EXHIBIT 1.1
A& B Draft Dated 12/8/97
Marked from Draft of 12/3/97
SCP POOL CORPORATION
(a Delaware corporation)
Common Stock
UNDERWRITING AGREEMENT
Dated: November __, 1997
EXHIBIT 1.1
SCP POOL CORPORATION
UNDERWRITING AGREEMENT
November ___, 1997
XXXXXX XXXXXX & COMPANY, INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
XXXXXXX XXXX & COMPANY L.L.C.
[As Representatives of the Several Underwriters
Named in Schedule A hereto]
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
SCP Pool Corporation, a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule A (collectively, the
"Underwriters") an aggregate of 1,350,000 shares of Common Stock, $0.001 par
value per share (the "Common Stock"), of the Company (the "Firm Company Shares")
and the selling shareholders of the Company named in Schedule B (the "Selling
Shareholders") propose to sell to the Underwriters an aggregate of 1,600,000
shares of Common Stock (the "Firm Selling Shareholder Shares" and, together with
the Firm Company Shares, the "Firm Shares"). The Firm Shares are to be sold to
each Underwriter, acting severally and not jointly, in such amounts as are set
forth in Schedule A opposite the name of such Underwriter.
The Selling Shareholder listed in Schedule C also grants to the
Underwriters the option described in Section 3 to purchase, on the same terms as
the Firm Shares, up to 442,500 additional shares of Common Stock (the "Option
Shares") solely to cover over-allotments. The Firm Shares, together with all or
any part of the Option Shares, are collectively herein called the "Shares."
Section 1. Representations and Warranties of the Company. 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-_______)
with respect to the Shares, including a preliminary form of
prospectus, has been prepared by the Company in conformity with the
requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and the applicable rules and
regulations (the "1933 Act Regulations") of the Securities and Exchange
Commission (the "Commission"), and has been filed with the Commission; and such
amendments to such registration statement as may have been required prior to the
date hereof have been filed with the Commission, and such amendments have been
similarly prepared. Copies of such registration statement and amendment or
amendments and of each related preliminary prospectus, and the exhibits,
financial statements and schedules, as finally amended and revised, have been
delivered to you. The Company will prepare in the same manner, and proposes so
to file with the Commission, one of the following: (i) prior to effectiveness of
such registration statement, a further amendment thereto, including the form of
final prospectus, (ii) if the Company does not rely on Rule 434 of the 1933 Act,
a final prospectus in accordance with Rules 430A and 424(b) of the 1933 Act
Regulations or (iii) if the Company relies on Rule 434 of the 1933 Act, a term
sheet relating to the Shares that shall identify the preliminary prospectus that
it supplements containing such information as is required or permitted by Rules
434, 430A and 424(b) of the 1933 Act. The Company also may file a related
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act for the purpose of registering certain additional shares of Common Stock,
which registration statement will be effective upon filing with the Commission.
As filed, such amendment, any registration statement filed pursuant to Rule
462(b) of the 1933 Act and any term sheet and form of final prospectus, or such
final prospectus, shall include all Rule 430A Information (as defined below)
and, except to the extent that you shall agree in a modification, shall be in
all respects in the form furnished to you prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the extent
not completed at such date and time, shall contain only such specific additional
information and other changes (beyond that contained in the latest preliminary
prospectus) as the Company shall have previously advised you in would be
included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the Closing Time (as hereinafter defined), shall also mean such registration
statement as so amended; provided, however, that such term shall also include
all Rule 430A Information contained in any Prospectus and any Term Sheet (as
hereinafter defined) and deemed to be included in such registration statement at
the time such registration statement becomes effective as provided by Rule 430A
of the 1933 Act Regulations. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean (a) if the Company relies on Rule 434 of the
1933 Act, the Term Sheet relating to the Shares that is first filed pursuant to
Rule
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424(b)(7) of the 1933 Act, together with the Preliminary Prospectus identified
therein that such Term Sheet supplements or (b) if the Company does not rely on
Rule 434 of the 1933 Act, the prospectus relating to the Shares in the form in
which it is first filed with the Commission pursuant to Rule 424(b) of the 1933
Act Regulations or, if no filing pursuant to Rule 424(b) of the 1933 Act
Regulations is required, shall mean the form of final prospectus included in the
Registration Statement at the time such Registration Statement becomes
effective. The term "Rule 430A Information" means information with respect to
the Shares and the offering thereof permitted pursuant to Rule 430A of the 1933
Act Regulations to be omitted from the Registration Statement when it becomes
effective. The term "462(b) Registration Statement" means any registration
statement filed with the Commission pursuant to Rule 462(b) under the 1933 Act
(including the Registration Statement and any Preliminary Prospectus or
Prospectus incorporated therein at the time such registration statement becomes
effective). The term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 of the 1933 Act. Any reference to the "date" of a
Prospectus that includes a Term Sheet shall mean the date of such Term Sheet.
(b) No order preventing or suspending the use of any Preliminary Prospectus
has been issued by the Commission, and no proceedings for that purpose have been
instituted or threatened by the Commission or the state securities or blue sky
authority of any jurisdiction. Each Preliminary Prospectus and any amendment or
supplement thereto, at the time of filing thereof, conformed in all material
respects to the requirements of the 1933 Act and the 1933 Act Regulations, and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in 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 or on behalf of an
Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(c) When the Registration Statement and any 462(b) Registration Statement
shall become effective, when any Term Sheet that is part of the Prospectus is
filed with the Commission pursuant to Rule 434, when the Prospectus is first
filed pursuant to Rule 424(b) of the 1933 Act Regulations, when any amendment to
the Registration Statement or any 462(b) Registration Statement becomes
effective, and when any supplement to the Prospectus or any Term Sheet is filed
with the Commission and at the Closing Time and Date of Delivery (as hereinafter
defined), (i) the Registration Statement, the 462(b) Registration Statement, the
Prospectus, the Term Sheet and any amendments thereof and supplements thereto
will conform in all material respects with the applicable requirements of the
1933 Act and the 1933 Act Regulations, and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the
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Prospectus, any Term Sheet nor any amendment or supplement thereto will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order 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 or on behalf
of an Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(d) 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 corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and the
Prospectus. The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each of the jurisdictions in which the
ownership or leasing of its properties or the nature or conduct of its business
as described in the Registration Statement and the Prospectus requires such
qualification, except where the failure to do so would not have a material
adverse effect on the financial condition, business or results of operations of
the Company and the Subsidiaries (as hereinafter defined) taken as a whole (such
effect is referred to herein as a Material Adverse Effect).
(e) All of the Company's subsidiaries are named on an exhibit to the
Registration Statement (each a "Subsidiary" and collectively the
"Subsidiaries"). Each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the state
of its incorporation with all requisite corporate power and authority to own,
lease and operate its properties and conduct its business as described in the
Registration Statement and the Prospectus. Each such entity is duly qualified to
do business and is in good standing as a foreign corporation in each other
jurisdiction in which the ownership or leasing of its properties or the nature
or conduct of its business as described in the Registration Statement and the
Prospectus requires such qualification, except where the failure to do so would
not have a Material Adverse Effect.
(f) The Company has full power and authority (corporate and other) to enter
into this Agreement, to issue, sell and deliver the Firm Company Shares as
provided herein and to consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other laws of
general applicability relating to or affecting creditors' rights, or by general
principles of equity whether considered at law or at equity and except to the
extent enforcement of the indemnification provisions set forth in Section 8 of
this Agreement may be
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limited by federal or state securities laws or the public policy underlying such
laws.
(g) Each consent, approval, authorization, order, license, certificate,
permit, registration, designation or filing by or with any governmental agency
or body necessary for the valid authorization, issuance, sale and delivery of
the Shares, the execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby has been
made or obtained and is in full force and effect, except as may be required to
qualify the Shares for public offering by the Underwriters under applicable
state securities laws.
