EXHIBIT 1.1
TREX COMPANY, INC.
Common Stock
____________________
UNDERWRITING AGREEMENT
New York, New York
March __, 1999
XXXXXXXX & CO. INC.
As Representative of the
Underwriters
named in Schedule I hereto
c/x Xxxxxxxx & Co. Inc.
Equitable Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Trex Company, Inc., a Delaware corporation (the "Company"), proposes,
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subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters"), an aggregate of
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3,250,000 shares (the "Company Firm Securities") of Common Stock, par value $.01
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per share ("Common Stock"), and the persons listed on Schedule II (the "Selling
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Stockholders") (who, as set forth on Schedule II comprise all of the record and
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beneficial owners of the Selling Stockholder Securities (as defined below))
propose, subject to the terms and conditions stated herein, to sell to the
Underwriters, an aggregate of 103,000 shares of Common Stock (the "Selling
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Stockholder Securities" and collectively with the Company Firm Securities, the
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"Firm Securities"). In addition, the Company proposes to grant to the
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Underwriters an option to purchase up to an additional 502,950 shares of Common
Stock (the "Option Securities"), on the terms and for the purposes set forth in
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Section 3 hereof. The Firm Securities and the Option Securities are herein
collectively referred to as the "Securities." Except as may be expressly set
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forth
below, any reference to you in this Agreement shall be solely in your capacity
as the representative of the Underwriters (in such capacity, the
"Representative").
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It is understood that the Securities will be offered and sold in the United
States and, subject to applicable law, may be offered and sold outside the
United States.
1. The Company represents and warrants to, and agrees with each of the
Underwriters and the Selling Stockholders that:
(a) A registration statement on Form S-1 (File No. 333-63287) as
amended by Amendment Nos. 1 through 4 thereto (the "Initial Registration
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Statement"), and as a part thereof a preliminary prospectus, in respect of
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the Securities, has been filed with the U.S. Securities and Exchange
Commission (the "Commission") in the form heretofore delivered to the
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Representative for each of the other Underwriters; if the Initial
Registration Statement has not become effective, an amendment to the
Initial Registration Statement, including a form of final prospectus,
necessary to permit the Initial Registration Statement to become effective,
will promptly be filed by the Company with the Commission; if the Initial
Registration Statement has become effective and any post-effective
amendment to the Initial Registration Statement has been filed with the
Commission prior to the execution and delivery of this Agreement, which
amendment or amendments shall be in form acceptable to the Representative,
the most recent such amendment has been declared effective by the
Commission; if the Initial Registration Statement has become effective, a
final prospectus relating to the Securities containing information
permitted to be omitted at the time of effectiveness by Rule 430A of the
rules and regulations of the Commission under the Securities Act of 1933,
as amended (the "Act"), will timely be filed by the Company pursuant to
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Rule 424(b) of the rules and regulations of the Commission under the Act
and, if applicable, a new registration statement increasing the size of the
offering pursuant to Rule 462(b) of the rules and regulations of the
Commission under the Act (the "Rule 462(b) Registration Statement") will
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timely be filed by the Company pursuant to Rule 462(b) of the rules and
regulations of the Commission under the Act (any preliminary prospectus
filed as part of the Initial Registration Statement being herein called a
"Preliminary Prospectus," the Initial Registration Statement as amended at
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the time that it becomes or became effective, or, if applicable, as amended
at the time the most recent post-effective amendment to such registration
statement filed with the Commission prior to the execution and delivery of
this Agreement became effective (the "Effective Date"), including all
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exhibits thereto and all information deemed to be a part thereof at such
time pursuant to Rule 430A of the rules and regulations of the Commission
under the Act, together with all parts of the Rule 462(b) Registration
Statement and all exhibits thereto, being herein called the "Registration
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Statement," and the final prospectus relating to the Securities in the form
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first filed pursuant to Rule 424(b) of the rules and regulations of the
Commission under the Act or, if no such filing is required, the form of
final prospectus included in the Registration Statement, being herein
called the "Prospectus");
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(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and any Preliminary Prospectus distributed to potential
investors did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
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warranty to the Underwriters shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by the Representative or another Underwriter through
the Representative expressly for use therein, and this representation and
warranty to any Selling Stockholder shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished to the Underwriters or the Company by such Selling Stockholder
expressly for use therein;
(c) On the Effective Date and the date the Prospectus was or is filed
with the Commission, and when any further amendments to the Registration
Statement become effective or any further amendments or supplements to the
Prospectus are filed with the Commission, as the case may be, (i) the
Registration Statement, the Prospectus and such amendments or supplements
did and will conform in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder, (ii) the
Registration Statement and such amendments did not and 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 (iii) the Prospectus and such amendments or supplements
did not and will not contain an untrue statement of a material fact or fail
to state a material fact required to be stated therein, or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation
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and warranty to the Underwriters shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Representative or another
Underwriter through the Representative expressly for use therein, and this
representation and warranty to any Selling Stockholder shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished to the Underwriters or the Company by such Selling
Stockholder expressly for use therein;
(d) Upon consummation of the Reorganization (as defined below), TREX
Company, LLC (the "Subsidiary") will become a wholly-owned subsidiary of
the Company;
(e) 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 all requisite power and corporate or similar authority to own its
properties and to conduct its business as described in the Prospectus, and,
where applicable, has been
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duly qualified as a foreign corporation for the transaction of business 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 not have a
material adverse effect on the condition, financial or otherwise, or the
business affairs or prospects of the Company and the Subsidiary taken as a
whole (a "Material Adverse Effect"));
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(f) The Subsidiary has been duly organized and is validly existing as
a limited liability company in good standing under the laws of the State of
Delaware, with all requisite power and authority as a limited liability
company to own its properties and to conduct its business as described in
the Prospectus, and has been duly qualified for the transaction of business
and is in good standing as a limited liability company 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 not have a Material Adverse Effect);
(g) All the issued equity interests in the Subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable and,
upon consummation of the Reorganization, will be owned by the Company free
and clear of all liens, encumbrances, equities, security interests or
claims; and there are no outstanding options, warrants or other rights
calling for the issuance or redemption of, and there are no commitments,
plans or arrangements to issue or redeem, any equity interests in the
Subsidiary or any security convertible or exchangeable or exercisable for
equity interests in the Subsidiary; except for the equity interests in the
Subsidiary owned by the Company, neither the Company nor the Subsidiary
owns, directly or indirectly, any shares of capital stock of any
corporation or has any equity interest in any limited liability company,
partnership, joint venture, association or other entity; and except as
disclosed in the Prospectus, neither the Company nor the Subsidiary has any
agreement or understanding with respect to the acquisition or purchase of
the securities of, or securities owned by, any person or entity or with
respect to the acquisition of the business, assets or liabilities of any
person or entity, and neither the Company nor the Subsidiary has any
agreement or understanding with respect to the disposition or sale of its
business, assets or properties;
(h) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement; the execution and
delivery of this Agreement and performance by the Company of its
obligations under this Agreement have been duly and validly authorized by
all requisite corporate action of the Company; and this Agreement
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally, now or hereafter
in effect, and subject to the availability of equitable remedies;
(i) Neither the Company nor the Subsidiary has, since the date of the
latest audited financial statements included in the Prospectus, sustained
any loss or interference with its business from fire, explosion, flood or
other calamity, whether
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or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, which loss or interference is
material to the Company and the Subsidiary taken as a whole; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, and, except as set forth or contemplated in
the Registration Statement and the Prospectus, there has not been, and
prior to the Time of Delivery (as defined below) there will not be, any
change in the shares of capital stock of the Company or equity interests in
the Subsidiary or change in the debt of the Company or the Subsidiary, any
dividend or distribution of any kind declared, paid or made on the shares
of capital stock of the Company or equity interests in the Subsidiary, or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the stockholders' equity of the
Company or the management, financial condition, or results of operations of
the Company and the Subsidiary taken as a whole, and neither Company nor
the Subsidiary has entered into any material transactions not in the
ordinary course of business other than as set forth or contemplated in the
Registration Statement and the Prospectus;
(j) The Company and the Subsidiary have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by each of them, in each case free and clear of all
liens, prior claims, encumbrances and defects except such as are described
in or contemplated by the Prospectus, or such as do not materially 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 or the Subsidiary, as
the case may be, or do not have a Material Adverse Effect, and any real
property and buildings held under lease by the Company or the Subsidiary
are held by them under valid, subsisting and enforceable leases of record
with such exceptions as are not material and do not interfere with the use
made and proposed to be made of such real property and buildings by the
Company or the Subsidiary, as the case may be, or do not have a Material
Adverse Effect;
(k) The Company has an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the
Prospectus, and all the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-
assessable, are free of any preemptive rights, rights of first refusal or
similar rights, were issued and sold in compliance with the applicable U.S.
