S&C Draft of June 5, 1998
Ex 1.1
SCHOOL SPECIALTY, INC.
Common Stock
(par value $.001 per share)
-------------
Underwriting Agreement
June 9, 1998
Xxxxxxx, Xxxxx & Co.,
NationsBanc Xxxxxxxxxx Securities LLC,
Xxxxx Xxxxxx Inc.,
Xxxxx Xxxxxxx Inc.,
c/x Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
School Specialty, Inc., a Delaware corporation (the "Company"),
proposes, 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 2,125,000 shares (the "Firm Shares") and, at the election of the
Underwriters, up to 318,750 additional shares (the "Optional Shares") of
Common Stock, par value $.001 per share ("Stock"), of the Company (the Firm
Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof being collectively called the "Shares").
1. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-47509)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of the Initial Registration
Statement has been issued and no proceeding for that purpose has been
initiated or, to the knowledge of the Company after reasonable
investigation, threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Securities Act of 1933, as amended (the
"Act"), is hereinafter called a "Preliminary Prospectus"; the various
parts of the Initial Registration Statement and the registration
statement increasing the size of the offering (the "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the Act,
if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 6(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the
registration statement became effective or such part of the Rule 462(b)
Registration Statement, if any became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; and
such final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and 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 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 warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use
therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto, and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Xxxxxxx, Xxxxx & Co. expressly for use therein;
(d) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock,
short-term debt (other than changes not in excess of $30 million in the
aggregate) or long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general
affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus;
(e) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(f) 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 its
properties and conduct its business as described in the Prospectus, and
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 the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
that has been incorporated has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and each subsidiary organized as a
limited liability company has been duly organized and is validly
existing as a limited liability company in good standing under the laws
of its jurisdiction of incorporation;
(g) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description of the Stock
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except
for directors' qualifying shares) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims, except as may be pledged as security for the $250.0 million
credit facility (the "Credit Facility") described in the Prospectus;
(h) The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued and fully paid and non-assessable and will
conform to the description of the Stock contained in the Prospectus;
(i) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation
of the transactions herein 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 or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, except where such
conflict, breach, violation or default would not, individually or in
the aggregate, have a material adverse effect on the current
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries considered as a whole (a
"Material Adverse Effect"), 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
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement, except
the registration under the Act of the Shares and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(j) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or other
organization documents or in default in the performance or observance
of 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 except where such violation or
default would not have a Material Adverse Effect;
(k) The statements set forth in the Prospectus under the
caption "Description of School Specialty Capital Stock", insofar as
they purport to constitute a summary of the terms of the Stock, under
the caption "The Spin-Off from U.S. Office Products", and under the
caption "Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein are accurate,
complete and fair summaries of such documents;
(l) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material Adverse Effect; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(m) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or
an entity "controlled" by an
"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(n) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes; and
(o) Price Waterhouse LLP, who has certified certain financial
statements of the Company and its subsidiaries, and Ernst & Young LLP,
BDO Xxxxxxx, LLP and Xxxxxxxxxx, Melvoin and Xxxxxxx LLP, who have
certified certain financial statements of The Re-Print Corporation and
American Academic Suppliers Holding Corporation and Subsidiary are each
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $______, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to issue and
sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the purchase
price per share set forth in clause (a) of this Section 2, that portion of
the number of Optional Shares as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to
purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase
at their election up to 318,750 Optional Shares, at the purchase price per
share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 5 hereof) or, unless you and the Company otherwise agree
in writing, earlier than two or later than ten business days after the date
of such notice.
3. The Company hereby confirms its engagement of Xxxxxxx, Xxxxx &
Co. as, and Xxxxxxx, Xxxxx & Co. hereby confirms its agreement with the
Company to render services as, a "qualified independent underwriter" within
the meaning of Section 2(o) of Rule 2720(c)(3) of the National Association of
Securities Dealers, Inc. (the "NASD") with respect to the offering and sale
of the Shares. Xxxxxxx, Xxxxx & Co., in its capacity as qualified independent
underwriter and not otherwise, is referred to herein as the "QIU". As
compensation for the services of the QIU hereunder, the Company agrees to pay
the QIU $10,000 on the Closing Date.
4. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours'
prior notice to the Company, shall be delivered by or on behalf of the
Company to Xxxxxxx, Xxxxx & Co., through the facilities of the Depository
Trust Company, ("DTC"), for the account of such Underwriter, against payment
by or on behalf of such Underwriter of the purchase price therefor by wire
transfer of Federal (same-day) funds to the account specified by the Company
to Xxxxxxx, Xxxxx & Co. at least forty-eight hours in advance
certified or official bank check or checks, payable to the order of the
Company in New York Clearing House (next day) funds. The Company will cause
the certificates representing the Shares to be made available for checking
and packaging at least twenty-four hours prior to the Time of Delivery (as
defined below) with respect thereto at the office of Xxxxxxx, Xxxxx & Co., 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 (the "Designated Office"). The time
and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York City time, on June 15, 1998 or such other time
and date as Xxxxxxx, Xxxxx & Co. and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the
date specified by Xxxxxxx, Xxxxx & Co. in the written notice given by
Xxxxxxx, Xxxxx & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Xxxxxxx, Xxxxx & Co. and the Company
may agree upon in writing. Such time and date for delivery of the Firm Shares
is herein called the "First Time of Delivery", such time and date for
delivery of the Optional Shares, if not the First Time of Delivery, is herein
called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 8(j) hereof, will be delivered at the
offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at
the Closing Location at 4:00 p.m., New York City time, on the New York
Business Day next preceding such Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 5, "New York Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus
which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies
thereof; to advise you, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, 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;
(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as you may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time prior to
the expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares and if at such
time any 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 the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such period to
amend or supplement the Prospectus in order to comply with the Act, to
notify you and upon your request to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than (i) pursuant to acquisitions where the Company
uses shares of Stock as all or a portion of the consideration for the
acquisitions up to an aggregate of 1.5 million Shares, if holders of
1.4 million of such Shares execute and deliver a lock-up letter to you
in the form attached hereto as Exhibit A, and (ii) pursuant to employee
stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of
this Agreement), without your prior written consent;
(f) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as 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 of the Registration
Statement), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds"; and
(i) To use its best efforts to list for quotation the Shares
on the National Association of Securities Dealers Automated Quotations
National Market System ("NASDAQ").
7. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or
producing any Agreement among Underwriters, this Agreement, the Blue Sky
Memorandum, closing documents (including any compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery
of the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in
Section 6(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection with listing the
Shares on the NASDAQ; (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc.
of the terms of the sale of the Shares; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar;
and (viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Sections 9 and 12 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Shares by them, and any advertising expenses
connected with any offers they may make.
8. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 6(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof 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 your reasonable satisfaction;
(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the
incorporation of the Company, the Shares, the Registration Statement
and the Prospectus and such other related matters as you 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;
(c) Xxxxxx, Xxxxxx & Xxxxxxxxx, counsel for the Company, shall
have furnished to you their written opinions, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the Shares being
delivered at such Time of Delivery have been duly and validly
authorized and issued and are fully paid and non-assessable;
and the Shares conform to the description of the Stock
contained in the Prospectus;
(iii) 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, except where the failure to
be so qualified or in good standing would not have a Material
Adverse Effect (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);
(iv) Each subsidiary of the Company that has been
incorporated has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and each subsidiary
organized as a limited liability company has been duly
organized and is validly existing as a limited liability
company in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock
or equity interests of each such subsidiary have been duly and
validly authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims, except
as may be pledged as security for the Credit Facility
described in the Prospectus (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of
local counsel and in respect to matters of fact upon
certificates of officers of the Company or its subsidiaries,
provided
that such counsel shall state that they believe that both you
and they are justified in relying upon such opinions and
certificates);
(v) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
Material Adverse Effect; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(vi) This Agreement has been duly authorized,
executed and delivered by the Company;
(vii) The issue and sale of the Shares being
delivered at such Time of Delivery by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein
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 known to such
counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject except where such
conflict, breach or violation or default would not have a
Material Adverse Effect, 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 known to such counsel of any court
or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties;
(viii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the
registration under the Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by
the Underwriters;
(ix) Neither the Company nor any of its subsidiaries
is in violation of its Certificate of Incorporation or By-laws
or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument known to such counsel to which
the
Company or any of its subsidiaries is a party or by which it
or any of its properties may be bound except where such
conflict, breach, violation or default would not have a
