, as to matters of laws of any jurisdiction
other than the state of Tennessee or the United States, upon the opinion of
local counsel reasonably acceptable to the Underwriters, provided that counsel
must state that counsel believes that the Underwriters are justified in relying
upon the opinion and copies of the opinion are delivered to the Underwriters and
counsel for the Underwriters.
(d) The Underwriters shall have received an opinion addressed to the
Underwriters satisfactory to the Underwriters and counsel for the Underwriters,
of ___________________, counsel for the Selling Stockholders, dated the Closing
Date, to the effect that:
(i) This Agreement has been duly authorized, executed and delivered by
each Selling Stockholder.
(ii) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by or on behalf of each Selling
Stockholder and are valid and binding obligations of each of them,
enforceable against each of them in accordance with their respective terms,
except as enforceability may subject to general principles of equity.
(iii) Each individual Selling Stockholder has the requisite legal
capacity, and each other Selling Stockholder has full legal right, power
and authority, and any approval required by law applicable to the
respective Selling Stockholder (other than any approval required by federal
or state securities or Blue Sky laws), to sell, assign, transfer and
deliver the Shares to be sold by the Selling Stockholder in the manner
provided in this Agreement, the Custody Agreement, and the Power of
Attorney.
(iv) Each of the Selling Stockholders has, to the best of counsel's
knowledge based solely on certificates executed by Selling Stockholders,
good and clear title to the Shares to be sold by him or her or it pursuant
to this Agreement and upon delivery of certificates for the Shares to be
sold by each Selling Stockholder pursuant hereto and payment for the
Shares, good and clear title thereto will pass to the Underwriters,
severally, free of all restrictions on transfer, liens, encumbrances,
security interests and claims whatsoever, assuming that none of the
Underwriters has any notice of any adverse claim or defect with respect to
any Selling Stockholders Shares.
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In rendering such opinion, such counsel may rely (i) as to matters of fact,
to the extent counsel deems proper, upon certificates of the Selling
Stockholders provided that the extent of such reliance is specified in its
opinion, and (ii) as to matters of laws of any jurisdiction other than ________
or the United States, upon the opinion of local counsel reasonably acceptable to
the Underwriters provided that the extent of this reliance is specified in the
opinion and that counsel shall state that the opinion or opinions of local
counsel are satisfactory to them and that they believe they and you are
justified in relying thereon.
The opinions of Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, a Professional Limited
Liability Company, and __________ described in paragraphs (c) and (d) above
shall be rendered to the Underwriters at the request of the Company or one or
more of the Selling Stockholders, as the case may be, and shall so state
therein.
(e) The Underwriters shall have received from Xxxxxxxx & Xxx, PLC, counsel
for the Underwriters, an opinion dated the Closing Date with respect to the
incorporation of the Company, the validity of this Agreement, the validity of
the Shares being delivered to the Underwriters, the Registration Statement, the
Preliminary Prospectus, the Effective Prospectus and the Final Prospectus and
other related matters as the Underwriters may reasonably request. Such counsel
shall have received such documents and information from the Company as they
request to enable them to pass upon such matters. In rendering such opinion,
counsel for the Underwriters may rely as to all matters other than the laws of
the state of Tennessee or Federal law upon the opinion of counsel referred to in
Paragraphs (c) and (d) of this Section 8.