federal and state securities laws, were issued without violation of any
preemptive rights, rights of first refusal or similar rights, and conform
in all material respects to the description thereof in the Prospectus;
except as described in the Prospectus, there are no outstanding options,
warrants or other rights calling for the issuance or redemption of, and
there are no commitments, plans or arrangements to issue or redeem, any
shares of capital stock of the Company or any security convertible or
exchangeable or exercisable for shares of capital stock of the Company;
there are no holders of securities of the Company who, by reason of the
filing of the Registration Statement or the Prospectus or the offering or
sale of the Securities have the right (and have not waived such right) to
request the Company to include in the Registration Statement or the
Prospectus securities owned by them;
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(l) The Securities have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable, and will conform in
all material respects to the description thereof in the Prospectus; and the
Securities have been duly authorized for listing on the New York Stock
Exchange, Inc. (the "NYSE") upon official notice of issuance, and a
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registration statement has been timely filed on Form 8-A pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which registration statement complies in all material
respects with the Exchange Act and the rules and regulations promulgated
thereunder;
(m) The execution and delivery of this Agreement, the performance of
the obligations of the Company under this Agreement, the consummation of
the transactions herein contemplated, the issuance and sale of the
Securities, the compliance by the Company with all the provisions of this
Agreement and the application of the net proceeds from the offering and
sale of the Securities in the manner set forth in Prospectus under the
heading "Use of Proceeds" do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge,
claim, prior claim or encumbrance upon, any of the property or assets of
the Company or the Subsidiary, pursuant to any indenture, mortgage, deed of
trust, loan agreement or other contract, agreement, license or instrument
to which the Company or the Subsidiary is a party or by which the Company
or the Subsidiary is bound or to which any of the property or assets of the
Company or the Subsidiary is subject (any of the foregoing constituting a
"Conflict"), nor do or will any such actions result in any violation of the
provisions of the Certificate of Incorporation or Bylaws of the Company or
the Certificate of Formation or Limited Liability Company Agreement of the
Subsidiary, in each case as amended through the date hereof and each
Closing Date, or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or the
Subsidiary or any of their respective properties (any of the foregoing
constituting a "Violation"); and no consent, approval, authorization,
filing, order, registration or qualification of or with any court or
governmental agency or body is required (all of the foregoing constituting
a "Consent") for the issue and sale of the Securities or the consummation
of the other transactions contemplated by this Agreement, except the
registration under the Act of the Securities, and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws or by the by-laws and rules of the
National Association of Securities Dealers, Inc. (the "NASD") in connection
with the purchase and distribution of the Securities by the Underwriters,
except for any such Conflict or Violation which would not, or any such
Consent, which the failure to obtain would not, individually or in the
aggregate, result in a Material Adverse Effect or that would not,
individually or in the aggregate, impair the Company's ability to
consummate the transactions herein contemplated;
(n) Except as disclosed in the Registration Statement and the
Prospectus, there are no legal or governmental proceedings pending to which
the Company, the
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Subsidiary or any of their respective officers or directors is a party or
of which any property of the Company or the Subsidiary is subject that
could prevent consummation of the transactions contemplated by this
Agreement or that is required to be disclosed in the Registration Statement
or the Prospectus or any other such proceedings, other than litigation or
proceedings incident to the business conducted by the Company and the
Subsidiary that will not individually or in the aggregate have a Material
Adverse Effect; to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened or
contemplated by others; and neither the Company nor the Subsidiary is
involved in any employee or labor dispute, nor, to the best of the
Company's knowledge, is any employee or labor dispute threatened, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of the suppliers, distributors or contractors of the
Company or the Subsidiary, that would have a Material Adverse Effect;
(o) The Company is not aware of any threatened or pending litigation
or any dispute between it or the Subsidiary, on the one hand, and any of
their executive officers or key employees, on the other hand, which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect, and has no reason to believe that any executive officers or
key employees will not remain in the employment of the Company or the
Subsidiary, as the case may be, for the foreseeable future;
(p) The Company and the Subsidiary have all material licenses, permits
and other approvals or authorizations of and from governmental or
regulatory authorities ("Permits") as are necessary under applicable law to
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own or lease their properties, and to otherwise conduct their businesses in
the manner now being conducted and as described in the Prospectus; and the
Company and the Subsidiary have fulfilled and performed all of their
respective obligations with respect to such Permits, and no event has
occurred which allows, or after notice or lapse of time or both would
allow, revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permits; except, in any
of the above cases, where any failure to have such Permits, failure to
fulfill and perform such obligations or an occurrence of any such event
would not reasonably be expected to have a Material Adverse Effect;
(q) Ernst & Young, LLP, who have certified certain financial
statements and delivered their reports with respect to audited consolidated
financial statements and schedules included in the Registration Statement
and the Prospectus, are independent public accountants as required by the
Act;
(r) The financial statements included in the Registration Statement
and the Prospectus present fairly (i) the financial position of the Company
as at December 31, 1998, (ii) the financial position of the Subsidiary as
at December 31, 1997 and 1998 and the results of operations, the
undistributed income, the cash flows and changes in members' equity of the
Subsidiary for the period from July 1, 1996 through December 31, 1996 and
for the years ended December 31, 1997 and
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1998, and (iii) the results of operations, divisional operating equity
deficit and cash flows of the Composite Products Division of Mobil Oil
Corporation (the "Predecessor") for the year ended December 31, 1995 and
for the period from January 1, 1996 through August 28, 1996, in each case
in accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as otherwise stated
therein, and include all adjustments necessary for a fair presentation of
the results for such periods; the other financial data set forth in the
Registration Statement and the Prospectus are accurately presented and, to
the extent such data are derived from the financial statements and books
and records of the Company, the Subsidiary and the Predecessor, are
prepared on a basis consistent with such financial statements and the books
and records of the Company, the Subsidiary and the Predecessor; the pro
forma financial information included in the Registration Statement and the
Prospectus has been properly compiled and complies in all material respects
with the applicable accounting requirements of Rule 11-01 and Rule 11-02 of
Regulation S-X of the Commission, and includes all adjustments necessary
for a fair presentation of the results for such periods; the assumptions
described in the notes to the pro forma statement of operations data and
pro forma balance sheet data contained in the Prospectus provide or will
provide, as the case may be, a reasonable basis for presenting the
significant direct effects of the transactions contemplated therein, and
the pro forma adjustments made therein give appropriate effect to those
assumptions; and no other financial statements or schedules are required to
be included in the Registration Statement and the Prospectus;
(s) There are no statutes or governmental regulations, or any
contracts or other documents that are required to be described in the
Prospectus or filed as exhibits to the Registration Statement which are not
described therein accurately in all material respects or filed as exhibits
thereto; and all such contracts to which the Company or the Subsidiary is a
party have been duly authorized, executed and delivered by the Company or
the Subsidiary, constitute valid and binding agreements of the Company and
are enforceable against the Company or such Subsidiary in accordance with
the terms thereof;
(t) The Company and the Subsidiary own or possess adequate patent
rights or licenses or other rights to use patent rights, inventions,
trademarks, service marks, trade names, copyrights, technology and know-how
necessary to conduct the business now or proposed to be operated by them as
described in the Prospectus; except as set forth in the Prospectus, neither
the Company nor the Subsidiary has received any notice of infringement of
or conflict with asserted rights of others with respect to any patent,
patent rights, inventions, trademarks, service marks, trade names,
copyrights, technology or know-how which, individually or in the aggregate,
could have a Material Adverse Effect; and, the discoveries, inventions,
products or processes of the Company and the Subsidiary referred to in the
Prospectus do not, to the Company's knowledge, infringe or conflict with
any patent or right of any third party, or any discovery, invention,
product or process which is the subject of a patent application filed by
any third party known to the Company;
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(u) Neither the Company nor the Subsidiary is in violation of any term
or provision of its Certificate of Incorporation or Bylaws (in the case of
the Company) or Certificate of Formation or Limited Liability Company
Agreement (in the case of the Subsidiary), in each case as amended through
the date hereof and each Closing Date, or any law, ordinance,
administrative or governmental rule or regulation applicable to the Company
or the Subsidiary, or of any decree of any court or governmental agency or
body having jurisdiction over the Company or the Subsidiary where the
consequences of such violation could reasonably be expected to have a
Material Adverse Effect;
(v) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, bank loan or credit agreement, lease or other
contract, agreement, license or instrument to which the Company or the
Subsidiary is a party or by which the Company or the Subsidiary or the
Company's or the Subsidiary's properties is bound or may be affected, where
such default could reasonably be expected to have a Material Adverse
Effect;
(w) The Company and the Subsidiary have timely filed all necessary tax
returns and notices (except where the failure to file such returns or
notices could not reasonably be expected to have a Material Adverse Effect)
and have paid or made provision for all federal, state, county, local and
foreign taxes of any nature whatsoever for all tax years through December
31, 1998, and have paid or made provision for all federal, state, county,
local and foreign taxes for any later periods to the extent such taxes have
become due; except as may be set forth or adequately reserved for in the
financial statements included in the Registration Statement and the
Prospectus, the Company has no knowledge, or any reasonable grounds to
know, of any tax deficiencies (including interest or penalties accrued or
accruing) which would have a Material Adverse Effect; the Company and the
Subsidiary have paid all taxes which have become due, whether pursuant to
any assessment or reassessment or otherwise, and there is no further
liability (whether or not disclosed on such returns) or assessment or
reassessment for any such taxes, and no interest or penalties accrued or
accruing with respect thereto; neither the Company nor the Subsidiary has
granted or agreed to any extensions of the periods provided for under
applicable law for the issuance of tax assessments or reassessments; the
amounts currently set up as provisions for taxes or otherwise by the
Company and the Subsidiary on their books and records are sufficient for
the payment of all its unpaid federal, state, county, local and foreign
taxes accrued through the dates as of which they speak, and for which the
Company or the Subsidiary may be liable in its own right, or as a
transferee of the assets of, or as successor to any other corporation,
association, partnership, joint venture or other entity;
(x) The Company and the Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial
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statements in conformity with generally accepted accounting principles and
to maintain accountability for assets; (iii) access to material assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences;
(y) Neither the Company nor the Subsidiary is in violation of, nor has
either of them received any outstanding notice of a violation of, any
applicable federal, state, county, local or foreign law or regulation
relating to equal opportunity or discrimination in the hiring, promotion or
compensation or civil rights generally of employees, or any applicable
federal, provincial or state wages and hours laws, or any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder, or any legislation relating to
labor standards or antitrust or trade regulation matters, where such
violation could reasonably be expected to have a Material Adverse Effect.
The Company and the Subsidiary (i) are in compliance with any and all
applicable federal, state and local laws and regulations relating to the
protection of human health and safety, the environment, hazardous or toxic
substances or waste, pollutants or contaminants or the collection of water
for human consumption ("Environmental Laws"), (ii) have received all
Permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and are in
compliance with all terms and conditions of any such Permit, license or
approval; there has been no storage, disposal, generation, transportation,
handling or treatment of hazardous substances or solid wastes by the
Company or the Subsidiary (or to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or the Subsidiary or in violation
of any applicable law, ordinance, rule, regulation, order, judgment, decree
or Permit or which would require remedial action by the Company or the
Subsidiary under any applicable law, ordinance, rule, regulation, order,
judgment, decree or Permit; there has been no spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any solid
wastes or hazardous substances due to or caused by the Company or any
Subsidiary; and the terms "hazardous substances" and "solid wastes" shall
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have the meanings specified in any applicable local, state and federal
Environmental Laws or regulations; except for such failures to comply,
failure to receive Permits, licenses or approvals, violations or other
action, inaction or occurrence that could not reasonably be expected to
have a Material Adverse Effect;
(z) Neither the Company nor the Subsidiary, nor any of their
respective officers, directors, employees or agents, has used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity, or made any unlawful payment of
funds of the Company or the Subsidiary or received or retained any funds in
violation of any law, rule or regulation; none of the Company, the
Subsidiary, nor, to the Company's best knowledge, any of their respective
directors, officers, employees, consultants or agents (in the course of
such person's actions for, or on behalf of, the Company or
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the Subsidiary) has violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended, or has made any
bribe, rebate, payoff, influence, payment, kickback or other unlawful
payment;
(aa) Neither the Company nor the Subsidiary, nor any of their
respective officers, directors, employees or agents, have taken or will
take, directly or indirectly, any action designed to or which has
constituted or that might be reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
or that operates or would operate as a fraud or deceipt or any conspiracy
with respect thereto, in which the Company or the Subsidiary shall
participate, in connection with the issuance or sale of any security of the
Company;
(bb) Other than with respect to the Underwriters or TriCapital
Corporation as described in the Prospectus, the Company has not incurred
any liability for finder's or broker's fees or agent's commissions in
connection with the execution, delivery or performance of this Agreement,
the offer and sale of the Securities or the transactions contemplated
hereby;
(cc) The Company has furnished to the Representative true, accurate
and complete copies of letters from each of the executive officers,
directors, employees and current stockholders of the Company listed on
Appendix A (collectively, the "Lock-Up Agreements") pursuant to which such
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persons have agreed that for a period of 180 days after the Time of
Delivery (the "Lock-Up Period"), except pursuant to this Agreement or as
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specified in the Lock-Up Agreements, such persons will not offer, sell,
contract to sell, issue or grant an option or other right for the purchase
or sale of, assign, transfer, make a distribution of, pledge hypothecate or
otherwise encumber or dispose of, or grant any rights with respect to
(collectively, a "Disposition"), any shares of the Company or any
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securities, instruments or other rights convertible into or exercisable or
exchangeable for, or evidencing any right to purchase or subscribe for, any
shares of capital stock of the Company (collectively, the "Company
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Securities"), directly or indirectly, without the prior written consent of
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Xxxxxxxx & Co. Inc.;
The foregoing restrictions have been expressly agreed to preclude
a holder of Company Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Company Securities during the Lock-Up Period,
even if such Company Securities would be disposed of by someone other than
such holder. Such prohibited hedging or other transactions would include,
without limitation, any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation, any
put or call option) with respect to any Company Securities or with respect
to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Company Securities. Furthermore, each such person has also agreed and
consented to the entry of stop transfer instructions with the Company's
transfer agent against the
11
transfer of the Company Securities held by such person except in compliance
with this restriction.