(h) Neither the issuance, sale and delivery by the Company of the Firm
Company Shares, nor the execution, delivery and performance of this Agreement,
nor the consummation of the transactions contemplated hereby will conflict with
or result in a breach or violation of any of the terms and provisions of, or
(with or without the giving of notice or the passage of time or both) constitute
a default under the charter or bylaws of the Company or the Subsidiaries,
respectively, or under any indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument to which the Company or the
Subsidiaries, respectively, is a party or to which the Company or the
Subsidiaries, respectively, any of their respective properties or other assets
is subject; or any applicable statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to any of the
foregoing or any of their respective properties; or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company or the Subsidiaries, respectively.
(i) The Shares to be issued and sold to the Underwriters hereunder have
been validly authorized by the Company. When issued and delivered against
payment therefor as provided in this Agreement, the Shares will be duly and
validly issued, fully paid and nonassessable. No preemptive rights of
shareholders exist with respect to any of the Shares which have not been
satisfied or waived. No person or entity holds a right to require or participate
in the registration under the 1933 Act of the Shares pursuant to the
Registration Statement which has not been satisfied or waived; and, except as
set forth in the Prospectus, no person holds a right to require registration
under the 1933 Act of any shares of Common Stock of the Company at any other
time which has not been satisfied or waived.
(j) The Company's authorized, issued and outstanding capital stock is as
disclosed in the Prospectus. All of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description of the Company's capital stock
contained in the Prospectus.
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(k) All of the issued shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned directly or indirectly through another Subsidiary by the Company
free and clear of all liens, security interests, pledges, charges, encumbrances,
defects, shareholders' agreements, voting trusts, equities or claims of any
nature whatsoever, except for that certain pledge of the capital stock of the
Subsidiaries made by the Company pursuant to its Senior Loan Facility (as
defined in the Prospectus). Other than the Subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other equity securities of any
other corporation or any ownership interest in any partnership, joint venture or
other association.
(1) Except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company or any of its Subsidiaries convertible
into or exchangeable for any capital stock of the Company or any such
Subsidiary, (ii) warrants, rights or options to subscribe for or purchase from
the Company or any such Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company or any such Subsidiary to issue any shares of capital stock, any
such convertible or exchangeable securities or obligation, or any such warrants,
rights or options.
(m) The Company and the Subsidiaries have good and marketable title in fee
simple to all real property, if any, and good title to all personal property
owned by them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed to
be made of such property by the Company and the Subsidiaries; and any real
property and buildings held under lease by the Company or any Subsidiary are
held under valid, existing and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company or
such Subsidiary.
(n) The financial statements of the Company and its consolidated
Subsidiaries included in the Registration Statement and Prospectus present
fairly the financial position of the Company and its consolidated Subsidiaries
as of the dates indicated and the results of operations and cash flows for the
Company and its consolidated Subsidiaries for the periods specified, all in
conformity with generally accepted accounting principles applied on a consistent
basis. The financial statement schedules included in the Registration Statement
and the amounts in the Prospectus under the captions "Prospectus Summary --
Summary Consolidated Financial Data," "Selected Consolidated Financial Data,"
"Unaudited Pro Forma Condensed Consolidated Financial Data," "Consolidated
Financial Statements of SCP Pool Corporation," and "Financial Statements of the
X-X Network, Inc." fairly present the information shown therein and have been
compiled on a basis consistent with the financial statements included in the
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Registration Statement and the Prospectus (other than the pro forma adjustments
specified therein). The unaudited pro forma financial information (including the
related notes) included in the Prospectus or any Preliminary Prospectus complies
as to form in all material respects to the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations, and management of the Company
believes that the assumptions underlying the pro forma adjustments are
reasonable. Such pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such information
fairly presents with respect to the Company and the Subsidiaries, the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified.
(o) To the knowledge of the Company, Ernst & Young LLP who have examined
and are reporting upon the audited financial statements and schedules included
in the Registration Statement, are, and were during the periods covered by their
reports included in the Registration Statement and the Prospectus, independent
public accountants within the meaning of the 1933 Act and the rules and
regulations of the Commission thereunder.
(p) The Asset Purchase Agreement (the "Asset Purchase Agreement"), dated as
of November 13, 1997 among the Company, South Central Pool Supply, Inc.,
Xxxxxxxx Xxxxxx Distributors, Inc. (the "Seller"), Pacific Industries, Inc. and
Xxxxxxx America, Inc. has been duly authorized, executed and delivered by the
Company and, to the knowledge of the Company, the Seller, and constitutes a
valid and binding agreement of the Company and the Seller, enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other laws of
general applicability relating to or affecting creditors' rights, or by general
principles of equity whether considered at law or at equity and the Company has
no knowledge of any condition to the consummation of the transactions
contemplated therein that is not reasonably likely to be satisfied prior to
January 31, 1998 or that is reasonably likely to materially delay or hinder the
closing as contemplated therein. Neither the Company nor, to the Company's
knowledge, the Seller is in breach of any representation, warranty or covenant
under the terms of the Asset Purchase Agreement.
(q) Except for the Company's Form 8-K/A, Amendment No. 1, which was filed
on November 13, 1997, the Company has timely filed all documents required to be
filed by the Company since the Company's initial public offering in October 1995
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act").
(r) None of the Company or the Subsidiaries has sustained, since December
31, 1996, any material loss or interference with its business from fire,
explosion, flood, hurricane, accident or other calamity, whether or not covered
by
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insurance, or from any labor dispute or arbitrators' 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
otherwise stated in the Registration Statement and Prospectus, there has not
been (i) any material change in the capital stock, long-term debt, obligations
under capital leases or short-term borrowings of the Company, or the
Subsidiaries, or (ii) any Material Adverse Change, or any development which
could reasonably be seen as involving a prospective Material Adverse Change.
(s) Neither the Company nor its Subsidiaries is in violation of its
respective charter, or by-laws, and no default exists, and no event has
occurred, nor state of facts exists, which, with notice or after the lapse of
time to cure or both, would constitute a default in the due performance and
observance of any obligation, agreement, term, covenant, consideration or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
note, lease or other agreement or instrument to which any such entity is a party
or to which any such entity or any of its properties is subject, except as in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. None of the Company or its Subsidiaries is in violation of, or in
default with respect to, any statute, rule, regulation, order, judgment or
decree, except as may be properly described in the Prospectus or such as in the
aggregate do not now have and would not reasonably be expected to have a
Material Adverse Effect.
(t) There is not pending or threatened, any action, suit, proceeding,
inquiry or investigation against the Company, the Subsidiaries or any of their
respective officers and directors or to which the properties, assets or rights
of any such entity are subject, before or brought by any court or governmental
agency or body or board of arbitrators that are required to be described in the
Registration Statement or the Prospectus but are not described as required.
(u) The descriptions in the Registration Statement and the Prospectus of
the contracts, leases and other legal documents therein described present fairly
the information required to be shown, and there are no contracts, leases, or
other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required.
(v) Except as disclosed to you in a writing as of the date hereof (i) the
Company owns, possesses or has obtained all material permits, licenses,
franchises, certificates, consents, orders, approvals and other authorizations
of governmental or regulatory authorities or other entities as are necessary to
own or lease, as the case may be, and to operate its properties and to carry on
its business as presently conducted, or as contemplated in the Prospectus to be
conducted, and (ii) the Company has not received any notice of proceedings
relating to revocation
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or modification of any such licenses, permits, franchises, certificates,
consents, orders, approvals or authorizations.