(f) You shall have received from Ernst & Young LLP letters dated,
respectively, the date hereof (or, if the Registration Statement has been
declared effective prior the execution and delivery of this Agreement, dated
such effective date and the date of this Agreement) and each Closing Date, in
form and substance satisfactory to you, to the effect that:
(i) they are independent public accountants with respect to the
Company and its Subsidiaries within the meaning of the Securities Act and
the Rules and Regulations;
(ii) in their opinion, the consolidated financial statements and
schedules of the Company and its Subsidiaries audited by them and included
in the Preliminary Prospectus, the Effective Prospectus, the Final
Prospectus, and the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the Rules and Regulations;
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the latest available interim financial statements of the Company
and its Subsidiaries, an inspection of the minute books of the Company and
its Subsidiaries since the date of the latest audited financial statements
included in the Preliminary Prospectus, the Effective
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Prospectus and the Final Prospectus, inquiries of officials of the Company
and its Subsidiaries responsible for financial accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) as of a specified date not more than five (5) days prior to
the date of such letter, there were any changes in the capital stock
(other than the issuance of common stock upon exercise of employee
stock options that were outstanding on the date of the latest balance
sheet included in the Preliminary Prospectus, the Effective Prospectus
and the Final Prospectus) or any increase in inventories or the
long-term debt or short-term debt of the Company and its Subsidiaries,
or any decreases in net current assets or net assets or other items
specified by the Underwriters, or any increases in any other items
specified by the Underwriters, in each case as compared with amounts
shown in the latest balance sheet included in the Preliminary
Prospectus, the Effective Prospectus and the Final Prospectus, except
in each case for changes, increases or decreases which the Preliminary
Prospectus, the Effective Prospectus and the Final Prospectus disclose
have occurred or may occur, or which are described in such letter; and
(B) for the period from the date of the latest financial
statements included in the Preliminary Prospectus, the Effective
Prospectus and the Final Prospectus to the specified date referred to
in Clause (A) there were any decreases in revenues or operating income
or the total or per share amounts of net income or other items
specified by the Underwriters, or any increases in any items specified
by the Underwriters, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in each
case for increases or decreases which the Preliminary Prospectus, the
Effective Prospectus and the Final Prospectus disclose have occurred
or may occur, or which are described in such letter; and
(iv) In addition to the audit referred to in their reports included in
the Preliminary Prospectus, the Effective Prospectus and the Final
Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraph (iii) above, they
have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Underwriters that are included in the Registration Statement, the
Preliminary Prospectus, the Effective Prospectus and the Final Prospectus,
or which appear in Part II of, or in exhibits or schedules to, the
Registration Statement and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its Subsidiaries and have found them to be in agreement;
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(v) on the basis of a reading of the unaudited pro forma consolidated
financial statements included in the Registration Statement, the
Preliminary Prospectus, the Effective Prospectus, and the Final Prospectus,
carrying out certain specified procedures that would not necessarily reveal
matters of significance with respect to the comments set forth in this
paragraph (v), inquiries of certain officials of the Company and its
Subsidiaries who have responsibility for financial and accounting matters
and preparing the pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to believe that the
unaudited pro forma consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of such
statements.
In the event that the letters referred to in this Section 8(f) set forth
any changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (I) such letters shall be accompanied by a
written explanation by the Company as to the significance thereof, unless the
Underwriters deem such explanation unnecessary, and (II) such changes, decreases
or increases do not, in your sole judgment, make it impracticable or inadvisable
to proceed with the purchase, sale and delivery of the Shares being delivered at
such Closing Date as contemplated by the Registration Statement, as amended as
of the date of such letter.
(g) Since the date of the latest balance sheet included in the Registration
Statement, the Preliminary Prospectus, the Effective Prospectus and the Final
Prospectus, neither the Company nor any of its Subsidiaries shall have sustained
(i) any loss or interference with their respective businesses from fire,
explosion, flood, hurricane 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 disclosed in the Preliminary Prospectus, the Effective
Prospectus, and the Final Prospectus, or (ii) any change, or any development
involving a prospective change (including without limitation a change in
management or control of the Company), in or affecting the condition (financial
or otherwise), results of operations, business or prospects of the Company and
its Subsidiaries, otherwise than as disclosed in the Preliminary Prospectus, the
Effective Prospectus, and the Final Prospectus, the effect of which, in either
such case, is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the purchase, sale and delivery of
the Shares being delivered at such Closing Date as contemplated by the
Registration Statement, as amended as of the date hereof.