(dd) The Company is not an "investment company," an entity
"controlled" by an "investment company," or an "affiliated person" of, or
"promoter", or "principal underwriter", for, an "investment company," nor,
immediately after giving effect to the offering and sale of the Securities
and the application of the net proceeds therefrom as set forth in the
Prospectus, will the Company be an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended;
(ee) Except as disclosed in the Prospectus, no holder of any security
of the Company has any right to require registration of Common Stock or any
other security of the Company;
(ff) The Company and the Subsidiary maintain insurance for themselves
of the types and in the amounts which they believe are reasonably adequate
for their respective businesses, all of which insurance is in full force
and effect;
(gg) There are no affiliations with the NASD among the Company's
officers, directors or, to the Company's best knowledge, any five percent
or greater security holder of the Company, except as disclosed in writing
to the Representative;
(hh) The Company has not distributed and, prior to the last to occur
of (i) the Time of Delivery, (ii) the Option Securities Delivery Date (as
defined below) or (iii) completion of the distribution of the Securities,
will not distribute any securities without the Representative's prior
written consent in connection with the offering and sale of the Securities.
(ii) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a
summary of the terms of the Common Stock, and under the captions "Risk
Factors - Impact of Government Regulation," "Business - Governmental
Regulation," "Risk Factors - Shares Eligible for Future Sale; Registration
Rights" and "Underwriting," as well as under the caption "Indemnification
of Directors and Officers" in Item 14 of Part II of the Registration
Statement, to the extent they constitute summaries of U.S. federal
statutes, rules and regulations, or portions thereof, or insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair.
2. Each Selling Stockholder, severally and not jointly, represents and
warrants to, and agrees with, each of the Underwriters that:
(a) Such Selling Stockholder has been duly organized and is validly
existing in good standing under the laws of its jurisdiction of
organization;
12
(b) Such Selling Stockholder has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement; the
execution and delivery of this Agreement and the performance by such
Selling Stockholder of its obligations under this Agreement have been duly
and validly authorized by all requisite action on the part of such Selling
Stockholder, and this Agreement constitutes the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally, now or hereafter in effect, and
subject to the availability of equitable remedies;
(c) Such Selling Stockholder has, and at the Time of Delivery will
have, good and valid title to the Securities to be sold by such Selling
Stockholder hereunder, free and clear of any liens, encumbrances, equities,
security interests, prior claims, claims and other restrictions of any
nature whatsoever, and such Selling Stockholder has the full legal right,
power and authority, and any approval required by law, to enter into this
Agreement and to sell, assign, transfer and deliver the Securities being
sold by it hereunder and to make the representations, warranties, covenants
and agreements made by such Selling Stockholder in this Agreement; and upon
the delivery of and payment for such Securities as herein provided, the
several Underwriters will acquire good and valid title thereto (assuming
the Underwriters are without notice of any "adverse claim" (as such term is
defined in the New York Uniform Commercial Code) and are otherwise bona
fide purchasers for purposes of the New York Uniform Commercial Code), free
and clear of all liens, encumbrances, equities, security interests, prior
claims, claims and other restrictions of any nature whatsoever. The
foregoing representation shall apply to CIG & Co., as the record holder,
and each of Connecticut General Life Insurance Company ("CIGNA") and Life
Insurance Company of North America ("LICNA"), as the beneficial owners,
respectively, of the Selling Stockholder Securities to be sold by CIGNA and
LICNA, as set forth on Schedule II, in each case as to their respective
-----------
interests in such Selling Stockholder Securities;
(d) Such Selling Stockholder has duly executed and delivered an
agreement and power of attorney with respect to such Selling Stockholder
(the "Agreement and Power-of-Attorney") in the form heretofore delivered to
-------------------------------
the Representative, appointing [___________________] such Selling
Stockholder's attorney-in-fact (the "Attorney-in-Fact") with authority to
----------------
execute, deliver and perform this Agreement on behalf of such Selling
Stockholder and appointing ChaseMellon Shareholder Services, L.L.C., as
custodian thereunder (the "Custodian"). Certificates in negotiable form,
---------
endorsed in blank or accompanied by blank stock powers duly executed, with
signatures appropriately guaranteed, representing the Securities to be sold
by such Selling Stockholder hereunder have been deposited with the
Custodian pursuant to the Agreement and Power-of-Attorney for the purpose
of delivery pursuant to this Agreement. Such Selling Stockholder has full
power and authority to enter into the Agreement and Power-of-Attorney and
to perform its obligations thereunder. The execution and delivery of the
Agreement and Power-of-Attorney
13
have been duly authorized by all necessary corporate action of such Selling
Stockholder; the Agreement and Power-of-Attorney has been duly executed and
delivered by such Selling Stockholder and, assuming due authorization,
execution and delivery by the Custodian, is the legal, valid, binding
instrument of such Selling Stockholder, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization
or other laws affecting the enforcement of creditors' rights generally, now
or hereafter in effect, and subject to the availability of equitable
remedies. Such Selling Stockholder agrees that each of the Securities
represented by the certificates on deposit with the Custodian is subject to
the interests of the Underwriters, the Company and the other Selling
Stockholders hereunder, that the arrangements made for such custody, the
appointment of the Attorney-in-Fact and the right, power and authority of
the Attorney-in-Fact to execute and deliver this Agreement and to carry out
the terms of this Agreement are to that extent irrevocable and that the
obligations of such Selling Stockholder hereunder shall not be terminated,
except as provided in this Agreement or the Agreement and Power-of-
Attorney, by any act of such Selling Stockholder, by operation of law, or
otherwise, whether by its liquidation or dissolution. If any Selling
Stockholder shall liquidate or dissolve or if any other event should occur,
before the delivery of such Securities hereunder, the certificates for such
Securities deposited with the Custodian shall be delivered by the Custodian
in accordance with the respective terms and conditions of this Agreement as
if such liquidation or dissolution or other event had not occurred,
regardless of whether or not the Custodian or the Attorney-in-Fact shall
have received notice thereof;
(e) Neither the execution and delivery or performance of this
Agreement or the Agreement and Power-of-Attorney or the consummation of the
transactions herein or therein contemplated nor the compliance with the
terms hereof or thereof by such Selling Stockholder will conflict with, or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge, claim or encumbrance on any property of such Selling
Stockholder under any indenture, mortgage, deed of trust, lease or other
contract, agreement, license or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder's property is
bound, or the certificate of incorporation, bylaws or other organizational
or governing instruments of such Selling Stockholder, or any statute,
ruling, judgment, decree, order, or regulation of any court or other
governmental authority or any arbitrator applicable to such Selling
Stockholder; and no consent, approval, authorization, order, registration
or qualification of or with any governmental authority is required, except
such as have been obtained, such as may be required under federal, state or
foreign securities or Blue Sky laws or by the by-laws and rules of the NASD
and, if the registration statement filed with respect to the Securities is
not effective under the Act as of the time of execution hereof, such as may
be required (and shall be obtained as provided in this Agreement) under the
Act;
(f) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action designed to cause or result in, or that
has constituted or which
14
might reasonably be expected to constitute, the stabilization (within the
meaning of Regulation M promulgated under the Act) or manipulation of the
price of any security of the Company;
(g) The sale by such Selling Stockholder of Securities pursuant hereto
is not prompted by any adverse information concerning the Company that, to
the knowledge of such Selling Stockholder (without any independent
investigation), is not set forth in the Registration Statement or the
Prospectus;
(h) The information regarding such Selling Stockholder set forth
therein under the caption "Principal and Selling Stockholders" is complete
and accurate;
(i) At the Time of Delivery, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the
sale and transfer of the Securities to be sold by such Selling Stockholder
to the several Underwriters hereunder will have been fully paid or provided
for by such Selling Stockholder and all laws imposing such taxes will have
been fully complied with;
(j) The Selling Stockholder has not distributed and, prior to the last
to occur of (i) the Time of Delivery, (ii) the Option Securities Delivery
Date or (iii) completion of the distribution of the Securities, will not
distribute without the prior written consent of the Representative any
offering material directly or indirectly in connection with the offering
and sale of the Securities; and
(k) None of the Company, counsel to the Company, the Underwriters, or
counsel to the Underwriters has made any representations or warranties or
provided any information to such Selling Stockholder with respect to the
tax consequences of the sale of the Securities.
3. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the several Underwriters an aggregate of 3,250,000
Company Firm Securities, each Selling Stockholder agrees to sell to the several
Underwriters the number of Selling Stockholder Securities set forth on Schedule
--------
II opposite the name of such Selling Stockholder, and each of the Underwriters
--
agrees to purchase from the Company and the Selling Stockholders, at a purchase
price of $_____________ per share (the "per share purchase price"), the
respective aggregate number of Firm Securities determined in the manner set
forth below. The obligation of each Underwriter to the Company shall be to
purchase that portion of the number of shares of Common Stock to be sold by the
Company or such Selling Stockholders pursuant to this Agreement as the number of
Firm Securities set forth opposite the name of such Underwriter on Schedule I
----------
bears to the total number of Firm Securities to be purchased by the Underwriters
pursuant to this Agreement, in each case adjusted by the Representative such
that no Underwriter shall be obligated to purchase Firm Securities other than in
100 share blocks. In making this Agreement, each Underwriter is contracting
severally and not jointly.
15
In addition, subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters, as required (for
the sole purpose of covering over-allotments in the sale of the Firm
Securities), up to 502,950 Option Securities at the per share purchase price as
stated in the preceding paragraph. The right to purchase the Option Securities
may be exercised by the Representative giving 48 hours' prior written or
telephonic notice (subsequently confirmed in writing) to the Company of the
Underwriters' determination to purchase all or a portion of the Option
Securities. Such notice may be given at any time within a period of 30 days
following the Time of Delivery. Option Securities shall be purchased severally
for the account of each Underwriter in proportion to the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule I hereto.