Material Adverse Effect;
(x) The statements set forth in the Prospectus (A)
under the caption "Description of School Specialty Capital
Stock", insofar as they purport to constitute a summary of the
terms of the Stock, (B) under the caption "The Spin-Off from
U.S. Office Products", and (C) under the caption
"Underwriting", in each of (A), (B) and (C) insofar as they
purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair summaries
of such documents;
(xi) The Company is not an "investment company" or an
entity "controlled" by an "investment company", as such terms
are defined in the Investment Company Act;
(xii) The Registration Statement and the
Prospectus and any further amendments and supplements
thereto made by the Company prior to such Time of Delivery
(other than the financial statements, the related
schedules, the financial data therein and statistical data
derived from such financial statements, as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the
rules and regulations thereunder; although they do not assume
any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or
the Prospectus, except for those referred to in the opinion in
subsection (xi) of this Section 8(c), they have no reason
to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the
Company prior to such Time of Delivery (other than the
financial statements and related schedules, the financial
data therein and statistical data derived from such
financial statements, as to which such counsel need express
no opinion) 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 that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules, the financial data therein
and statistical data derived from such financial statements,
as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading or that, as of such Time of Delivery, either
the Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company prior
to such Time of Delivery (other than the financial
statements and related schedules, the financial data
therein and statistical data derived from such financial
statements, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and they do not know of any
amendment to the Registration Statement required to be filed
or of any contracts or
other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus
which are not filed or described as required; and
(xiii) For U.S. federal income tax purposes, the
Distribution, as defined in the Prospectus, should qualify as
a tax-free spin-off under Section 355 of the Internal Revenue
Code of 1986, as amended (the "Code"), and should not be
taxable under Section 355(e) of the Code, subject to the
accuracy of the factual representations made by U.S. Office
Products, the Spin-Off Companies, CD&R-PC Acquisition, LLC and
the other assumptions and qualifications described in the
Prospectus;
(d) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, Price Waterhouse LLP, Ernst & Young LLP, BDO
Xxxxxxx, LLP and Xxxxxxxxxx, Melvoin and Xxxxxxx LLP shall have
furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have
been any change in the capital stock, short-term debt (other than
changes not in excess of $30 million in the aggregate) or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in Clause (i) or (ii), is in the
judgment of the Underwriters so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or
NASDAQ; (ii) a suspension or material limitation in trading in the
Company's securities on NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York
State or Washington, D.C. authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this Clause (iv) in the judgment
of the Underwriters makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered
at such Time of Delivery on the terms and in the manner contemplated in
the Prospectus;
(h) The Shares to be sold at such Time of Delivery shall have
been duly listed for quotation on NASDAQ;
(i) The persons named in Schedule II hereto who on the date
hereof own, in the aggregate, at least _________ shares of Stock
(representing at least __% of all outstanding Stock) and other
securities which are convertible or exchangeable into, and rights to
purchase, in the aggregate, at least _________ shares of Stock
(representing at least __% of all Stock to be issued upon conversion or
exchange of all such rights outstanding) have, in each case, entered
into a written agreement with the Company substantially in the
applicable form of Annex II hereto (each such agreement a "Lock-Up
Agreement"), and complete copies of each Lock-Up Agreement have been
delivered to you;
(j) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (e) of this Section and as to such
other matters as you may reasonably request; and
(k) All of the transactions described in the Prospectus as
occurring prior to or concurrently with the closing of the Offering
shall have occurred, including but not limited to: (i) the Distribution
shall have occurred on a 1:9 ratio as set forth in the Prospectus, (ii)
U.S. Office Products, as defined in the Prospectus, shall have
repurchased 37,037,037 of its shares pursuant to the U.S. Office
Products tender offer as contemplated in the Prospectus, (iii) the
$250.0 million revolving credit facility from NationsBank, N.A. as
administrative agent shall have been entered into and remain available
to the Company on the terms and in the manner set forth in the
Prospectus, and (iv) the $83.3 million owed to U.S. Office Products
described in the Prospectus, and any additional amounts owed by the
Company to U.S. Office Products, shall have been paid in full by the
Company in the manner contemplated by the Prospectus.
9. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter 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 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, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Xxxxxxx,
Xxxxx & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the
Company 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 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 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 or the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, 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 otherwise than under such subsection. 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 (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying 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 subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 9
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only such relative benefits but also the
relative fault of the Company 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 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 (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the 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 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 and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). 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 subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 9
shall be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 9 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 (including any person who, with his or her consent, is named in
the Registration Statement as about to become a director of the Company) and
to each person, if any, who controls the Company within the meaning of the
Act.
10. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or
other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company shall be entitled
to a further period of thirty-six hours within which to procure another party
or other parties satisfactory to you to purchase such Shares on such terms.
In the event that, within the respective prescribed periods, you notify the
Company that you have so arranged for the purchase of such Shares, or the
Company notifies you that it has so arranged for the purchase of such Shares,
you or the Company shall have the right to postpone such 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 your 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 Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
number of Shares which such Underwriter agreed to purchase hereunder) of the
Shares
of such defaulting Underwriter or Underwriters for which such arrangements
have not been made; but nothing herein shall relieve a defaulting Underwriter
from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number
of all the Shares to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company
to sell the Optional Shares) shall thereupon terminate, without liability on
the part of any non-defaulting Underwriter or the Company, except for the
expenses to be borne by the Company and the Underwriters as provided in
Section 7 hereof and the indemnity and contribution agreements in Section 9
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
11. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several 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 officer or director or controlling person of the Company,
and shall survive delivery of and payment for the Shares.
12. If this Agreement shall be terminated pursuant to Section 10
hereof, the Company shall not then be under any liability to any Underwriter
except as provided in Sections 7 and 9 hereof; but, if for any other reason,
any Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 7 and 9 hereof.
13. In all dealings hereunder, you 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 you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of the
Underwriters.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to the Underwriters in care of Xxxxxxx, Xxxxx
& Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any
notice to an Underwriter pursuant to Section 9(c) hereof shall be delivered
or sent by mail, telex or
facsimile transmission 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 you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 9 and 11 hereof, the officers and directors of the Company and each
person who controls the Company 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 Shares from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
15. 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.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
17. 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 seven 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 between each of the
Underwriters and the Company. 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, the form of which shall be
submitted to the Company for examination upon request, but without warranty
on your part as to the authority of the signers thereof.
Very truly yours,
School Specialty, Inc.
By:__________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxx Xxxxxx Inc.
Xxxxx Xxxxxxx Inc.
By: _________________________________
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Underwriters
SCHEDULE I
Number of Optional
Total Number Shares
Underwriter of Firm to be Purchased if
----------- Shares to be Maximum Option
Purchased Exercised
------------ ------------------
Xxxxxxx, Xxxxx & Co...................................
NationsBanc Xxxxxxxxxx Securities
LLC................................................
Xxxxx Xxxxxx Inc......................................
Xxxxx Xxxxxxx Inc.....................................
Total............................................
SCHEDULE II
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxx X. XxXxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxxxx
Xxxxx X. Xxxxxx Xxxxxx
Xxxxxxxx Xxxx Xxxxxxx
ANNEX I(a)
Pursuant to Section 8(d) of the Underwriting Agreement, Price
Waterhouse LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if
applicable, financial forecasts and/or pro forma financial
information) examined by them and included in the Prospectus
or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements
of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in
accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies
of which have been separately furnished to the Underwriters;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public
Accountants of the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been
separately furnished to the Underwriters and on the basis of
specified procedures including inquiries of officials of the
Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations, nothing came to their attention that
caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position
of the Company for the five most recent fiscal years included
in the Prospectus agrees with the corresponding amounts (after
restatements where applicable) in the audited consolidated
financial statements for such five fiscal years which were
1
included or incorporated by reference in the Company's Annual
Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of
Regulation S-K and on the basis of limited procedures
specified in such letter nothing came to their attention as a
result of the foregoing procedures that caused them to believe
that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading
of the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books
of the Company and its subsidiaries since the date of the
latest audited financial statements included in the
Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention that caused them
to believe that:
(A)(i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus
do not comply as to form in all material respects
with the applicable accounting requirements of the
Act and the related published rules and regulations,
or (ii) any material modifications should be made to
the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus
for them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such
data and items were derived, and any such unaudited
data and items were not determined on a basis
substantially consistent with the basis for the
corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were
derived any unaudited condensed financial statements
referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in
the Prospectus and referred to in Clause (B) were not
determined on a
2
basis substantially consistent with the basis for the
audited consolidated financial statements included in
the Prospectus;
(D) management's assumptions do not provide a reasonable
basis for presenting the significant effects directly
attributable to the offering, that the related pro
forma adjustments do not give appropriate effect to
those assumptions, or that the pro forma column does
not reflect the proper application of those
adjustments to the historical financial statement
amounts in the pro forma condensed balance sheet as
of October 25, 1997, and the pro forma condensed
statement of income for the six months then ended;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options
and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of
convertible securities, in each case which were
outstanding on the date of the latest financial
statements included in the Prospectus) or any
increase in the consolidated long-term debt of the
Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders'
equity or other items specified by the Underwriters,
or any increases in any items specified by the
Underwriters, in each case as compared with amounts
shown in the latest balance sheet included in the
Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the
specified date referred to in Clause (E) there were
any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by
the Underwriters, or any increases in any items
specified by the Underwriters, in each case as
compared with the comparable period of the preceding
year and with any other period of corresponding
length specified by the Underwriters, except in each
case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and
financial information specified by the Underwriters, which are
derived from the general accounting records
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of the Company and its subsidiaries, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to,
the Registration Statement specified by the Underwriters, and
have compared certain of such amounts, percentages and
financial information with the accounting records of the
Company and its subsidiaries and have found them to be in
agreement.