(w) The Company owns or possesses adequate license or other rights to use
all patents, trademarks, service marks, trade names, copyrights, software and
design licenses, trade secrets, manufacturing processes, other intangible
property rights and know-how (collectively, "Intangibles") necessary to entitle
the Company to conduct its business as described in the Prospectus, and the
Company has not received notice of infringement of or conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which would reasonably be expected to have a Material
Adverse Effect.
(x) Each of the Company's and the Subsidiaries' respective systems of
internal accounting controls taken as a whole is sufficient to meet the broad
objectives of internal accounting control insofar as those objectives pertain to
the prevention or detection of errors or irregularities in amounts that would be
material in relation to the Company's or the Subsidiaries' financial statements.
(y) Each of the Company and the Subsidiaries has filed on a timely basis
all necessary federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes shown as
due thereon; and no tax deficiency has been asserted against any such entity,
nor does any such entity know of any tax deficiency which is likely to be
asserted against any such entity which if determined adversely to any such
entity, would reasonably be expected to have a Material Adverse Effect. All tax
liabilities are adequately provided for on the respective books of such
entities.
(z) Each of the Company and its Subsidiaries maintain insurance (issued
by insurers of recognized financial responsibility) of the types and in the
amounts generally deemed by the Company to be adequate for their respective
businesses and, consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
(aa) Each of the Company, the Subsidiaries, and their officers, directors
or affiliates has not taken and will not take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or result in
or constitute the stabilization or manipulation of any security of the Company
or to facilitate the sale or resale of the Shares.
(bb) The Company is not, will not become as a result of the transactions
contemplated hereby, or will not conduct its respective businesses in a manner
in
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which the Company would become, "an investment company," or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(cc) Neither the Company nor any of the Subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to a federal or state
governmental officer or official, or other person charge with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
Section 2. Representations and Warranties of the Selling Shareholders.
Each of the Selling Shareholders, severally and not jointly, represents and
warrants to, and agrees with, each of the several Underwriters and the Company
that:
(a) Such Selling Shareholder has full power and authority to enter
into this Agreement, the Power of Attorney and the Custody Agreement (as
hereinafter defined) and to sell, assign, transfer and deliver to the
Underwriters the Shares to be sold by such Selling Shareholder hereunder;
and the execution and delivery of this Agreement, the Power of Attorney and
the Custody Agreement have been duly authorized by all necessary action of
the Selling Shareholder.
(b) Such Selling Shareholder has duly executed and delivered this
Agreement, the Power of Attorney and the Custody Agreement, and each
constitutes the valid and binding agreement of such Selling Shareholder
enforceable against such Selling Shareholder in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles.
(c) No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares to be
sold by such Selling Shareholder or the consummation of the transactions
contemplated by this Agreement, the Power of Attorney or the Custody
Agreement, except the registration of such Shares under the 1933 Act
(which, if the Registration Statement is not effective as of the time of
execution hereof, shall be obtained as provided in this Agreement) and such
as may be required under state securities or blue sky laws in connection
with the offer, sale and distribution of such Shares by the Underwriters.
(d) The sale of the Shares to be sold by such Selling Shareholder
and the performance of this Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and
therein
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contemplated will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which such Selling Shareholder is a party or to
which any of its properties or assets is subject, nor will such action
conflict with or violate any provision of the charter or bylaws or other
governing instruments of such Selling Shareholder, if any, or any statute,
rule or regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over the Selling
Shareholder or any of such Selling Shareholder's properties or assets.
(e) Such Selling Shareholder has, and immediately prior to the
transfer of the Shares at the Closing Time (as defined in Section 3 hereof)
or at the Date of Delivery, as the case may be, such Selling Shareholder
will have, good and valid title to the Shares to be sold by such Selling
Shareholder hereunder, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever; and, upon delivery of
such Shares against payment therefor as provided herein, good and valid
title to such Shares, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever, will pass to the
several Underwriters.
(f) The Selling Shareholder has not (i) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares or (ii) since the filing of
the Registration Statement (A) sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of, the Shares or (B) paid or agreed
to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
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In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to you prior to or at the Closing Time (as
hereinafter defined) a properly completed and executed United States Treasury
Department form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
Each of the Selling Shareholders individually represents and warrants that
certificates in negotiable form representing all of the Shares to be sold by
such Selling Shareholder hereunder have been placed in custody under a custody
agreement (the "Custody Agreement"), in the form heretofore furnished to and
approved by you, duly executed and delivered by such Selling Shareholder to
First Chicago Trust Company of New York, as custodian (the "Custodian"), and
that such Selling Shareholder has duly executed and delivered a Power of
Attorney (the "Power of Attorney"), in the form heretofore furnished to and
approved by you, appointing Xxxxxx X. Code, Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx
and Xxxxxx X. Xxxxxx as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Shareholder, to determine the purchase price to be paid
by the Underwriters to the Selling Shareholders as provided in Section 3 hereof,
to authorize the delivery of the Shares to be sold by such Selling Shareholder
hereunder and otherwise to act
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on behalf of such Selling Shareholder in connection
with the transactions contemplated by this Agreement and the Custody
Agreement.
Each of the Selling Shareholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling
Shareholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder, and that the arrangements made by such Selling
Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorneys-in-Fact by the Power of Attorney, are
irrevocable subject to the terms thereof. Each of the Selling Shareholders
specifically agrees that the obligations of the Selling Shareholders
hereunder shall not be terminated by operation of law, whether by the death
or incapacity of any individual Selling Shareholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by
the occurrence of any other event.
Section 3. Sale and Delivery of the Shares to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Underwriters the Firm Company
Shares, and the Selling Shareholders agree, severally and not jointly, to
sell to the Underwriters the Firm Selling Shareholder Shares set forth
opposite the name of such Selling Shareholder on Schedule B, and each
Underwriter agrees, severally and not jointly, to purchase from the Company
and the Selling Shareholders the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule A (the proportion which each
Underwriter's share of the total number of the Firm Shares bears to the
total number of Firm Shares is hereinafter referred to as such
Underwriter's "underwriting obligation proportion"), at a purchase price of
$______ per share.
(b) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Selling Shareholder set forth in Schedule C hereby grants an option to
the Underwriters, severally and not jointly, to purchase up to an
additional 442,500 Option Shares at the same purchase price as shall be
applicable to the Firm Shares. The option hereby granted will expire if not
exercised within the thirty (30) day period after the date of the
Prospectus by giving written notice to the Company and the Selling
Shareholder set forth in Schedule C. The option granted hereby may be
exercised in whole or in part (but not more than once), only for the purpose
of covering over-allotments that may be made in connection with the offering
and distribution of the Firm Shares. The notice of exercise shall set forth
the number of Option Shares as to which the several Underwriters are
exercising the option, and the time and date of payment and delivery
thereof. Such time and
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date of delivery (the "Date of Delivery") shall be determined by you but
shall not be later than three full business days after the exercise of such
option, nor in any event prior to the Closing Time. If the option is
exercised as to all or any portion of the Option Shares, the Option Shares
as to which the option is exercised shall be purchased by the Underwriters,
severally and not jointly, in their respective underwriting obligation
proportions.
(c) Payment of the purchase price for and delivery of certificates in
definitive form representing the Firm Shares shall be made at the offices
of Xxxxxx Xxxxxx & Company, Inc., 00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000
or at such other place as shall be agreed upon by the Company and you, at
10:00 a.m., either (i) on the third full business day after the execution
of this Agreement, or (ii) at such other time not more than ten full
business days thereafter as you and the Company shall determine (unless, in
either case, postponed pursuant to the term hereof), (such date and time of
payment and delivery being herein called the "Closing Time"). In addition,
in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for and delivery of
certificates in definitive form representing the Option Shares shall be
made at the offices of Xxxxxx Xxxxxx & Company, Inc. in the manner set
forth above, or at such other place as the Company and you shall determine,
on the Date of Delivery as specified in the notice from you to the Company.