(h) The Underwriters shall have received a certificate of the Company,
dated the Closing Date and addressed to the Underwriters, signed by the chief
executive officer and the principal financial and accounting officer of the
Company, to the effect that, as of the Closing Date:
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(i) The representations and warranties of the Company contained in
Section 1 of this Agreement are true and correct, as if made at and as of
the Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) The Registration Statement has become effective under the
Securities Act, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been initiated or are pending, or to their knowledge, threatened or
contemplated by the Commission;
(iii) All filings required by Rules 424, 430A, and 434 of the Rules
and Regulations have been made;
(iv) The signers of the certificate have carefully examined the
Registration Statement and the Final Prospectus and any amendments or
supplements thereto, and these documents do not include 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; and
(v) Since the effective date of the Registration Statement, there has
occurred no event (other than with respect to the information contained
under the caption "Underwriting") required to be set forth in an amendment
or supplement to the Registration Statement, the Effective Prospectus or
the Final Prospectus which has not been so set forth.
(i) The representations and warranties of each Selling Stockholder in
Section 2 of this Agreement shall be true and correct, as if made at and as of
the Closing Date, each Selling Stockholder shall have complied with all the
agreements and satisfied all the conditions on his part to be performed or
satisfied at or prior to the Closing Date, and the Selling Stockholders shall
deliver to the Underwriters a certificate to that effect, dated the Closing
Date, signed by such Selling Stockholder or his or her duly appointed
attorney-in-fact.
(j) The Shares shall be approved for quotation on the Nasdaq Stock Market's
National Market System.
(k) The Company shall have furnished to the Underwriters such further
certificates and documents confirming the representations and warranties
contained herein and related matters as the Underwriters may reasonably have
requested.
(l) The Company shall have delivered to the Underwriters written lock-up
agreements from those persons listed on Schedule C pursuant to which such
persons agree with the Underwriters not to offer, sell or dispose of any Common
Stock of the Company, or any
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securities convertible into or exercisable or exchangeable therefor or
derivative therefrom, for a period of 120 days after the date of this
Agreement, directly or indirectly, except with the prior written consent of
Equitable on behalf of the Underwriters.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory to the Underwriters and counsel for the Underwriters.
The Company shall furnish to the Underwriters such conformed copies of such
opinions, certificates, letters and documents in such quantities as the
Underwriters shall reasonably request.
If any of the conditions hereinabove provided for in this Section 8 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Underwriters by notifying the Company and the Selling Stockholder(s) of such
termination in writing at or prior to the Closing Date.
In such event, the Selling Stockholders, the Company, and the Underwriters
shall not be under any obligation to each other (except to the extent provided
in Sections 7 and 9 hereof).
The several obligations of the Underwriters to purchase and pay for the
Option Shares hereunder shall be subject, in their discretion, to satisfaction
on and as of the Option Closing Date of each of the foregoing conditions to
purchase the Firm Shares set forth in paragraphs (a) through (l) above, except
that (i) all references to the "Closing Date" shall be deemed to refer to the
Option Closing Date, if it is any date other than the First Closing Date, and
(ii) the opinions required under paragraphs (c), (d) and (e) shall be revised to
reflect the sale of the Option Shares.
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9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages, liabilities and judgments,
joint or several, to which such Underwriter or such controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in (A) the
Registration Statement, any Preliminary Prospectus, the Effective
Prospectus, or the Final Prospectus, or (B) any application or other
document, or any amendment or supplement thereto, executed by the Company
or based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to qualify the Shares under the
securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each a "Blue Sky
Application"); or (ii) the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Effective
Prospectus, the Final Prospectus or any Blue Sky Application a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter and each such
controlling person upon demand for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending or appearing as a third-party witness in
connection with any such loss, claim, damage, liability, action or
proceeding; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus, or the
Final Prospectus, in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for
use therein; provided, further, however, that the Company shall not be
liable to any Underwriter in respect of any Preliminary Prospectus to the
extent that (i) the Effective Prospectus or Final Prospectus did not
contain the untrue statement or alleged untrue statement or omission or
alleged omission giving rise to such loss, claim, damage, liability or
action, (ii) the Preliminary Prospectus was not sent or given to the
purchaser of the Shares in question at or prior to the time at which the
written confirmation of the sale of such Shares was sent or given to such
person, and (iii) the failure to deliver such Final Prospectus was not the
result of the Company's noncompliance with its obligations under Sections
6(a), 6(e), and 6(f) hereof. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments, joint or several, caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, any Preliminary Prospectus, the Effective
Prospectus, the Final Prospectus or any
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Blue Sky Application, 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, but in all such cases only with
reference to information relating to such Selling Stockholder furnished by
or on behalf of such Selling Stockholder in its capacity as a Selling
Stockholder expressly for use in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or the Final Prospectus;
provided, however, that nothing in this subsection (b) shall limit the
obligation of the Company to indemnify the Underwriters in the manner set
forth in subsection (a) relating to information provided by any Selling
Stockholder acting in his or her capacity as an officer, director or
employee of the Company. This indemnity agreement will be in addition to
any liability which any Selling Stockholder may otherwise have.