----------
No Option Securities shall be delivered to or for the accounts of the
Underwriters unless the Firm Securities shall be simultaneously delivered or
shall theretofore have been delivered as herein provided. The respective
purchase obligations of each Underwriter shall be adjusted by the Representative
so that no Underwriter shall be obligated to purchase Option Securities other
than in 100 share blocks.
It is agreed that 162,500 shares of Common Stock (the "Reserved
Shares") initially will be reserved by the Underwriters for offer and sale to
certain individuals, including directors and employees of the Company, members
of their families or friends, and other persons having business relationships
with the Company, at the per share purchase price. Any allocation of such
Reserved Shares among such persons will be made in accordance with directions
received by the Representative from the Company not less than ____ days prior to
the Time of Delivery, provided that under no circumstances will the
Representative or any Underwriter be liable to the Company or any such person
for any action taken or omitted in good faith in connection with such allocation
of Reserved Shares to such persons. As a condition to the purchase of Reserved
Shares, any purchaser thereof will be required to execute and deliver to the
Representative a Lock-Up Agreement. It is further understood that any such
Reserved Shares which are not purchased by such persons will be offered by the
Underwriters for sale to the public upon the terms and conditions set forth in
the Prospectus.
4. The Underwriters propose to offer the Securities for sale upon the
terms and conditions set forth in the Prospectus.
5. Certificates in definitive form for the Firm Securities to be
purchased by each Underwriter hereunder shall be delivered by or on behalf of
the Company and the Selling Stockholders to the Representative for the account
of such Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer of immediately available funds to the
account of the Company in the amount of the purchase price of the Company Firm
Securities as specified on Schedule III hereto, and by wire transfer of
------------
immediately available funds to the account of each Selling Stockholder, as
specified on Schedule III hereto, in the amount specified thereon for the
------------
purchase price of the Selling Stockholder Securities being sold by such Selling
Stockholder as specified on Schedule III hereto, at the offices of the
------------
Representative at Equitable Center, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at
9:30 A.M., New York City time, on __________, 1999,
16
or at such other time, date and place as the Representative and the Company may
agree upon in writing, such time and date being herein called the "Time of
-------
Delivery."
--------
Certificates in definitive form for the Option Securities to be purchased
by each Underwriter hereunder shall be delivered by or on behalf of the Company
to the Representative for the account of such Underwriter, against payment by
such Underwriter or on its behalf of the purchase price thereof by wire transfer
of immediately available funds to the account of the Company as specified on
Schedule III hereto, in New York, New York, at such time and on such date (not
------------
earlier than the Time of Delivery nor later than ten business days after giving
of the notice delivered by the Representative to the Company) and in such
denominations and registered in such names as shall be specified in the notice
delivered by the Representative to the Company with respect to the purchase of
such Option Securities. The date and time of such delivery and payment are
herein sometimes referred to as the "Option Securities Delivery Date."
-------------------------------
Certificates for the Firm Securities and the Option Securities so to be
delivered will be in good delivery form, and in such denominations and
registered in such names as the Representative may request not less than 48
hours prior to the Time of Delivery and the Option Securities Delivery Date,
respectively. Such certificates will be made available for checking and
packaging in New York, New York, at least 24 hours prior to the Time of Delivery
or Option Securities Delivery Date, as applicable.
In lieu of delivering certificates in definitive form for the Securities to
be delivered by the Company and the Selling Stockholders hereunder, the Company
and the Selling Stockholders may make electronic delivery of such Securities
through the facilities of The Depository Trust Company under arrangements
satisfactory to the Company, the Selling Stockholders, the transfer agent for
the Securities and the Representative.
6. The Company covenants and agrees with each of the Underwriters:
(a) If the Registration Statement has not become effective, to file
promptly any required amendment to the Registration Statement with the
Commission and use its best efforts to cause the Registration Statement to
become effective; if the Registration Statement has become effective, to
timely file the Prospectus with the Commission as required under Rule
424(b) under the Act; to make no further amendment to the Registration
Statement or any amendment or supplement to the Prospectus which shall be
disapproved by the Representative after reasonable notice thereof; to
advise the Representative, promptly after it receives notice thereof of the
time when the Registration Statement or any amended Registration Statement
has become effective or any amendment or supplement to the Prospectus has
been filed, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending of the Registration Statement or the amending or
supplementing of the Prospectus or for additional information; and in the
event of the issuance of any stop order or of any order
17
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification, promptly to use its best
efforts to obtain withdrawal of any such order;
(b) Promptly from time to time to take such action as the
Representative may reasonably request to qualify the Securities for
offering and sale under the securities laws of such jurisdictions (within
or without the United States) as the Representative may reasonably request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Securities, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction or to take any other action which would subject it to
taxation, other than as to matters and transactions relating to the offer
and sale of the Securities in each jurisdiction in which the Securities
have been qualified as provided above;
(c) To furnish each of the Representative and counsel for the
Underwriters, without charge, three signed copies of the Initial
Registration Statement filed with respect to the Securities and each
amendment thereto (including all exhibits thereto) and to each other
Underwriter, without charge, a conformed copy of such Registration
Statement and each amendment thereto (without exhibits thereto) and, so
long as a prospectus relating to the Securities is required to be delivered
under the Act, as many printed copies of each Preliminary Prospectus, the
Prospectus, and all amendments or supplements thereto as the Representative
may from time to time reasonably request. If at any time when the delivery
of a prospectus is required under the Act an event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make statements therein, in the light
of the circumstances under which they were made when such Prospectuses are
delivered, not misleading, or would contain any misrepresentation or
omission likely to affect the market price of the Securities, or if for any
other reason it shall be necessary to amend or supplement the Prospectus in
order to comply with the Act, the Company will forthwith prepare and,
subject to the provisions of Section 6(a) hereof, file with the Commission,
an appropriate supplement or amendment thereto, and will furnish to each
Underwriter and to any dealer in securities, without charge, signed and
conformed copies and as many printed copies as the Representative may from
time to time reasonably request of amendments or supplements to the
Prospectus;
(d) To make generally available to the Company's stockholders, as soon
as practicable, but not later than 60 days after the end of the twelve-
month period beginning on the first day of the Company's first fiscal
quarter immediately succeeding the Company's fiscal quarter during which
the Effective Date occurs, an earnings statement of the Company covering
such twelve-month period that satisfies the provisions of Section 11(a) of
the Act and the rules and regulations of the Commission thereunder;
18
(e) To file promptly all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act
subsequent to the Effective Date and during any period when the Prospectus
is required to be delivered;
(f) For a period of five years from the Effective Date, to furnish to
its stockholders, within the time periods prescribed by the rules and
regulations promulgated pursuant to the Exchange Act or such shorter time
periods prescribed by the rules of the NYSE, after the end of each fiscal
year an annual report (including consolidated balance sheets and statements
of operations, retained earnings and cash flows of the Company certified by
independent certified public accountants) and, as soon as reasonably
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the Effective
Date), consolidated summary financial information of the Company for such
quarter in reasonable detail;
(g) During a period of five years from the Effective Date, to furnish
to the Representative copies of all reports or other communications
(financial or other) generally furnished to its stockholders, and deliver
to the Representative (A) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission,
the NYSE and any other national securities exchange on which any class of
securities of the Company is listed; and (B) such additional information as
the Representative may from time to time reasonably request concerning the
business and financial condition of the Company and its consolidated
subsidiaries;
(h) To apply the net proceeds from the sale of the Securities in the
manner set forth in the Prospectus under the caption "Use of Proceeds";
(i) That it will not, and will cause the Subsidiary and their
respective officers, directors, employees, agents and affiliates not to,
take, directly or indirectly, any action designed to cause or result in, or
that 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 Securities;
(j) That prior to the Time of Delivery there will not be any change
in the shares of capital stock of the Company or equity interests in the
Subsidiary or material change in the debt of the Company or the Subsidiary,
otherwise than as set forth or contemplated in the Registration Statement
and the Prospectus;
(k) That it will not, during the period of 180 days after the Time of
Delivery (other than pursuant to or as provided in this Agreement), offer,
sell, pledge, contract to sell, sell any option to purchase, purchase any
option to sell, grant any option right or warrant or otherwise dispose of
(or register for sale under the Act) any shares of capital stock of the
Company (or securities convertible into, or exchangeable for, shares of the
Company), directly or indirectly, without the prior written consent of
Xxxxxxxx & Co. Inc., or enter into any swap or any other
19
agreement, or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of shares of capital
stock of the Company to be settled by delivery, in cash or otherwise;
provided, however, that, notwithstanding the foregoing, the Company may, as
-------- -------
described in the Prospectus, (i) consummate the Reorganization, (ii) issue
options or other awards under its 1999 Stock Option and Incentive Plan in
the form of such plan filed as an exhibit to the Registration Statement,
(iii) issue options under its 1999 Incentive Plan for Outside Directors in
the form of such plan furnished to the Representative prior to the date
hereof, (iv) issue shares of Common Stock under its 1999 Employee Stock
Purchase Plan in the form of such plan filed as an exhibit to the
Registration Statement, (v) issue up to 135,000 shares of Common Stock upon
exercise of options granted by the Company effective as of the Time of
Delivery pursuant to the plans referred to in clauses (ii) and (iii) above
and as described in the Prospectus and (vi) file one or more Registration
Statements on Form S-8 registering the offer and sale of Common Stock under
the plans referred to in clauses (ii), (iii) and (iv) above;
(l) To use its best efforts to cause the Securities to be listed on
the NYSE, at all times from the Effective Date until such time as the
Representative notifies the Company that the distribution of the Securities
has been completed and to complete the listing conditions of the NYSE; and
(m) To consummate the Reorganization (as defined in the Prospectus)
as described in the Prospectus as soon as practicable following execution
hereof (other than payments with respect to the LLC Distribution (as
defined in the Prospectus) which may be made after the Time of Delivery).
7. Each Selling Stockholder, severally and not jointly, covenants and
agrees with each of the Underwriters that:
(a) Such Selling Stockholder will not, during the period of 180 days
after the Time of Delivery, except pursuant to this Agreement, offer, sell,
contract to sell, or otherwise dispose of any shares of capital stock of
the Company (or securities convertible into, or exchangeable for, shares in
the shares of the Company), directly or indirectly, , other than transfers
to affiliates of such Selling Stockholder who are wholly-owned direct or
indirect subsidiaries of the corporate parent of such Selling Stockholder
and who agree to be bound by the terms of this Section 7(a), without the
prior written consent of Xxxxxxxx & Co. Inc. or enter into any swap or any
other agreement, or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of shares in
the Company to be settled by delivery, in cash or otherwise;
(b) Such Selling Stockholder will not, directly or indirectly, take
any action designed to cause or result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization (within the
meaning of Regulation M promulgated under the Act) or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities;
20
(c) Each Selling Stockholder will advise the Representative and
confirm such advice in writing promptly after (i) such Selling Stockholder
or any representative or agent of such Selling Stockholder receives any
written communication from the Commission relating to the Registration
Statement, the Prospectus or any Preliminary Prospectus, or any notice or
order of the Commission relating to the Company or any of the Selling
Stockholders in connection with the transactions contemplated by this
Agreement or (ii) such Selling Stockholder is advised in writing that (A)
any statement made in the Registration Statement, the Prospectus or any
Preliminary Prospectus is or becomes untrue in any material respect or (B)
any change is required in the Registration Statement, the Prospectus or any
Preliminary Prospectus, as the case may be, in order to make such statement
(with regard to the Prospectus or Preliminary Prospectus, in the light of
the circumstances in which it was made) not misleading; and
(d) Such Selling Stockholder will deliver to the Representative prior
to the Time of Delivery a properly completed and executed U.S. Treasury
Department Form W-9 or Substitute Form W-9.