Payment for the Firm Shares and the Option Shares shall be made to the
Company and the Selling Shareholders, respectively, by wire transfer in
same-day funds to the accounts designated to the Underwriters in writing by
the Company and the Selling Shareholders, respectively, against delivery to
you for the respective accounts of the Underwriters of the Shares to be
purchased by them.
(d) The certificates representing the Shares to be purchased by the
Underwriters shall be in such denominations and registered in such names as
you may request in writing at least two full business days before the
Closing Time or the Date of Delivery, as the case may be. The certificates
representing the Shares will be made available at the offices of Xxxxxx
Xxxxxx & Company, Inc. or at such other place as Xxxxxx Xxxxxx & Company,
Inc. may designate for examination and packaging not later than 10:00 a.m.
at least one full business day prior to the Closing Time or the Date of
Delivery as the case may be.
(e) After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after
the initial public offering of such Shares, you may in your discretion vary
the public offering price.
Section 4. Certain Covenants of the Company. The Company covenants and
agrees with each Underwriter as follows:
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(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time
that this Agreement is executed and delivered by the parties hereto). If
the Company elects to rely upon Rule 430A of the 1933 Act Regulations or
the filing of the Prospectus is otherwise required under Rule 424(b) of the
1933 Act Regulations, the Company will comply with the requirements of Rule
430A and will file the Prospectus, properly completed, pursuant to the
applicable provisions of Rule 424(b), or a Term Sheet pursuant to and in
accordance with Rule 434, within the time period prescribed. If the Company
elects to rely upon Rule 462(b), the Company shall file a 462(b)
Registration Statement with the Commission in compliance with Rule 462(b)
by 10:00 p.m., Washington, D.C. time on the date of this Agreement, and the
Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee. The Company will notify you
immediately (i) when the Registration Statement, 462(b) Registration
Statement or any post-effective amendment to the Registration Statement,
shall have become effective, or any supplement to the Prospectus or any
amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission with regard to the Registration Statement,
(iii) of any request by the Commission to amend the Registration Statement
or 462(b) Registration Statement or amend or supplement the Prospectus or
for additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or any 462(b) Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of
the institution or threatening of any proceeding for any such purposes. The
Company will use every reasonable effort to prevent the issuance of any
such stop order or of any order preventing or suspending such use and, if
any such order is issued, to obtain the withdrawal thereof at the earliest
possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement (i) to the
Prospectus, if the Company has not elected to rely upon Rule 430A, (ii) if
the Company has elected to rely upon Rule 430A, to either the Prospectus
included in the Registration Statement at the time it becomes effective or
to the Prospectus filed in accordance with Rule 424(b) or any Term Sheet
filed in accordance with Rule 434, or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement in any case if
you shall not have previously been advised and furnished a copy thereof a
reasonable time prior to the proposed filing, or if you or counsel for the
Underwriters shall object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at its expense,
as soon as available, four (4) copies of the Registration Statement as
originally
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filed and of all amendments thereto, whether filed before or after the
Registration Statement becomes effective, copies of all exhibits and
documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished
or will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto.
(d) The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus
as such Underwriter may reasonably request, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will deliver to each Underwriter, at the Company's expense, as soon
as the Registration Statement shall have become effective and thereafter
from time to time as requested during the period when the Prospectus is
required to be delivered under the 1933 Act, such number of copies of the
Prospectus (as supplemented or amended) as each Underwriter may reasonably
request. The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations so as to permit the completion of the
distribution of the Shares as contemplated in this Agreement and in the
Prospectus. 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
or any Term Sheet in connection with the offering or sale of the Shares and
if at such time any events shall have occurred as a result of which the
Prospectus or any Term Sheet 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 light of the
circumstances under which they were made when such Prospectus or any Term
Sheet is delivered not misleading, or, if for any reason it shall be
necessary during such same period to amend or supplement the Prospectus or
any Term Sheet in order to comply with the 1933 Act or the rules and
regulations thereunder, the Company will notify you and upon your request
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 any Term Sheet or a supplement to the
Prospectus or any Term Sheet or an amendment or supplement to any such
incorporated document 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 or any Term Sheet,
upon your request but at the expense of such Underwriter, the Company will
prepare and deliver to such Underwriter as many copies as you may request
of an amended or supplemented Prospectus or any Term Sheet complying with
Section 10(a)(3) of the 1933 Act.
(e) The Company will take such action as the Underwriters may
reasonably request to qualify the Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as you
may designate and to
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maintain such qualifications in effect for as long as may be necessary to
complete the distribution of the Shares (not to exceed nine months);
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to make
any undertakings in respect of doing business in any jurisdiction in which
it is not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Shares have been qualified as above provided.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the
fiscal quarter first occurring after the first anniversary of the
"effective date of the Registration Statement" (as defined in Rule 158(c)
of the 1933 Act Regulations), an earnings statement (in reasonable detail
but which need not be audited) complying with the provisions of Section
11(a) of the 1933 Act and Rule 158 thereunder and covering a period of at
least 12 months beginning after the effective date of the Registration
Statement.
(g) The Company will use the net proceeds received by it from the sale
of the Firm Company Shares in the manner specified in the Prospectus under
the caption "Use of Proceeds," it being understood, however, that the
amounts paid for each such specified use may vary based on the actual
amount required to finance the 1997 Acquisition (as defined in the
Prospectus).
(h) During a period of two years after the date hereof, the Company
will furnish to you: (i) copies of all reports (financial or otherwise)
mailed to securityholders; and (ii) as soon as they are available, copies
of all reports and financial statements furnished to or filed with the
Commission, any securities exchange or the National Association of
Securities Dealers, Inc. (the "NASD").
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(i) During the period beginning from the date hereof and continuing to
and including the date 90 days after the date of the Prospectus, the
Company will not, without the prior written consent of Xxxxxx Xxxxxx &
Company, Inc., offer, pledge, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, or announce any offer,
pledge, sale, grant of any option to purchase or other disposition,
directly or indirectly, any shares of Common Stock or securities
convertible into, exercisable or exchangeable for, shares of Common Stock,
except as provided in Section 3 of this Agreement and except for the
issuance of Common Stock upon the exercise of stock options, warrants or
Convertible Subordinated Promissory Notes due December 31, 2002 outstanding
on the date of this Agreement to the extent that such stock options or
warrants are disclosed in the Prospectus and except for the issuance of
options to purchase shares of Common Stock pursuant to the Company's stock
option plans described under the caption "Management" in the Prospectus.
(j) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be
the same entity as the transfer agent) for its Common Stock.
(k) The Company will use its reasonable best efforts to cause the
Shares to be approved for listing on the Nasdaq Stock Market and to
maintain the listing of the Shares on the Nasdaq Stock Market.
(l) The Company will endeavor in the future to conduct its affairs, in
such a manner so as to ensure that the Company will not be an "investment
company" or an entity "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(m) Prior to termination of the underwriting syndicate contemplated by
this Agreement, the Company will not, and will use its best efforts to
cause its officers, directors and affiliates not to, (i) take, directly or
indirectly any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in
the future reasonably be expected to cause or result in, the stabilization
or manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Shares, (ii) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of the Shares or (iii)
pay or agree to pay to any person any compensation for soliciting any order
to purchase any other securities of the Company, except for such fees as
shall be paid to a financial institution relating to the Company's Senior
Loan Facility.