(c) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders, and each
person, if any, who controls the Company or a Selling Stockholder within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which
the Company or any such director, officer, Selling Stockholder or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Effective Prospectus, the Final Prospectus, or any Blue Sky Application, or
caused by the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that each Underwriter will be
liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
to the Company by any Underwriter specifically for use therein.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to paragraphs (a), (b) or (c) of this Section 9, 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. However, the failure so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 9 and will not
relieve the indemnifying party from any liability to the extent it is not
materially prejudiced as a proximate result of such failure. In case any
such proceeding is brought against any indemnified party, the indemnifying
party shall be entitled to participate therein and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, and after notice from the
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indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation unless the
indemnifying party does not so assume the defense thereof if given the
opportunity to do so. 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 or any officers, directors or controlling persons of the indemnifying
party and the indemnified party and representation of all such 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 connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (a) the reasonable fees and
expenses of more than one separate firm for all Underwriters and all
persons, if any, who control Underwriters within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, (b) the
reasonable fees and expenses of more than one separate firm for 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 such Section, and (c) the reasonable fees and expenses of more than
one separate firm for all Selling Stockholders and all persons, if any who
control Selling Stockholders within the meaning of either such Section. It
is further understood that, in any case, the indemnifying party shall, in
addition to the separate firm described above, be responsible for any fees
and expenses of local counsel necessary in connection with any such
proceedings and shall pay all legal fees and expenses promptly as they are
incurred. In the case of any such separate firm for the Underwriters and
such controlling persons of the Underwriters, such firm shall be designated
in writing by the Underwriters. In the case of any such separate firm for
the Company, and such directors, officers and controlling persons of the
Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Stockholders and such
controlling persons of the Selling Stockholders, such firm shall be
designated in writing by the attorneys-in-fact for the Selling Stockholders
under the Power of Attorney referred to in Section 2(c). 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, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding, of which indemnification may be sought hereunder
(whether or not any indemnified party is a party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of the indemnified party from all liability arising
out of such claim, action or proceeding.
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(e) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 9(a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party under any such paragraph shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by
the Company, the Selling Stockholders, and the Underwriters from the
offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 9(d)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company, the Selling Stockholders, and the Underwriters in connection with
the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Stockholders, and the Underwriters shall be deemed to
be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by each of the Company and the Selling
Stockholders and the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover
page of the Final Prospectus, bear to the aggregate public offering price
of the Shares. The relative fault of the Company, the Selling Stockholders,
and the Underwriters 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, the Selling Stockholders or the
Underwriters and the parties' relative intent, 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 9(e) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 9(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
Section 9(e) shall be deemed to include 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 subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omissions 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. No Selling Stockholder
shall be required to contribute any amount in excess of the proceeds
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received by that Selling Stockholder from the Underwriters in the offering.
The Underwriters' obligations in this Section 9(e) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus, the Final Prospectus or
any supplement or amendment thereto, each party against whom
indemnification may be sought under this Section 9 hereby consents to the
jurisdiction of any court having jurisdiction over any other indemnifying
party, agrees that process issuing from such court may be served upon him
or it by any other indemnifying party and consent to the service of such
process and agrees that any other indemnifying party may join him or it as
an additional defendant in any such proceeding in which such other
indemnifying party is a party.