8. The Company covenants and agrees with the several Underwriters and,
without affecting any other agreement between the Company or the Subsidiary and
any Selling Stockholder, the Selling Stockholders that the Company will pay or
cause to be paid, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated: (i) the fees, disbursements and
expenses of counsel and accountants for the Company, and all other expenses of
the Company, incurred in connection with the preparation, printing and filing of
the Registration Statement and the Prospectus and amendments and supplements
thereto and the furnishing of copies thereof, including charges for mailing, air
freight and delivery and counting and packaging thereof and of any Preliminary
Prospectus and related offering documents to the Underwriters and dealers; (ii)
the cost of printing or duplicating this Agreement, any Blue Sky Memorandum and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (iii) all expenses incurred in connection with the
qualification of the Securities for offering and sale under securities laws as
provided in Sections 6(a) and 6(b) hereof, including filing and registration
fees and the fees, disbursements and expenses for counsel for the Underwriters
in connection with such qualification and in connection with Blue Sky surveys or
similar advice with respect to sales; (iv) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the NASD of the terms of the sale of the
Securities; (v) all fees and expenses incurred in connection with the listing of
the Securities on the NYSE; and (vi) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 8, including the fees of the Company's
transfer agent and registrar, the cost of any share issue or transfer taxes on
sale of the Securities to the Underwriters, the cost of the Company's personnel
and other internal costs, the cost of printing and engraving the certificates
representing the Securities and all expenses and transfer taxes incident to the
sale and delivery of the Securities to be sold by the Company to the
Underwriters hereunder.
21
It is understood, however, that, except as provided in this Section 8,
Section 10 hereof and Section 13 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, share transfer
taxes on resale of any of the Securities by them, and any advertising expenses
connected with any offers they may make.
9. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to the condition that (i) all representations and warranties
and other statements of the Company and the Selling Stockholder herein are true
and correct at and as of the Time of Delivery and all representations and
warranties and other statements of the Company herein are true and correct at
and as of the Option Securities Closing Date, and (ii) the Company and the
Selling Stockholders shall have performed all their respective obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Registration Statement shall have become effective, and the
Representative shall have received notice thereof not later than [10:00]
a.m., New York City time, on the date immediately following the date of
execution of this Agreement, or at such other time as the Representative
and the Company may agree; if required, the Prospectus shall have been
filed with the Commission in the manner and within the time period required
by Rule 424(b); if the Representative and the Company have elected to rely
upon Rule 430A, the price of the Securities and any price related to or
other information previously omitted from the Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) within the prescribed time period, and
on or prior to the Time of Delivery the Company shall have provided
evidence satisfactory to the Representative of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall
have been complied with to the Representative's reasonable satisfaction;
(b) No action shall have been taken and no statute, rule or
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Time of Delivery, prevent the
issuance of the Securities; no injunction, restraining order or order of
any nature by a federal, state or provincial court of competent
jurisdiction shall have been issued as of the Time of Delivery which would
prevent the issuance of the Securities; at the Time of Delivery, no action,
suit or proceeding shall be pending against, or, to the knowledge of the
Company, threatened against, the Company or the Subsidiary or before any
court or arbitrator or any governmental body, agency or official which, if
adversely determined, would interfere with or adversely affect the issuance
of the Securities or could reasonably be expected to have a Material
Adverse Effect, or in any manner invalidate this Agreement or the issuance
of the Securities.
22
(c) All corporate proceedings and related legal and other matters in
connection with the organization of the Company and the Subsidiary and the
registration, authorization, issue, sale and delivery of the Securities
shall have been reasonably satisfactory to XxXxxxxxx, Will & Xxxxx, counsel
to the Underwriters, and XxXxxxxxx, Will & Xxxxx shall have been timely
furnished with such documents and information as they may reasonably have
requested to enable them to pass upon the matters referred to in this
Section 9(c);
(d) The Representative shall not have advised the Company or any
Selling Stockholder that the Registration Statement or the Prospectus, or
any amendment or supplement thereto, contains an untrue statement of fact
or omits to state a fact which in the Representative's judgment is in
either case material and in the case of an omission is required to be
stated therein or is necessary to make the statements therein (with regard
to the Prospectus, in the light of the circumstances under which they were
made) not misleading;
(e) Xxxxx & Xxxxxxx L.L.P., as special counsel to the Company, shall
have furnished to the Representative their written opinion (in the form
attached as Appendix C hereto), dated the Time of Delivery or the Option
Securities Closing Date, as applicable, in form and substance satisfactory
to the Representative and to XxXxxxxxx, Will & Xxxxx;
(f) With respect to each of CIGNA, LICNA and CIG & Co., Xxxxxx, Hall
& Xxxxxxx, as counsel to such Selling Stockholders, shall have furnished to
the Representative their written opinion (in the form attached as Appendix
D hereto), dated the Time of Delivery, in form and substance satisfactory
to the Representative and to XxXxxxxxx, Will & Xxxxx;
(g) With respect to The Lincoln National Life Insurance Company,
Xxxxxx, Hall & Xxxxxxx, as counsel to such Selling Stockholder, shall have
furnished to the Representative their written opinion (in the form attached
as Appendix E hereto), dated the Time of Delivery, in form and substance
satisfactory to the Representative and to XxXxxxxxx, Will & Xxxxx;
(h) With respect to The Lincoln National Life Insurance Company,
inside counsel to such Selling Stockholder shall have furnished to the
Representative their written opinion (in the form attached as Appendix F
hereto), dated the Time of Delivery, in form and substance satisfactory to
the Representative and to XxXxxxxxx, Will & Xxxxx;
(i) Xxxxxxxx Xxxxxxxx Xxxxx Xxxxxxxxxx & Xxxxxx LLP, as patent
counsel to the Company, shall have furnished to the Representative their
written opinion (in the form attached as Appendix G hereto), dated the Time
of Delivery, in form and substance satisfactory to the Representative and
XxXxxxxxx, Will & Xxxxx;
23
(j) XxXxxxxxx, Will & Xxxxx, counsel to the Underwriters, shall have
furnished to the Representative its written opinion or opinions, dated the
Time of Delivery or the Option Securities Closing Date, as applicable, in
form and substance satisfactory to the Representative, with respect to the
incorporation of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and other related matters as the
Representative may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them
to pass upon such matters;
(k) At the effective time of this Agreement and also at the Time of
Delivery or the Option Securities Closing Date, as applicable, Ernst &
Young, LLP shall have furnished to the Representative a letter or letters,
dated as of the effective time of this Agreement, and the Time of Delivery,
as applicable, or the Option Securities Closing Date, as applicable, in
form and substance satisfactory to the Representative in its sole
discretion, which letters shall include, but not be limited to,
determinations based on those specified procedures set forth or described
in Ernst & Young, LLP's comfort letter dated ___________, 1999, which
specified procedures shall be performed to and including a date within
three days of the date of the applicable letter;
(l) Neither the Company nor the Subsidiary shall have, since the date
of the latest audited financial statements included in the Prospectus,
sustained any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree; and since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, and, except as set forth or contemplated in
the Registration Statement and the Prospectus, there has not been, and
prior to the Time of Delivery there will not be, any change in the shares
of capital stock of the Company or equity interests in the Subsidiary or
change in the debt of the Company or the Subsidiary, any dividend or
distribution of any kind declared, paid or made on the shares of capital
stock of the Company or equity interest in the Subsidiary, nor any change
or any development involving a prospective change, in or affecting the
general affairs, management, financial condition, stockholders' or members'
equity or results of operations of the Company or the Subsidiary, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case is in the Representative's judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in the
manner contemplated in the Prospectus;
(m) The Company shall have consummated the Reorganization on the
terms described in the Prospectus, other than payments with respect to the
LLC Distribution, which may be made after the Time of Delivery;
(n) Between the date hereof and the Time of Delivery or the Option
Securities Closing Date, as applicable, there shall have been no
declaration of war by the Government of the United States; at the Time of
Delivery or the Option
24
Securities Closing Date, as applicable, there shall not have occurred any
material adverse change in the financial or securities markets in the
United States or in political, financial or economic conditions in the
United States or any outbreak or material escalation of hostilities or
other calamity or crisis, the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to market the
Securities or to enforce contracts for the resale of Securities and no
event shall have occurred resulting in (i) trading in securities generally
on the NYSE, or in the Common Stock on the NYSE, being suspended or limited
or minimum or maximum prices being generally established on such exchange,
or (ii) additional material restrictions, not in force on the date of this
Agreement, being imposed upon trading in securities generally (or the
Common Stock specifically) by the NYSE, or by order of the Commission or
any court or other governmental authority or (iii) a general banking
moratorium being declared by federal or New York authorities; between the
date hereof and the Time of Delivery or the Option Securities Closing Date,
as applicable, (a) there shall not have been any inquiry, action, suit,
investigation or other proceeding (whether formal or informal) instituted
or threatened or any order made by any federal, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality in the United States, including without limitation, the
NYSE or any securities commission or other regulatory authority which, in
the opinion of the Underwriters or any of them, acting reasonably, operates
to or would prevent or restrict the distribution of the Securities in the
United States or prevents or materially restricts trading in the Securities
and (b) there shall not have developed, occurred or come into effect (i)
any occurrence of national or international consequence, (ii) any action,
governmental law or regulation or inquiry or (iii) any other occurrence of
any other nature whatsoever which, in the opinion of the Underwriters or
any of them, acting reasonably, seriously affects or may seriously affect
the financial markets or the business of the Company or the Subsidiary, on
a consolidated basis, or would be likely to prejudice materially the
success of the proposed issue, sale and distribution of the Securities, and
(c) the state of the financial markets shall not be or have become such
that the Securities cannot, in the reasonable opinion of the Underwriters,
or any of them, be profitably marketed.