(n) If at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
-18-
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after
written notice from you advising the Company to the effect set forth above,
the Company agrees to forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
Section 5. Covenants of the Selling Shareholders. Each of the Selling
Shareholders covenants and agrees with each of the Underwriters that
the Selling Shareholder will not (i) take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed, or which has constituted, or that might
reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Shares, (ii) sell, bid for, purchase or pay
anyone any compensation for soliciting purchases of, the Shares or (iii)
pay to or agree to pay any person any compensation for soliciting another
to purchase any other securities of the Company.
Section 6. Payment of Expenses. The Company will pay and bear all costs,
fees and expenses incident to the performance of its obligations under this
Agreement (excluding fees and expenses of counsel for the Underwriters, except
as specifically set forth below), including (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, the Preliminary Prospectuses, the
Prospectus and any Term Sheet and any amendments or supplements thereto, and the
cost of furnishing copies thereof to the Underwriters, (b) the certificates
representing the Shares, the Blue Sky Memoranda and any instruments relating to
any of the foregoing, (c) the issuance and delivery of the Shares to the
Underwriters, including any transfer taxes payable upon the sale of the Shares
to the Underwriters (other than transfer taxes on resales by the Underwriters),
(d) the fees and disbursements of the Company's counsel and accountants, (e) the
qualification of the Shares under the applicable securities laws in accordance
with the terms of this Agreement, including filing fees and fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the Blue Sky Memoranda, (f) all costs, fees and expenses in
connection with the notification to the Nasdaq Stock Market of the proposed
issuance of the Shares, (g) filing fees relating to the review of the offering
by the NASD, (h) the transfer agent's and registrar's fees and all miscellaneous
expenses referred to in Part II of the Registration Statement, (i) costs related
to travel and lodging incurred by the Company and its representatives relating
to meetings with and presentations to prospective purchasers of the Shares
reasonably determined by the Underwriters to be necessary or desirable to effect
the sale of the Shares to the public, and
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(j) all other costs and expenses incident to the performance of the Company's
obligations hereunder (including costs incurred in closing the purchase of the
Option Shares, if any) that are not otherwise specifically provided for in this
section. The Company, upon your request, will provide funds in advance for
filing fees in connection with "blue sky" qualifications.
If the sale of the Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 7
hereof is not satisfied, because of any termination pursuant to Section 10
(other than Section 10(b)(iii), (v) or (vii)) hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of default by any of
the Underwriters, the Company will reimburse the Underwriters severally on
demand for all reasonable out-of-pocket expenses, including fees and
disbursements of Underwriters' counsel, reasonably incurred by the Underwriters
in reviewing the Registration Statement and the Prospectus, and in investigating
and making preparations for the marketing of the Shares.
Section 7. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for (i) the Firm Shares that they have
respectively agreed to purchase pursuant to this Agreement (and any Option
Shares as to which the option granted in Section 3 has been exercised and the
Date of Delivery determined by you is the same as the Closing Time) at the
Closing Time and (ii) the Option Shares at the Date of Delivery of the Option
Shares, are subject to the accuracy of the representations and warranties of the
Company and the Selling Shareholders contained herein as of the Closing Time or
the Date of Delivery, as the case may be, and to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
contained in certificates of any officer of the Company and the Selling
Shareholders delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholders of their obligations hereunder, and to
the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m. (Washington, D.C. time) on the date of this Agreement or,
with your consent, at a later time and date not later, however, than 5:30
p.m. on the first business day following the date hereof, or at such later
time or on such later date as you may agree to in writing; if the Company
has elected to rely upon Rule 462(b), the 462(b) Registration Statement
shall have become effective by 10:00 p.m., Washington, D.C. time, on the
date of this Agreement; and at the Closing Time no stop order suspending
the effectiveness of the Registration Statement or any 462(b) Registration
Statement shall have been issued under the 1933 Act and no proceedings for
that purpose shall have been instituted or shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the satisfaction of counsel
for the Underwriters. If the Company has elected to rely upon Rule 430A, a
Prospectus or a Term Sheet containing the Rule 430A Information shall have
been filed with
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the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time, you shall have received a favorable opinion
of Xxxxxxxx & Xxxxx, counsel for the Company, dated as of the Closing Time,
together with signed or reproduced copies of such opinion for each of the
other Underwriters, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly organized and is a corporation existing
and in good standing under the General Corporation Law of the
State of Delaware with the corporate power to own and lease its
properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Company is
qualified to transact business as a foreign corporation and is in
good standing in the state of Louisiana
(ii) Each of the Subsidiaries has been duly organized and is a
corporation existing and in good standing under the General
Corporation Law of the State of Delaware. Each such entity has
all requisite corporate power to own and lease its properties and
conduct its business as described in the Registration Statement
and the Prospectus. South Central Pool Supply, Inc. is qualified
to do business and is in good standing in the states listed in
Schedule D. Alliance Packaging, Inc. is qualified to do business
and is in good standing in the State of Texas.
(iii) The Company has the corporate power and authority to enter into
this Agreement, to issue, sell and deliver the Firm Company
Shares as provided herein and to consummate the transactions
contemplated herein. This Agreement has been duly authorized,
executed and delivered by the Company.
(iv) The Company was not required to obtain any consent, approval,
authorization or order of or from any governmental agency or body
for the issuance, sale and delivery of the Firm Company Shares,
the execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated
hereby, except for the order by the Commission declaring the
Registration Statement effective.
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(v) The issuance, sale and delivery by the Company of the Shares,
the Company's execution, delivery and performance of this
Agreement, and the consummation by the Company of the
transactions contemplated hereby do not conflict with or result
in a breach or violation of any of the terms and provisions of,
or (with or without the giving notice or the passage of time or
both) constitute a default under, (a) the charter or by-laws of
the Company or the Subsidiaries, respectively, ; (b) any existing
obligation of the Company under any of the agreements filed as
exhibits to the Registration Statement (provided, that such
counsel need not express an opinion as to compliance with any
financial test or cross-default provision in any such agreement);
(c) to such counsel's knowledge, any applicable statute,
judgment, decree, order, rule or regulation of any court or
governmental agency or body (except that such counsel need not
express an opinion as to compliance with any disclosure
requirement or any prohibition against fraud or misrepresentation
or as to whether performance of the indemnification or
contribution provisions of this Agreement would be permitted);
or, (d) to such counsel's knowledge, result in the creation or
imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or the Subsidiaries,
respectively.
(vi) The Common Stock conforms in all material respects as to legal
matters to the description thereof contained in the Registration
Statement and the Prospectus under the heading "Description of
Capital Stock."
(vii) The Shares to be issued and sold to the Underwriters hereunder
have been validly authorized by the Company. When appropriate
certificates representing those Shares are duly countersigned by
the Company's transfer agent and registrar (or other similar
action is taken by the Company's transfer agent and registrar
with regard to electronic transfer of such Shares) and issued and
delivered against payment therefor as provided in this Agreement,
such shares will be validly issued, fully paid and nonassessable.
To such counsel's knowledge, no preemptive rights of shareholders
exist with respect to any of the Shares which have not been
satisfied or waived. To such counsel's knowledge, no person or
entity holds a right to require or participate in the
registration under the 1933 Act of the Shares pursuant to the
Registration Statement which has not been satisfied or waived.
The form of certificates evidencing the Shares complies with all
applicable requirements of Delaware law.
-22-
(viii) The Company has an authorized capitalization as set forth in
the Prospectus under the caption "Capitalization." All of the
issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable.
None of the issued shares of capital stock of the Company has
been issued or is owned or held in violation of any statutory
preemptive rights of shareholders. Such counsel may assume for
purposes of this opinion that in the case of each share issuance
and transfer, the shares were represented by a shares certificate
which complied with all applicable requirements imposed by law,
by the Company's certificate of incorporation and bylaws and by
any applicable resolutions by the Company's board of directors,
that such certificate was properly signed and authenticated and
that payment for such shares was received by the Company.