10. Substitution of Underwriters. If any Underwriter defaults in its
obligation to purchase Shares hereunder and if the total number of Shares which
such defaulting Underwriter agreed but failed to purchase is ten percent (10%)
or less of the total number of Shares to be sold hereunder, the non-defaulting
Underwriters shall be obligated severally to purchase (in the respective
proportions which the number of Shares set forth opposite the name of each
non-defaulting Underwriter in Schedule A hereto bears to the total number of
Shares set forth opposite the names of all the non-defaulting Underwriters), the
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase. If any Underwriter so defaults and the total number of Shares with
respect to which such default or defaults occur is more than ten percent (10%)
of the total number of Shares to be sold hereunder, and arrangements
satisfactory to the other Underwriters and the Company for the purchase of such
Shares by other persons (who may include the non-defaulting Underwriters) are
not made within 36 hours after such default, this Agreement, insofar as it
relates to the sale of the Shares, will terminate without liability on the part
of the non-defaulting Underwriters, the Selling Stockholders or the Company
except for (i) the provisions of Section 9 hereof, and (ii) the expenses to be
paid or reimbursed by the Company pursuant to Section 7. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve shall relieve a
defaulting Underwriter from liability for its default.
11. Default by Selling Stockholders. If one or more of the Selling
Stockholders shall fail to sell and deliver to the Underwriters the number of
Firm Shares or Option Shares, as the case may be, to be sold and delivered by
such Selling Stockholder or Selling Stockholders at the First Closing Date under
the terms of this Agreement, the Company and the remaining Selling Stockholders
shall have the right to increase the numbers of Shares to be sold by them
hereunder, pro rata or otherwise, to the total number set forth for sale by all
of the Selling Stockholders in Schedule B, on such Closing Date. If the Company
and such remaining Selling Stockholders do not exercise such right, then the
Underwriters may at their option, by written notice from the Underwriters to the
Company and the Selling Stockholders, either (a) terminate this Agreement
without any liability on the part of any non-defaulting party or (b) purchase
the Shares which the Company and the other Selling Stockholders have agreed to
sell and deliver in accordance with the terms hereof.
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In the event of a failure by one or more of the Selling Stockholders to
sell and deliver as referred to in this Section, either the Underwriters, the
Company or, by joint action only, the non-defaulting Selling Stockholders shall
have the right to postpone the Closing Date for a period of not exceeding seven
days in order that any required changes in the Registration Statement or in the
Final Prospectus or in any other documents or arrangements may be effected.
12. Termination. This Agreement may be terminated by the Underwriters by
written notice to the Company and the Selling Stockholders as follows:
(a) At any time prior to the earlier of (i) the time the Shares are
released by the Underwriters for sale to the public, or (ii) 11:30 a.m.,
Washington, D.C. time, on the first business day following the date of this
Agreement;
(b) At any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given
in the Registration Statement, the Effective Prospectus and the Final
Prospectus, any material adverse change, or any development, to the
reasonable belief of the Underwriters, involving a prospective material
adverse change, in or affecting the condition, financial or otherwise, of
the Company and its Subsidiaries taken as a whole or the earnings, business
affairs, management or business prospects of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business; (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency after the date hereof or other
national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets
of the United States which would, in your judgment, make it impracticable
or inadvisable to market the Shares on the terms and in the manner
contemplated in the Preliminary Prospectus, the Effective Prospectus and
the Final Prospectus; (iii) suspension of trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market System or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such exchange
or the Nasdaq National Market System; (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation,
rule or order of any court or other governmental authority which in your
opinion materially and adversely affects, or will materially and adversely
affect, the business or operations of the Company or any of its
Subsidiaries; (v) the declaration of a banking moratorium by either federal
or New York State authorities; or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States; or
(c) As provided in Sections 8, 10, and 11 of this Agreement.
This Agreement also may be terminated by the Underwriters, by notice to the
Company, as to any obligation of the Underwriters to purchase the Option Shares,
upon the occurrence at any time prior
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to the Option Closing Date of any of the events described in subparagraph (b)
above or as provided in Sections 8, 10, and 11 of this Agreement.