(o) The Company and the Selling Stockholders shall have furnished to
the Representative at the Time of Delivery or the Option Securities Closing
Date, as applicable, certificates signed by the chief operating officer and
the chief financial officer of the Company and by each Selling Stockholder,
as applicable, satisfactory to the Representative as to such matters as the
Representative may reasonably request and as to (i) the accuracy of its and
their respective representations and warranties herein at and as of the
Time of Delivery or the Option Securities Closing Date, as applicable, and
(ii) the performance by the Company and each Selling Stockholder of all
their respective obligations hereunder to be performed at or prior to the
Time of Delivery or the Option Securities Closing Date, as applicable; the
Company and the Selling Stockholders shall have furnished or caused to be
furnished to the Representative at the Time of Delivery or the Option
Securities Closing Date, as applicable, certificates signed by the chief
operating officer and the chief financial officer of the Company and each
Selling Stockholder, as
25
applicable, as to (i) the fact that each has carefully examined the
Registration Statement and Prospectus (in the case of each Selling
Stockholder, only the information regarding such Selling Stockholder) and,
(a) as of the Effective Date, the statements contained in the Registration
Statement and the Prospectus were true and correct and neither the
Registration Statement nor the Prospectus omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus or any amendment or
supplement thereto, in the light of the circumstances under which they were
made), except that each Selling Stockholder shall be responsible only for
information relating to it or required to be disclosed by it, and (b) in
the case of certificates delivered by officers of the Company, since the
Effective Date, no event has occurred that is required by the Act or the
rules and regulations of the Commission thereunder to be set forth in an
amendment of, or a supplement to, the Prospectus that has not been set
forth in such an amendment or supplement and (ii) in the case of
certificates delivered by officers of the Company, the matters set forth in
Sections 9(a) and 9(b) hereof;
(p) Each person or entity listed on Appendix A shall have delivered
to the Representative a Lock-Up Agreement as provided in Section 2(cc)
hereof;
(q) The Company shall have delivered to the Representative evidence
that the Securities have been duly authorized for listing on the NYSE upon
official notice of issuance as of the Effective Date; and
(r) The Company shall have delivered to the Representative written
evidence that the documents or matters set forth on Appendix B hereto have
been delivered, satisfied or fulfilled, as the case may be, in each case in
a manner satisfactory to the Representative and XxXxxxxxx, Will & Xxxxx.
10. (a) The Company will indemnify, defend and hold harmless each
Underwriter and (without limiting any obligation of the Company under any
other agreement with any Selling Shareholder) each Selling Stockholder
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter or such Selling Stockholder (and their respective
officers, directors, agents and affiliates and each person, if any, who
controls such Underwriter or such Selling Stockholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) (each, an
"Indemnitee") may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements made
therein not misleading (in the case of the Prospectus or any amendment or
supplement thereto, in the light of the circumstances under which they were
made), or (ii) any breach by the Company of any representation or warranty
made by the Company in Section 1 hereof, and will reimburse each Indemnitee
for legal or other expenses reasonably incurred by
26
such Indemnitee in connection with investigating, preparing to defend,
defending or appearing as a third-party witness in connection with any such
action or claim; provided, however, that the Company shall not be liable
-------- -------
(i) to any Underwriter 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 Preliminary
Prospectus, the Registration Statement, the Prospectus or such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative
expressly for use therein or (ii) to any Selling Stockholder 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 Preliminary Prospectus, the Registration Statement,
the Prospectus or such amendment or supplement in reliance upon and in
conformity with written information furnished to the Underwriters or the
Company by such Selling Stockholder in writing expressly for use therein;
provided, further, that the indemnity agreement contained in this Section
-------- -------
10(a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any persons controlling such Underwriter) on
account of any losses, claims, damages, liabilities or litigation arising
from the sale of Securities to any person, if such Underwriter fails to
send or give a copy of the Prospectus as the same may be then supplemented
or amended, to such person, within the time required by the Act and the
untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.
The indemnity agreement in this Section 10(a) shall be in addition to
any liability which the company may otherwise have.
(b) Each Selling Stockholder, severally and not jointly, will
indemnify, defend and hold harmless each Underwriter and (without limiting
any obligation of any Selling Stockholder under any other agreement between
such Selling Stockholder and the Company) the Company against any losses,
claims, damages or liabilities to which such Underwriter or the Company
(and their respective officers, directors, agents and affiliates and each
person who controls such Underwriter or the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading (in
the case of the Prospectus or any amendment or supplement thereto, in the
light of the circumstances under which they were made), in each case to the
extent, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Preliminary
Prospectus, the Registration Statement, the Prospectus or such
27
amendment or supplement in reliance upon and in conformity with information
furnished to the Underwriters or the Company by such Selling Stockholder in
writing expressly for use therein, or (ii) any untrue statement or alleged
untrue statement made by such Selling Stockholder in Section 2 hereof, and
will reimburse such Underwriter or the Company for any legal or other
expenses incurred by such Underwriter or the Company (and their respective
officers, directors, agents and affiliates and each person who controls
such Underwriter or the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) in connection with investigating,
preparing to defend, defending or appearing as a third-party witness in
connection with any such action or claim; provided, however, that the
-------- -------
indemnity agreement contained in this Section 10(b) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter
(or its officers, directors, agents, affiliates or person who controls such
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) on account of any losses, claims, damages, liabilities or
litigation arising from the sale of Securities to any person, if such
Underwriter fails to send or give a copy of the Prospectus, as the same may
be then supplemented or amended, to such person within the time required by
the Act and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, unless such failure is the
result of noncompliance by the Company with Section 6(a) hereof; provided,
--------
further, that no Selling Stockholder against whom a claim for indemnity is
-------
made on the basis of the provisions of this Section 10(b) shall be required
to indemnify, hold harmless or reimburse the Company or any Underwriter
(and their respective officers, directors, agents and affiliates and each
person who controls such Underwriter or the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) in an aggregate
amount in excess of the proceeds received by such Selling Stockholder from
the sale of Selling Stockholder Security hereunder in connection herewith.
(c) In addition to any obligations of the Company under Section 10(a)
hereof, the Company agrees that it shall perform its indemnification
obligations under Section 10(a) hereof with respect to counsel fees and
expenses and other expenses reasonably incurred by any Underwriter by
making payments within 30 days to such Underwriter in the amount of the
statements of such Underwriter's counsel or other statements which shall be
forwarded by such Underwriter, and that they shall make such payments
notwithstanding the absence of a judicial determination as to the propriety
and enforceability of the obligation to reimburse the Underwriters for such
expenses and the possibility that such payments might later be held to have
been improper by a court until such time as a court orders return of such
payments.
(d) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities
to which the Company or such Selling Stockholder may become subject under
the Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue
28
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading (in the case of the
Prospectus or any amendment or supplement thereto, in the light of the
circumstances under which they were made), 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 any Preliminary Prospectus, the
Registration Statement, the Prospectus or such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter relating to such Underwriter through the
Representative expressly for use therein, and will reimburse the Company
and each such Selling Stockholder for any legal or other expenses
reasonably incurred by the Company or such Selling Stockholder in
connection with investigating, preparing to defend, defending or appearing
as a third-party witness in connection with any such action or claim.
The indemnity agreement in this Section 10(d) shall be in addition to
any liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company and each Selling Stockholder and to each person, if
any, who controls the Company or any Selling Stockholder within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act.
(e) Promptly after receipt by an indemnified party under Section
10(a), 10(b) or 10(d) hereof of notice of the commencement of any action
(including any governmental investigation), such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party
under any such section, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any
indemnified party under Section 10(a), 10(b) or 10(d) hereof except to the
extent it was unaware of such action and has been prejudiced in any
material respect by such failure or from any liability which it may have to
any indemnified party otherwise than under such Section 10(a), 10(b) or
10(d) hereof. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. If, however,
(i) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party or (ii) an
indemnified party shall have reasonably concluded that representation of
such indemnified party and the indemnifying party by the
29
same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between
them and the indemnified party so notifies the indemnifying party, then the
indemnified party shall be entitled to employ counsel different from
counsel for the indemnifying party at the expense of the indemnifying party
and the indemnifying party shall not have the right to assume the defense
of such indemnified party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to local
counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising
out of the same set of allegations or circumstances. The counsel, if any,
with respect to which fees and expenses shall be reimbursed pursuant to the
two immediately preceding sentences shall (i) be designated in writing by
Xxxxxxxx & Co. Inc. in the case of parties indemnified pursuant to Sections
10(a) and 10(b) hereof, (ii) in the case of parties indemnified pursuant to
Section 10(d), and (iii) be designated (A) by the Company if it is the only
indemnified party named in any such action, (B) by the Selling Stockholders
if they are the only indemnified parties named in any such action, and (C)
jointly by the Company and the Selling Stockholder if the Company and one
or more Selling Stockholders shall be named in any such action. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 10(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened
action, claim or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, claim or proceeding and does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party. If an indemnifying party has
agreed to assume the defense of any claim against an indemnified party, the
indemnified party shall provide the indemnifying party with prior written
notice of any proposed settlement and shall not complete any settlement
without the prior written consent of the indemnifying party.
(f) In order to provide for just and equitable contribution under the
Act in any case in which (i) any Underwriter (or any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) makes claim for indemnification pursuant to Section
10(a) or 10(b) hereof, but is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding
the fact that Section 10(a) or 10(b) hereof provides for
30
indemnification in such case or (ii) contribution under the Act may be
required on the part of any Underwriter or any such controlling person in
circumstances for which indemnification is provided under Section 10(d)
hereof, then, and in each such case, each indemnifying party shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject as an indemnifying party hereunder (after contribution
from others) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one
hand and the Underwriters on the other from the offering of the Securities.
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 10(e) hereof, 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 and the
Selling Stockholders on the one hand and the Underwriters on the other 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 and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities purchased under
this Agreement (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the Securities
purchased under this Agreement, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault shall be determined by
reference to, 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 and the
Selling Stockholders on the one hand or the Underwriters on the other 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 10(f) 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 10(f). 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 10(f) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating, preparing to defend, defending or
appearing as a third-party witness in connection with any such action or
claim. Notwithstanding the provisions of this Section 10(f), no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
which such Selling Stockholder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 10(f), no Selling
Stockholder shall
31
be required to contribute any amount in excess of the amount by which the
total proceeds received by such Selling Stockholder from the sale of
Selling Stockholder Securities hereunder exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 10(f) to contribute are several in proportion
to their respective underwriting obligations and not joint. The Selling
Stockholders' obligations in this Agreement, including, without limitation,
obligations under this Section 10 to indemnify and/or contribute, are
several and not joint, and no Selling Stockholder shall be liable for any
act or omission of any other Selling Stockholder.