(ix) All of the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned directly, or
indirectly through another Subsidiary, by the Company and, to the
knowledge of such counsel, are held free and clear of all liens,
security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of
any nature whatsoever except for the pledge of such shares
pursuant to the Company's Senior Loan Facility. Such counsel may
assume for purposes of this opinion that in the case of each
share issuance and transfer, the shares were represented by a
shares certificate which complied with all applicable
requirements imposed by law, by the Company's certificate of
incorporation and bylaws and by any applicable resolutions by the
Company's board of directors, that such certificate was properly
signed and
-23-
authenticated and that payment for such shares was received by
the Company.
(x) Neither the Company nor its Subsidiaries is in violation of their
respective charter or by-laws, and no material default exists,
and to such counsel's knowledge, no event has occurred nor state
of facts exist which, with notice or after the lapse of time to
cure or both, would constitute a material default in the due
performance and observance of any obligation, agreement, term,
covenant, or condition contained in any indenture, mortgage, deed
of trust, loan agreement, note, lease or other agreement or
instrument filed as an exhibit to the Registration Statement.
(xi) Such counsel has no knowledge about any legal or governmental
proceeding that is pending or threatened against the Company that
has caused such counsel to conclude that such proceeding is
required by Item 103 of Regulation S-K to be described in the
Prospectus but that is not so described.
(xii) Such counsel has no knowledge about any contract, lease or
other legal document to which the Company or a Subsidiary is a
party or to which any of their property is subject that has
caused such counsel to conclude that such contract, lease or
other document is required to be described in the Prospectus but
is not so described or is required to be filed as an exhibit to
the Registration Statement but has not been so filed.
-24-
(xiii) Other than financial statements and other financial and
operating data and schedules contained therein, as to which
counsel need express no opinion, the Registration Statement,
any 462(b) Registration Statement, all Preliminary
Prospectuses, the Prospectus and any amendment or supplement
thereto, appear on their face to conform as to form in all
material respects with the requirements of the 1933 Act and the
rules and regulations thereunder.
(xiv) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the net proceeds to
the Company therefrom as described in the Prospectus, will not
be, an "investment company," or a company "controlled" by an
"investment company," as such terms are defined in of the
Investment Company Act of 1940, as amended.
(xv) The descriptions in the Prospectus of statutes, regulations,
legal or governmental proceedings are accurate and present
fairly a summary of the information required to be shown under
the 1933 Act and the 1933 Act Regulations. The information in
the Prospectus under the caption "Shares Available for Future
Sale" to the extent that it summarizes laws, governmental rules
or regulations or documents, has been reviewed by such counsel,
is correct in all material respects and presents fairly the
information required to be disclosed therein under the 1933 Act
and the 1933 Act Regulations.
A member of the Commission's staff has advised such counsel by
telephone that the Commission's Division of Corporation Finance,
pursuant to authority delegated to it by the Commission, has entered
an order declaring the Registration Statement and any 462(b)
Registration Statement effective under the Securities Act on December
___, 1997 and December ___, 1997, respectively, (the "Effective Date")
and such counsel has no knowledge that any stop order suspending the
effectiveness of such Registration Statements has been issued or that
any proceedings for that
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purpose are pending before, or threatened by, the Commission. Such
counsel also shall state that nothing has come to such counsel's
attention that has caused such counsel to conclude that the
Registration Statement, any 462(b) Registration Statement or any
further amendment thereto made prior to the Closing Time or the Date
of Delivery, as the case may be, on its effective date and as of the
Closing Time or the Date of Delivery, as the case may be, contained or
contains any untrue statement of a material fact or omitted or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus,
or any amendment or supplement thereto made prior to the Closing Time
or the Date of Delivery, as the case may be, as of its issue date and
as of the Closing Time or the Date of Delivery, as the case may be,
contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading (provided that such counsel need express no
belief regarding the financial statements and related schedules and
other financial data contained in the Registration Statement, any
462(b) Registration Statement, any amendment thereto, or the
Prospectus, or any amendment or supplement thereto).
(c) You shall have received an opinion, dated such Time of Delivery,
of Xxxxxxxx & Xxxxx, counsel for the Selling Shareholders, in form and substance
satisfactory to you and your counsel, to the effect that:
(i) The Power of Attorney and the Custody Agreement have been duly
executed and delivered by each Selling Shareholder, and each is
enforceable against each Selling Shareholder in accordance with
its terms subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws
relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles.
(ii) This Agreement has been duly executed and delivered by or on
behalf of each Selling Shareholder; the sale of the Shares to be
sold by each Selling Shareholder at such Time of Delivery and the
performance of this Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein
and therein contemplated will not,
-26-
violate any provision of the charter or bylaws or other governing
instruments of each Selling Shareholder or any statute, rule or
regulation (except that such counsel need not express an opinion
as to compliance with any disclosure requirement or any
prohibition against fraud or misrepresentation or as to whether
performance of the indemnification or contribution provisions in
the Underwriting Agreement would be permitted).
(iii) The Selling Shareholders were not required to obtain any consent,
approval, authorization or order of or from any governmental
agency or body for the sale of the Shares being sold by such
Selling Shareholder or the consummation of the transactions
contemplated by this Agreement, the Power of Attorney or the
Custody Agreement, except for the order by the Commission
declaring the Registration Statement effective, and except the
registration of such Shares under the Act and such as may be
required under state securities or blue sky laws in connection
with the offer, sale and distribution of such Shares by the
Underwriters.
(iv) Upon your payment to the Selling Shareholders of the purchase
price specified in this Agreement and delivery to you of the
certificate or certificates representing the Selling Shareholder
Shares upon consummation of the sale thereof in accordance with
this Agreement, you will have acquired ownership of the Selling
Shareholder Shares free of any adverse claim. For purposes of
this opinion, such counsel may assume that you will have
purchased the Selling Shareholder Shares in good faith and
without notice of any adverse claim or defect in the validity of
the Selling Shareholder Shares and that you will take possession
at the closing of the certificates representing the Selling
Shareholder Shares and the instrument pursuant to which the
Selling Shareholders have assigned the Selling Shareholder Shares
to you. The term "adverse claim" as used in this opinion has the
meaning given to such term in Article 8 of the Uniform Commercial
Code and does not include (i) any claim which arises through you
or any person claiming through you (such as any security interest
you may have granted in the shares) and (ii) any adverse interest
which would not be extinguished upon the purchase of the Selling
Shareholder Shares by a person who qualifies as a "bona fide
purchaser" or "protected purchaser" under (S) 8-303 of the
Uniform Commercial Code. Such
-27-
counsel will further advise you that it has no actual knowledge
of the existence of any interest of the kind specified in clause
(ii) of the preceding sentence.
(d) In rendering the opinions set forth in Sections 7(b) and (c), such
counsel may assume: each document it has reviewed for purposes of the
letter is accurate and complete, each such document that is an original is
authentic, each such document that is a copy conforms to an authentic
original, and all signatures on each such document are genuine; that this
Agreement and every other agreement it has examined for purposes of the
letter constitutes a valid and binding obligation of each party to that
document and that each such party has satisfied all legal requirements that
are applicable to such party to the extent necessary to entitle such party
to enforce such agreement (except that such counsel will make no such
assumptions with respect to the Company); and that you have acted in good
faith and without notice of any fact which has caused you to reach any
conclusion contrary to any of the advice provided in this letter. Such
counsel may also make other assumptions which it believes to be appropriate
for purposes of the letter.