13. Successors. This Agreement has been and is made solely for the benefit
of the Underwriters, the Company, the Selling Stockholders, and their respective
successors, executors, administrators, heirs, and assigns, and the officers,
directors, and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares merely because of such purchase. No purchaser of
Shares from any Underwriter shall be deemed a successor or assign merely because
of such purchase.
14. Notices. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed or delivered as follows: (a) if to
the Underwriters, to Equitable Securities Corporation, Xxxxxxxxx Xxxx Xxxxxx,
Xxxxx 000, 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Xx. Xxxxxx
X. Xxxxx, with a copy to Xxxxxxxx & Xxx, PLC, 000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxx I.N. XxXxxxxx, Esq.; (b) if to the
Company, to Service Experts, Inc., 0000 Xxxxxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx
00000, Attention, Xx. Xxxx X. Xxxxxxxx, with a copy to Xxxxxx Xxxxxxx Xxxxxx &
Xxxxx, a Professional Limited Liability Company, 0000 Xxxxxxxxx Xxxx Xxxxxx, 000
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, 00000-0000, Attention: X. Xxxxx Xxxx, Esq.;
and (c) if to the Selling Stockholders, to ___________________________.
15. Miscellaneous. The reimbursement, indemnification, and contribution
agreements contained in this Agreement and the representations, warranties and
covenants of the Company and the Selling Stockholders in or pursuant to this
Agreement shall survive the delivery of and payment for the Shares hereunder and
shall remain in full force and effect regardless of (a) any termination of this
Agreement, (b) any investigation made by or on behalf of any Underwriter or
controlling person thereof, or by or on behalf of the Company, its directors or
officers or any controlling person of the Company, any Selling Stockholders or
any controlling person of any Selling Stockholders, and (c) acceptance of and
payment for the Shares under this Agreement the other covenants of the Company
in this Agreement shall remain in full force and effect regardless of (i) any
investigation made by or on behalf of any underwriter or controlling person and
(ii) delivery of any payment for the Shares under this Agreement.
The Company, the Selling Stockholders, and the Underwriters acknowledge and
agree that the only information furnished or to be furnished by any Underwriter
to the Company for inclusion in the Preliminary Prospectus, the Effective
Prospectus, and the Final Prospectus or the Registration Statement consists of
the information set forth in the last paragraph on the front cover page of the
Preliminary Prospectus, the Effective Prospectus, and the Final Prospectus
(insofar as such information relates to the Underwriters), information provided
in connection with Item 502(d) of Regulation S-K under the Securities Act and
information under the caption "Underwriting" in the Preliminary Prospectus, the
Effective Prospectus, and the Final Prospectus.
Any action under this Agreement taken by Equitable on behalf of the
Underwriters will be binding upon all the Underwriters.
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Tennessee, without giving effect to its principles of
conflicts of law.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Stockholders, the
Company, and the several Underwriters in accordance with its terms.
Very truly yours,
SERVICE EXPERTS, INC.
By: _______________________________
Name:
Title:
Selling Stockholders listed on Schedule B
By: _______________________________
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the
date first above written.
Equitable Securities Corporation
Alex. Xxxxx & Sons Incorporated
X.X. Xxxxxxx & Sons, Inc.
Xxxxxx Xxxxxx & Company, Inc.
By: Equitable Securities Corporation
By: ______________________________
Managing Director
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SCHEDULE A
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITERS TO BE PURCHASED
Equitable Securities Corporation . . . . . . . . . . . .
Alex. Xxxxx & Sons Incorporated . . . . . . . . . . . .
X.X. Xxxxxxx & Sons, Inc. . . . . . . . . . . . . . . .
Xxxxxx Xxxxxx & Company, Inc. . . . . . . . . . . . . .
---------
Total 3,200,000
=========
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SCHEDULE B
SCHEDULE OF SELLING STOCKHOLDERS
Number of Firm Number of
Shares to be Option
Name of Selling Stockholder Sold Shares
--------------------------- -------------- ---------
Total
--------- --------
1,350,000 100,000
========= ========
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SCHEDULE C
SCHEDULE OF PERSONS REQUIRED TO EXECUTE LOCK-UP AGREEMENTS
39