(g) In order to provide for just and equitable contribution under the
Act in any case in which (i) any Selling Stockholder or the Company makes a
claim for indemnification pursuant to Section 10(a) or 10(b) hereof, but is
judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that Section 10(a) or 10(b)
hereof provides for indemnification in such case or (ii) the Company and
any Selling Stockholder are required to contribute any amounts to any
Underwriter (or any person who controls such Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) pursuant to
Section 10(f) hereof, then, and in each such case, each indemnifying party
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject as an indemnifying or contributing party
hereunder (after contribution from others) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Selling Stockholders on the other from the offering of the
Securities. 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 10(e) hereof, 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 on
the one hand and the Selling Stockholders on the other 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 on the one hand and the Selling Stockholders on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Securities purchased under this Agreement (before deducting
expenses) received by the Company bear to the total net proceeds from the
offering of the Securities purchased under this Agreement (before deducting
expenses) received by the Selling Stockholders, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, 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
32
information supplied by the Company on the one hand or the Selling
Stockholders on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Company and the Selling Stockholders agree that it would
not be just and equitable if contributions pursuant to this Section 10(g)
were determined by pro rata allocation (even if the Selling Stockholders
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 10(g). 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 10(g)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating, preparing to
defend, defending or appearing as a third-party witness in connection with
any such action or claim. Notwithstanding the provisions of this Section
10(g), no Selling Stockholder shall be required to contribute any amount in
excess of the amount by which the total proceeds received by such Selling
Stockholder from the sale of Selling Stockholder Securities hereunder
exceeds the amount of any damages which such Selling Stockholder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Selling Stockholders' obligations in this
Agreement, including, without limitation, obligations under this Section 10
to indemnify and/or contribute, are several and not joint, and no Selling
Stockholder shall be liable for any act or omission of any other Selling
Stockholder.
(h) Promptly after receipt by any party to this Agreement of notice
of the commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against another
party (the "contributing party"), notify the contributing party of the
commencement thereof, but the omission so to notify the contributing party
will not relieve it from any liability which it may have to any other party
for contribution under the Act except to the extent it was unaware of such
action and has been prejudiced in any material respect by such failure or
from any liability which it may have to any other party other than for
contribution under the Act. Notice given pursuant to Section 10(e) hereof
shall constitute notice under this Section 10(h). In case any such action,
suit or proceeding is brought against any party, and such party notifies a
contributing party of the commencement thereof, the contributing party will
be entitled to participate therein with the notifying party and any other
contributing party similarly notified on the same terms and subject to the
same conditions contained in Section 10(e) hereof.
11. (a) If any Underwriter shall default on its obligation to purchase
the Firm Securities which it has agreed to purchase hereunder, the
Representative may in its discretion arrange for it or another party or
other parties to purchase such Firm Securities on the terms contained
herein. If the aggregate number of Firm Securities as to which Underwriters
default is more than one-eleventh of the
33
aggregate number of all the Firm Securities and within 36 hours after such
default by any Underwriter the Representative does not arrange for the
purchase of such Firm Securities, then the Company and the Selling
Stockholders shall be entitled to a further period of 36 hours within which
to procure another party or other parties satisfactory to the
Representative to purchase such Firm Securities on such terms. In the event
that, within the respective prescribed periods, the Representative notifies
the Company and the Selling Stockholders that it has so arranged for the
purchase of such Firm Securities, or the Company notifies the
Representative and the Selling Stockholders that it has so arranged for the
purchase of such Firm Securities, the Representative or the Company shall
have the right to postpone the Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the
Representative's opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Firm
Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Firm Securities of such defaulting Underwriter or Underwriters by the
Representative or the Company and the Selling Stockholders as provided in
Section 11(a) hereof, the aggregate number of such Firm Securities which
remain unpurchased does not exceed one-eleventh of the aggregate number of
all the Firm Securities, then the Company and the Selling Stockholders
shall have the right to require each non-defaulting Underwriter to purchase
the number of the Firm Securities which such Underwriter agreed to purchase
hereunder and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Firm Securities which
such Underwriter agreed to purchase hereunder) of the Firm Securities of
such defaulting Underwriter or Underwriters for which such arrangements
have not been made; but nothing shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Firm Securities of a defaulting Underwriter or Underwriters by the
Representative or the Company or any Selling Stockholders as provided in
Section 11(a) hereof, the aggregate number of such Firm Securities which
remain unpurchased exceeds one-eleventh of the aggregate number of all the
Firm Securities, or if the Company or any Selling Stockholders shall not
exercise the right described in Section 11(b) hereof to require non-
defaulting Underwriters to purchase Firm Securities of a defaulting
Underwriter or Underwriters, then this Agreement shall thereupon terminate
without liability on the part of any non-defaulting Underwriter, the
Company or any Selling Stockholder, except for the expenses to be borne by
the Company, the Selling Stockholders and the Underwriters as provided in
Section 8 hereof and the indemnity agreements in Section 10 hereof, but
nothing herein shall relieve a defaulting Underwriter from liability for
its default.
34
12. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or any Selling Stockholder, or an officer or
director or controlling person of the Company or any Selling Stockholder and
shall survive delivery of and payment for the Securities.
13. This Agreement shall become effective (a) if the Registration
Statement has not heretofore become effective, at the earlier of 12:00 Noon, New
York City time, on the first full business day after the Registration Statement
becomes effective, or at such time after the Registration Statement becomes
effective as the Representative may authorize the sale of the Securities to the
public by Underwriters or other securities dealers or (b) if the Registration
Statement has heretofore become effective, at the earlier of 24 hours after the
filing of the Prospectus with the Commission or at such time as the
Representative may authorize the sale of the Securities to the public by
Underwriters or securities dealers, unless, prior to any such time the
Representative shall have received notice from the Company that it elects that
this Agreement shall not become effective, or the Representative, or through the
Representative such of the Underwriters as have agreed to purchase in the
aggregate fifty percent or more of the Firm Securities hereunder, shall have
given notice to the Company that the Representative or such Underwriters elect
that this Agreement shall not become effective; provided, however, that the
provisions of this Section and Sections 8 and 10 hereof shall at all times be
effective.
If this Agreement shall be terminated pursuant to Section 11 hereof, or if
this Agreement, by election of the Representative or the Underwriters, shall
become effective pursuant to the provisions of this Section, neither the Company
nor any Selling Stockholder shall then be under any liability to any Underwriter
except as provided in Sections 8 and 10 hereof, but if this Agreement becomes
effective and is not so terminated but the Securities are not delivered by or on
behalf of the Company as provided herein because the Company has been unable for
any reason beyond its control and not due to any default by it to comply with
the terms and conditions hereof, the Company will reimburse the Underwriters
through the Representative for all out-of-pocket expenses approved in writing,
by the Representative, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Securities, but neither the Company nor any Selling Stockholder
shall then be under any further liability to any Underwriter except as provided
in Sections 8 and 10 hereof.
14. (a) The statements set forth under the caption "Underwriting" in the
Prospectus constitute the only information furnished by any Underwriter
through the Representative to the Company for purposes of Sections 1(b),
1(c), and 10 hereof.
(b) The statements relating to each Selling Stockholder set forth
under the captions "Certain Transactions" and "Principal and Selling
Stockholders" in the
35
Prospectus constitute the only information furnished by such Selling
Stockholder to the Company for purposes of Sections 1(b), 1(c), and 10
hereof.
15. In all dealings hereunder, the Representative shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representative jointly with any such
Underwriter or by the Representative.
All statements, requests, notices and agreements hereunder, unless
otherwise specified in this Agreement, shall be in writing and, if to the
Underwriters, shall be delivered or sent by mail, telex or facsimile
transmission (subsequently confirmed by delivery or by letter sent by mail) to
the Representative in care of Xxxxxxxx & Co. Inc., Equitable Center, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department, with a copy
(which shall not constitute notice) to XxXxxxxxx, Will & Xxxxx, 00 Xxxxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxxxxx, Esq.; if to the
Company, shall be delivered or sent by letter sent by mail or facsimile
transmission (subsequently confirmed by delivery or by letter sent by mail) to
the address of the Company set forth in the Registration Statement, Attention:
Xxxxxxx X. Xxxxxxx with a copy (which shall not constitute notice) to Xxxxx &
Xxxxxxx, L.L.P., 000 Xxxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000, Attention:
Xxxxxxx X. Xxxxxxx, Esq.; and if to the Selling Stockholders, to CIGNA, 000
Xxxxxxx Xxxxx Xxxx, X-000, Xxxxxxxx, Xxxxxxxxxxx 00000-0000, Attention: Xxxxx X.
Xxxxx, Esq., Senior Counsel, Investment Law, with a copy (which shall not
constitute notice) to Xxxxxx, Hall & Xxxxxxx, Exchange Place, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: W. Xxxxxxxx Xxx, Esq.; provided,
--------
however, that any notice to any Underwriter pursuant to Section 10(e) hereof
-------
shall be delivered or sent by mail or facsimile transmission (subsequently
confirmed by delivery or by letter sent by mail) to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
16. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Selling Stockholders and the Company and, to the
extent provided in Sections 10 and 12 hereof, the officers, directors, agents,
affiliates of the Company and each Underwriter and each Selling Stockholder and
each person who controls the Company, any Selling Stockholder or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
17. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
18. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
36
19. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us two counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters, the Company and
the Selling Stockholders. It is understood that your acceptance of this letter
on behalf of each of the Underwriters is pursuant to the authority set forth in
a form of Agreement Among Underwriters, manually or facsimile executed
counterparts of which, to the extent practicable and upon request, shall be
submitted to the Company and the Selling Stockholders for examination, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
TREX COMPANY, INC.
By: ________________________________
Name:
Title:
CIG & CO.
By: CIGNA Investments, Inc., authorized
agent
By:__________________________________
Name:
Title:
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc., authorized
agent
By:__________________________________
Name:
Title:
37
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA Investments, Inc., authorized
agent
By:___________________________________
Name:
Title:
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management
Company,
attorney-in-fact
By:___________________________________
Name:
Title:
Accepted as of the date hereof:
XXXXXXXX & CO. INC., as Representative
of the several Underwriters
By: XXXXXXXX & CO. INC.
By:_______________________________
Managing Director
38
SCHEDULE I
NUMBER OF FIRM
UNDERWRITER SECURITIES
----------- ----------
Xxxxxxxx & Co., Inc. _______________
X.X. Xxxxxxxx & Co. _______________
Total 3,353,000
=========
39
SCHEDULE II
Number of Selling
STOCKHOLDER SECURITIES Selling Stockholder
---------------------- -------------------
Connecticut General Life Insurance Company 57,062/1/
Life Insurance Company of North America 11,639/1/
The Lincoln National Life Insurance Company 34,299
__________________
/1/ Such shares are held of record by CIG & Co.
SCHEDULE III
Wire Transfer Expected
Selling Party Address Information Proceeds
--------------- ----------- ------------- --------
APPENDIX A
Persons and Entities Who Are To Execute Lock-Up Agreements
----------------------------------------------------------
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxxxxxxxxx
CIG & Co.
Connecticut General Life Insurance Company
Life Insurance Company of North America
The Lincoln National Life Insurance Company
Purchasers of Reserved Shares
APPENDIX B
Following is a listing of additional required deliveries:
1. Contribution and Exchange Agreement dated as of March 19, 1999
2. Preferred Units Exchange Agreement dated as of March 19, 1999
3. Agreement to Terminate Class A Members' Agreement
4. Agreements to Terminate Employment Agreements of Xxxxxx X. Xxxxxxx, Xxxxxxx
X. Xxxxxxx, Xxxxxx X. Ferrari, and Xxxxx X. Xxxxxxxxxx, each dated as of
March 19, 1999
APPENDIX C
SUBSTANCE OF OPINION
IN CONNECTION WITH PUBLIC OFFERING OF
TREX COMPANY, INC.