Such counsel may rely without independent verification upon: (i)
information contained in certificates obtained from governmental
authorities; (ii) factual information represented to be true in this
Agreement and other documents specifically identified at the beginning of
the letter as having been read by such counsel; (iii) factual information
provided to such counsel by the Company or its representatives; and (iv)
factual information obtained by such counsel from such other sources as it
has deemed reasonable. Such counsel may assume that the information upon
which it has relied is accurate and does not omit disclosures necessary to
prevent such information from being misleading. For purposes of the
opinions in subsections (i) and (ii) of Section 7(b), such counsel may, as
to matters of fact, rely exclusively upon certificates issued by
governmental authorities in the relevant jurisdictions.
Such counsel will confirm that it does not have knowledge that
has caused it to conclude that its reliance and assumptions cited in the
two immediately preceding paragraphs are unwarranted. Whenever the letter
provides advice about (or based upon ) knowledge of any particular
information or about any information which has not come to such counsel's
attention such advice is based entirely on the conscious awareness at the
time this letter is delivered on the date it bears by the lawyers with
Xxxxxxxx & Xxxxx at that time who spent substantial time representing the
Company in connection with the offering effected pursuant to the
Prospectus.
Such counsel's advice on every legal issue addressed in the
letter may be based exclusively on the law of the State of Illinois, the
General Corporation Law of the State of Delaware, or the federal law of the
United States, and may
-28-
represent such counsel's opinion as to how that issue would be resolved were it
to be considered by the highest court in the jurisdiction which enacted such
law. None of the opinions or other advice contained in the letter considers or
covers: (i) any state securities (or "blue sky") laws or regulations, (ii) any
financial statements or supporting schedules (or any notes to any such
statements or schedules) or other financial or statistical information set forth
or incorporated by reference in (or omitted from) the Registration Statement or
the Prospectus or (ii) any rules and regulations of the National Association of
Securities Dealers, Inc. relating to the compensation of underwriters. The
letter need not cover any other laws, statutes, governmental rules or
regulations or decisions which in such counsel's experience are not usually
considered for or covered by opinions like those contained in the letter or are
not generally applicable to transactions of the kind covered by this Agreement.
(e) At the Closing Time, you shall have received a favorable opinion from
Xxxxxx & Bird LLP, counsel for the Underwriters, dated as of the Closing Time,
with respect to the existence of the Company, the issuance and sale of the
Shares, the Registration Statement, the Prospectus and other related matters as
the Underwriters may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass on such matters. As of the date hereof, you hereby
represent that you know of no reason why such opinions cannot be delivered.
(f) At the Closing Time, (i) the Registration Statement, any 462(b)
Registration Statement, and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations; the Company shall have complied in all material respects with Rule
430A (if it shall have elected to rely thereon) and neither the Registration
Statement, any 462(b) Registration Statement, nor the Prospectus, as they may
then be amended or supplemented, shall 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, (ii) there shall not have been,
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the business, results of operations or
financial condition of the Company, whether or not arising in the ordinary
course of business, (iii) no action, suit or proceeding at law or in equity
shall be pending or, to the best of Company's knowledge, threatened against the
Company that would be required to be set forth in the Prospectus other than as
set forth therein and no proceedings shall be pending or, to the best knowledge
of the Company, threatened against the Company before or by any federal, state
or other commission, board or administrative agency wherein an unfavorable
decision, ruling or finding could materially adversely affect the business,
results of operations or financial
-29-
condition of the Company, other than as set forth in the Prospectus, (iv)
the Company shall have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to the
Closing Time, and (v) the representations and warranties of the Company set
forth in Section 1 shall be accurate as though expressly made at and as of
the Closing Time. At the Closing Time, you shall have received a
certificate executed by the President and Chief Financial Officer of the
Company on behalf of the Company dated as of the Closing Time, to such
effect. The representations and warranties of the Selling Shareholders set
forth herein shall be accurate as though expressly made at and as of the
Closing Time. At the Closing Time, you shall have received a certificate
executed on behalf of the Selling Shareholders to such effect.
(g) You shall have received from Ernst & Young LLP letters dated,
respectively, the date hereof (or, if the Registration Statement has been
declared effective prior to the execution and delivery of this Agreement,
dated such effective date and the date of this Agreement) and the Closing
Time and the Date of Delivery, in form and substance satisfactory to you,
to the effect set forth in Annex 1 hereto. In the event that the letters
referred to in this subsection set forth any changes, decreases or
increases in the items specified in paragraph (iv) of Annex 1, it shall be
a further condition to the obligations of the Underwriters that (i) such
letters shall be accompanied by a written explanation by the Company as to
the significance thereof, unless the Underwriters deem such explanation
unnecessary, and (ii) such changes, decreases or increases do not, in your
sole judgment, make it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares as contemplated by the
Registration Statement, as amended as of the date of such letter.
-30-
(h) At the Closing Time, you shall have received from Ernst & Young
LLP a letter, in form and substance satisfactory to you and dated as of the
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (f) above, except that the
specified date referred to shall be a date not more than five days prior to
the Closing Time.
(i) At the Closing Time, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they
may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Shares as contemplated in this Agreement and the
matters referred to in Section 7(d) and in order to evidence the accuracy
and completeness of any of the representations, warranties or statements of
the Company, the performance of any of the covenants of the Company, or the
fulfillment of any of the conditions herein contained; and all proceedings
taken by the Company at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Shares as contemplated in this
Agreement shall be reasonably satisfactory in form and substance to you and
to counsel for the Underwriters. The Company will furnish you with such
number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request.
(j) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at
or prior to the Closing Time, and such termination shall be without
liability of any party to any other party, except as provided in Section 6.
Notwithstanding any such termination, the provisions of Section 8 shall
remain in effect.
The several obligations of the Underwriters to purchase Option
Shares hereunder are subject to the satisfaction on and as of any Date of
Delivery for Option Shares of the conditions set forth in this Section 7,
except that, if any Date of Delivery for Option Shares is other than the
Closing Time, the certificates, opinions and letters referred to in
paragraphs (b), (c) and (d) shall be revised to reflect the sale of Option
Shares.
Section 8. Indemnification and Contribution.
(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 1933 Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise
-31-
out of or are based upon any breach of any warranty or covenant of the
Company herein contained, (ii) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in (A)
any Preliminary Prospectus, the Registration Statement, any 462(b)
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the securities or blue
sky laws thereof or filed with the Commission or any securities association
or securities exchange (each an "Application"), or (iii) arise out of or
are based upon the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement, any 462(b) Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any Application
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 loss, claim, damage,
liability or action; 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, any 462(b) 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 or
on behalf of any Underwriter expressly for use therein and provided,
further, that the indemnity agreement provided in this Section 8(a) with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any losses, claims, damages or
liabilities or actions based upon any untrue statement or alleged untrue
statement of material fact or omission or alleged omission to state therein
a material fact purchased the Shares, if a copy of the Prospectus in which
such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the
time required by the Act and the Rules and Regulations. In addition to its
other obligations under this Section 8(a), the Company agrees that, as an
interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 8(a), it will reimburse the Underwriters on a monthly basis
for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's
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 of competent jurisdiction. Any such interim reimbursement payments
that are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the prime rate (or reference rate or
other
-32-
commercial lending rate for borrowers of the highest credit standing)
published from time to time by The Wall Street Journal (the "Prime Rate")
from the date of such request. This indemnity agreement shall be in
addition to any liabilities that the Company may otherwise have. The
Company will not, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending
or threatened action or claim or related cause of action or portion of such
cause of action in respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such action or claim),
unless such settlement, compromise or consent includes an unconditional
release of such Underwriter from all liability arising out of such action
or claim (or related cause of action or portion thereof).
The indemnity agreement in this Section 8(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls any Underwriter within the meaning of the 1933 Act to the
same extent as such agreement applies to the Underwriters.