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ANNEX I(b)
Pursuant to Section 8(d) of the Underwriting Agreement, Ernst & Young
LLP, BDO Xxxxxxx, LLP and Xxxxxxxxxx, Melvoin and Xxxxxxx LLP shall furnish
letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations
thereunder; and
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if
applicable, financial forecasts and/or pro forma financial
information) examined by them and included in the Prospectus
or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements
of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in
accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies
of which have been separately furnished to the Underwriters.
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ANNEX II
LOCK-UP AGREEMENT
June __, 1998
School Specialty, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Xxxxxxx, Xxxxx & Co.
NationsBanc Xxxxxxxxxx Securities LLC
Xxxxx Xxxxxx Inc.
Xxxxx Xxxxxxx Inc.
c/x Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned has been informed that School Specialty, Inc.
(the "Company") has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 (Registration No. 333- 47509) in connection
with the proposed initial public offering (the "Offering") of up to 2,443,750
shares (the "Shares") of the Company's Common Stock, par value $.001 per share
(the "Common Stock").
In connection with such Offering, the undersigned understands
that the Company will enter into an underwriting agreement (the "Underwriting
Agreement") with Xxxxxxx, Xxxxx & Co., NationsBanc Xxxxxxxxxx Securities LLC,
Xxxxx Xxxxxx Inc. and Xxxxx Xxxxxxx Inc. (the "Underwriters").
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The undersigned, to facilitate the marketing of Shares to be
sold in the Offering and in consideration of the Underwriters entering into the
Underwriting Agreement, hereby irrevocably confirms, covenants and agrees for
the benefit of the Company and the Underwriters as follows:
(i) The undersigned will not offer, sell, contract to sell,
pledge or otherwise dispose of, any Common Stock or other securities of the
Company that are substantially similar to the Common Stock, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive Common Stock or any such substantially similar
securities other than bona fide gifts to donees who agree in writing prior to
the receipt thereof to be bound by the terms of this Agreement, or exercise any
of its preemptive or other rights with respect to the Company, or otherwise
direct, demand, request or in any other way cause the Company, to register any
Common Stock or any securities of the Company that are substantially similar to
the Common Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive
Common Stock or any such substantially similar securities, pursuant to any
agreement entered into on or prior to the date hereof, or at any time hereafter,
during the period beginning from the date hereof and
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continuing to and including the date 180 days from the date of the Prospectus
(as defined in the Underwriting Agreement), except with the prior written
consent of the Underwriters.
(ii) The undersigned has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares, or which has otherwise constituted or will constitute any prohibited
bid for or purchase of the Shares or any related securities.
(iii) The undersigned acknowledges and agrees that the covenants
and agreements set forth herein supersede, to the extent of the subject matter
thereof, the provisions of any agreements or instruments defining the rights of
the undersigned with respect to the shares of Common Stock or other securities
of the Company beneficially owned or controlled by the undersigned.
In furtherance of the foregoing, the Company and its
transfer agent and registrar are hereby authorized to decline to make any
transfer of Common Stock if such transfer would constitute a violation or breach
of this Agreement.
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This Agreement shall be binding on the undersigned and the
respective heirs, personal representatives and assigns of the undersigned.
Very truly yours,
-----------------------------
Name:
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