The following is the substance of an opinion only. Xxxxx & Xxxxxxx, L.L.P.
should incorporate the substance of this Appendix C in their opinion.
1. 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 power
and authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus.
2. The Company has an authorized capitalization as of June 30, 1998 as set
forth in the Prospectus, and all of the issued shares of Common Shares of the
Company have been duly and validly authorized and issued and are fully paid and
nonassessable; and the Common Shares conform to the description of the Common
Shares contained in the Prospectus.
3. The Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any such jurisdiction
(such counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel shall state
that they believe that both you and they are justified in relying upon such
opinions and certificates).
4. The Company has the corporate power and authority to execute, deliver and
perform all of its obligations under the Underwriting Agreement and to issue,
sell and deliver the Common Shares; the Underwriting Agreement has been duly and
validly authorized by all necessary corporate action by the Company, and has
been duly executed and delivered by the Company.
5. The Common Shares have been duly authorized for issuance and sale to the
Underwriters pursuant to the Underwriting Agreement and, when issued and
delivered by the Company pursuant to the Underwriting Agreement against payment
of the consideration set forth therein, will be validly issued and fully paid
and nonassessable, and to the best of such counsel's knowledge, the issuance of
such Common Shares is not subject to any preemptive or similar rights.
6. The Underwriting Agreement has been duly authorized, executed and delivered
by the Company.
7. The issuance and sale of the Common Shares by the Company and the compliance
by the Company with all of the provisions of the Underwriting Agreement and the
consummation of the transactions therein contemplated will not conflict with or
result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company is a party or by which the Company is bound or to which any of
the property or assets of the Company subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or By-laws
of the Company or any statute or any order, rule or regulation, judgment, order
or decree of any court, arbitrator, or governmental agency or body having
jurisdiction over the Company or any of its properties.
8. The Company is not in violation of its Certificate of Incorporation or By-
laws or in default in the performance or observance or any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound.
9. To such counsel's knowledge and except as described in the Prospectus, there
are no legal or governmental proceedings pending or threatened against the
Company to which any of its property is subject which, if determined adversely
to the Company, is of a character required to be disclosed in the Prospectus
which has not been properly disclosed by the Company.
10. No consent, approval, authorization or order of, or filing, registration or
qualification with any Governmental Authorities (the "Governmental Approvals"),
which has not been obtained, taken or made (other than pursuant to any state
securities or Blue Sky laws or foreign securities laws, as to which such counsel
need not express an opinion), is required for the issuance or sale of the Common
Shares or the performance by the Company of its obligations under the
Underwriting Agreement. For purposes of this opinion, the term "Governmental
Authorities" means any executive, legislative, judicial, administrative or
regulatory body of the United States of America, the States of Delaware and New
York, or the Commonwealth of Virginia.
11. The statements in the Prospectus under the caption "Description of Capital
Stock," insofar as they purport to constitute a summary of the Common Shares,
and under the captions "Risk Factors Impact of Government Regulation,"
"Business Governmental Regulation," "Risk Factors Shares Eligible for Future
Sale; Registration Rights," "Shares Eligible for Future Sale" and
"Underwriting," as well as under the caption "Indemnification of Directors and
Officers" in Item 14 of Part II of the Registration Statement, to the extent
that they constitute summaries of United States federal statutes, rules and
regulations, or portions thereof, or insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate in all
material respects.
12. Any required filing of the Prospectus, and any supplements thereto pursuant
to Rule 424(b), has been made in the manner and within the time period required
by Rule 424(b).
13. Except as disclosed in the Prospectus, to the best of such counsel's
knowledge, no holder of any security of the Company has any right to require
registration of any shares of Common Shares or any other security of the
Company.
14. The Company is not required to be registered as an investment company under
the Investment Company Act of 1940, as amended, and the rules and regulations of
the Commission promulgated thereunder.
15. The Reorganization has been consummated, and Trex Company, Inc. is the
successor to all of the obligations of Trex Company, LLC.
16. We do not know of any contract or other document which is required to be
filed as an exhibit to the Registration Statement by the Securities Act or the
rules and regulations of the Commission under the Act, and the rules promulgated
thereunder, which have not been so filed.
17. Each of the Registration Statement and the Prospectus, as of their
respective effective or issue dates, appears on its face to be appropriately
responsive in all material respects to the requirements of the Securities Act
and the rules and regulations of the Commission under the Securities Act, except
for the financial statements and notes thereto, financial statement schedules
and other financial, data or ratios included in or omitted from either of them,
as to which such counsel need not express an opinion. For the purposes of the
opinion in this paragraph 17, such counsel may assume that the statements made
in the Registration Statement and Prospectus are complete and correct.
* * *
Such counsel has been advised orally by the staff of the Commission that no
stop order suspending the effectiveness of the Registration has been issued and,
to our knowledge, no proceedings for that purpose have been initiated or are
pending or are threatened by the Commission.
Such counsel has participated in conferences with certain officers,
employees and other representatives of the Company, at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel has not undertaken to investigate or verify
independently, and does not assume responsibility for, the accuracy or
completeness of the statements contained in either of them (other than as
explicitly stated in paragraphs 9 and 13 above), based upon such participation
(and relying, as to materiality, to the extent we deemed reasonable, on
officers, employees and other representatives of the Company), no facts have
come to such counsel's attention to lead it to believe that (a) the Registration
Statement or any amendment (except for the financial statements or notes
thereto, financial statement schedules and other financial data or ratios
included in or omitted from those documents, as to which such counsel need not
express any such belief), at the time it became effective or on the date of this
letter, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (b) the Prospectus or any amendment or supplement
(except for the financial statements and notes thereto, financial statement
schedules and other financial data or ratios included in or omitted from those
documents, as to which such counsel need not express any such belief), at the
time the Prospectus was issued or on the date of this letter, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
APPENDIX D
OPINION OF XXXXXX, XXXX & XXXXXXX
(AS TO CIGNA PARTIES)
1. Each Selling Stockholder [CIGNA, LICNA AND CIG & CO.] has been duly
organized and is validly and existing in good standing under the laws of the
state of its organization.
2. Each Selling Stockholder has the power (corporate or otherwise) and
authority to execute, deliver and perform all of its obligations under the
Underwriting Agreement and the Agreement and Power of Attorney and to sell and
deliver the Securities being sold by such Selling Stockholder; the Underwriting
Agreement and the Agreement and Power of Attorney have been duly and validly
authorized by all necessary action (corporate and other) by each Selling
Stockholder, and have been duly executed and delivered by each Selling
Stockholder.
3. The Underwriting Agreement and the Agreement and Power of Attorney are
legal, valid and binding agreements of each Selling Stockholder, enforceable in
accordance with their terms, except as enforcement of the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
4. The sale of the Securities being sold by each Selling Stockholder and the
compliance by each Selling Stockholder with all of the provisions of the
Underwriting Agreement and the Agreement and Power of Attorney and the
consummation of the transactions therein contemplated will not (i) conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which any
Selling Stockholder is a party or by which any Selling Stockholder is bound or
to which any of the property or assets of any Selling Stockholder is subject, or
(ii) result in any violation of the provisions of the certificate of
incorporation or by-laws of any Selling Stockholder or any statute or any order,
rule or regulation, judgment, order or decree of any court, arbitrator, or
governmental agency or body having jurisdiction over any Selling Stockholder or
any of their respective properties or assets.
5. No consent, approval, authorization or order of, or filing, registration or
qualification with any governmental authority, which has not been obtained,
taken or made (other than pursuant to the Securities Act of 1933, as amended,
any state securities or Blue Sky laws or foreign securities laws or from the
National Association of Securities Dealers or the New York Stock Exchange, as to
all of which we express no opinion), is required for the sale of the Securities
or the performance by the Selling Stockholders of their obligations under the
Underwriting Agreement or the Agreement and Power of Attorney.
6. Upon delivery of and payment for the Securities being sold by each Selling
Shareholder pursuant to the Underwriting Agreement and registration of
Securities in the names of the Underwriters in the stock records of the Company,
the several Underwriters will receive good and marketable title to such
Securities, free and clear of any adverse claim (within the meaning of the
Uniform Commercial Code), assuming at such time that the Underwriters acquire
the Securities in good faith without notice of any adverse claim and are
otherwise bona fide purchasers (within the meaning of the Uniform Commercial
Code).
APPENDIX E
OPINION OF XXXXXX, HALL & XXXXXXX
(AS TO LINCOLN NATIONAL)
1. Each Selling Stockholder is validly existing in good standing under the
laws of the state of its organization.
2. The Underwriting Agreement and the Agreement and Power of Attorney are
legal, valid and binding agreements of each Selling Stockholder, enforceable in
accordance with their terms, except as enforcement of the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3. No consent, approval, authorization or order of, or filing, registration or
qualification with any governmental authority, which has not been obtained,
taken or made (other than pursuant to the Securities Act of 1933, as amended,
any state securities or Blue Sky laws or foreign securities laws or from the
National Association of Securities Dealers or the New York Stock Exchange, as to
all of which we express no opinion), is required for the sale of the Securities
or the performance by the Selling Stockholders of their obligations under the
Underwriting Agreement or the Agreement and Power of Attorney.
4. Upon delivery of and payment for the Securities being sold by each Selling
Shareholder pursuant to the Underwriting Agreement and registration of
Securities in the names of the Underwriters in the stock records of the Company,
the several Underwriters will receive good and marketable title to such
Securities, free and clear of any adverse claim (within the meaning of the
Uniform Commercial Code), assuming at such time that the Underwriters acquire
the Securities in good faith without notice of any adverse claim and are
otherwise bona fide purchasers (within the meaning of the Uniform Commercial
Code).
APPENDIX F
OPINION OF INSIDE COUNSEL
TO LINCOLN NATIONAL
1. Each Selling Stockholder has been duly organized and is validly existing in
good standing under the laws of the state of its organization.
2. Each Selling Stockholder has the power (corporate or otherwise) and
authority to execute, deliver and perform all of its obligations under the
Underwriting Agreement and the Agreement and Power of Attorney and to sell and
deliver the Securities being sold by such Selling Stockholder; the Underwriting
Agreement and the Agreement and Power of Attorney have been duly and validly
authorized by all necessary action (corporate and other) by each Selling
Stockholder, and have been duly executed and delivered by each Selling
Stockholder.
3. The sale of the Securities being sold by each Selling Stockholder and the
compliance by each Selling Stockholder with all of the provisions of the
Underwriting Agreement and the Agreement and Power of Attorney and the
consummation of the transactions therein contemplated will not (i) conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which any
Selling Stockholder is a party or by which any Selling Stockholder is bound or
to which any of the property or assets of any Selling Stockholder is subject, or
(ii) result in any violation of the provisions of the certificate of
incorporation or by-laws of any Selling Stockholder or any statute or any order,
rule or regulation, judgment, order or decree of any court, arbitrator, or
governmental agency or body having jurisdiction over any Selling Stockholder or
any of their respective properties or assets.