(b) Each Selling Shareholder, severally but not jointly, 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 1933 Act, or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) (i) arise out of or are
based upon any breach of any warranty or covenant of such Selling
Shareholder herein contained, (ii) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in (A) any Preliminary Prospectus, the Registration Statement, any 462(b)
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or (B) any Application, or (iii) arise out of or are based upon
the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement, any 462(b) Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any Application 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 loss, claim, damage,
liability or action; provided, however, that such Selling Shareholder 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, any 462(b) 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 or on behalf of any Underwriter expressly for use therein and
provided, further, that the indemnity agreement provided in this Section
8(a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any losses,
claims, damages or liabilities or actions based upon any untrue statement
or alleged
-33-
untrue statement of material fact or omission or alleged omission to state
therein a material fact purchased the Shares, if a copy of the Prospectus
in which such untrue statement or alleged untrue statement or omission or
alleged omission was corrected had not been sent or given to such person
within the time required by the Act and the Rules and Regulations. In
addition to their other obligations under this Section 8(b), each Selling
Shareholder agrees that, as an interim measure during the pendency of any
such claim, action, investigation, inquiry or other proceeding arising out
of or based upon any statement or omission, or any alleged statement or
omission, described in this Section 8(b), such Selling Shareholder will
reimburse the Underwriters on a monthly basis for all reasonable legal and
other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety
and enforceability of such Selling Shareholder's 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 of competent
jurisdiction. Any such interim reimbursement payments that are not made to
an Underwriter within 30 days of a request for reimbursement shall bear
interest at the prime rate (or reference rate or other commercial lending
rate for borrowers of the highest credit standing) published from time to
time by The Wall Street Journal (the "Prime Rate") from the date of such
request. This indemnity agreement shall be in addition to any liabilities
that such Selling Shareholder may otherwise have. Such Selling Shareholder
will not, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened action or claim or related cause of action or portion of such
cause of action in respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such action or claim),
unless such settlement, compromise or consent includes an unconditional
release of such Underwriter from all liability arising out of such action
or claim (or related cause of action or portion thereof).
The indemnity agreement in this Section 8(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls any Underwriter within the meaning of the 1933 Act to the
same extent as such agreement applies to the Underwriters.
(c) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company and each Selling Shareholder against any losses,
claims, damages or liabilities to which the Company and such Selling
Shareholder may become subject, under the 1933 Act, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any breach of any warranty or
covenant by such Underwriter herein contained or any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, any 462(b) 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
-34-
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 thereto in reliance upon and in conformity with written
information furnished to or on behalf of the Company by such Underwriter
expressly for use therein; and will reimburse the Company and each Selling
Shareholder for any legal or other expenses reasonably incurred by the
Company and such Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to
its other obligations under this Section 8(c), the Underwriters agree that,
as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 8(c), they will reimburse the Company and each Selling
Shareholder on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability
of their obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. Any such interim reimbursement payments
that are not made to the Company within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities
that the Underwriters may otherwise have. No Underwriter will, without the
prior written consent of the Company, and each Selling Shareholder settle
or compromise or consent to the entry of judgment in any pending or
threatened action or claim or related cause of action or portion of such
cause of action in respect of which indemnification may be sought hereunder
(whether or not the Company is a party to such action or claim), unless
such settlement, compromise or consent includes an unconditional release of
the Company and each Selling Shareholder from all liability arising out of
such action or claim (or related cause of action or portion thereof).
The indemnity agreement in this Section 8(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer
and director of the Company and each person, if any, who controls the
Company and each Selling Shareholder within the meaning of the 1933 Act to
the same extent as such agreement applies to the Company and the Selling
Shareholder.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) 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. No
indemnification provided for in
-35-
subsection (a), (b) or (c) shall be available to any party who shall fail
to give notice as provided in this subsection (d) if the party to whom
notice was not given was unaware of the proceeding to which such notice
would have related and was prejudiced in any material respect by the
failure to give such notice, but the omission so to notify the indemnifying
party will not relieve the indemnifying party or parties from any liability
that it or they may have to any indemnified party otherwise than under this
Section 8. 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
reasonably 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 this 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, except that
if the indemnified party has been advised by counsel in writing that there
are one or more defenses available to the indemnified party which are
different from or additional to those available to the indemnifying party,
then the indemnified party shall have the right to employ separate counsel
and in that event the reasonable fees and expenses of such separate counsel
for the indemnified party shall be paid by the indemnifying party;
provided, however, that if the indemnifying party is the Company, the
Company shall only be obligated to pay the reasonable fees and expenses of
a single law firm (and any reasonably necessary local counsel) employed by
all of the indemnified parties. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Section 8(a), (b) and
(c) hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts
shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the
National Association of Securities Dealers, Inc. Any such arbitration must
be commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in Sections 8(a), (b) and (c) hereof
-36-
and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses that is created by the provisions of
Sections 8(a), (b) and (c).
(f) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 8 is
for any reason 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 right of appeal) to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Selling Shareholders, on the one hand and the Underwriters
on the other shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred
by the Company and the Selling Shareholders, and one or more of the
Underwriters, as incurred, in such proportions that (a) the Underwriters
are responsible pro rata for that portion represented by the percentage
that the underwriting discount appearing on the cover page of the
Prospectus bears to the public offering price (before deducting expenses)
appearing thereon, and (b) the Company and the Selling Shareholders are
responsible for the balance, provided, however, that no person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation; provided, further, that if the
allocation provided above is not permitted by applicable law, the Company
and the Selling Shareholders, on the one hand, and the Underwriters on the
other shall contribute to the aggregate losses in such proportion as is
appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company and the Selling Shareholders, 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, as well as any other relevant equitable considerations.
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 to state a material fact relates to information supplied by the
Company and the Selling Shareholders, on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Company, the Selling Shareholders, and the Underwriters
agree that it would not be just and equitable if contributions pursuant to
this Section 8(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 8(f). The amount paid or
payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending such action or claim. Notwithstanding the
provisions of this Section 8(f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
-37-
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. The Underwriters'
obligations in this Section 8(f) to contribute are several in proportion to
their respective underwriting obligations and not joint. For purposes of
this Section 8(f), each person, if any, who controls an Underwriter within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company or the Selling Shareholders,
within the meaning of Section 15 of the 1933 Act shall have the same rights
to contribution as the Company or the Selling Shareholders.
(g) Notwithstanding anything to the contrary contained herein, (i) the
Selling Shareholders shall have no liability or obligations under this
Section 8 unless the Company shall have had final, non-appealable judgment
against it with respect to a claim under this Section 8 and such judgment
is not paid or satisfied in full within sixty days, and (ii) the aggregate
liability of the Selling Shareholders under this Section 8 shall not exceed
the net proceeds received by the Selling Shareholders hereunder.
Section 9. Representations, Warranties and Agreements to Survive Delivery.
The representations, warranties, indemnities, agreements and other statements of
the Company and the Selling Shareholders, or their respective officers set forth
in or made pursuant to this Agreement will remain operative and in full force
and effect regardless of any investigation made by or on behalf of the Company,
any Selling Shareholder, or any Underwriter or controlling person, and with
respect to an Underwriter or the Company and the Selling Shareholders, will
survive delivery of and payment for the Shares or termination of this Agreement
and shall continue in full force and effect until the applicable statute of
limitations, except that if a claim for indemnification is made under this
Agreement prior to the expiration of such statute of limitations, the
representations, warranties, indemnities, agreements and other statements set
forth in or made pursuant to this Agreement will remain operative and in full
force and effect until such claim is resolved.
Section 10. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective immediately as to Sections 6
and 8 and, as to all other provisions, (i) if at the time of execution of
this Agreement the Registration Statement has not become effective, at
10:00 a.m., on the first full business day following the effectiveness of
the Registration Statement, or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, at 10:00
a.m. on the first full business day following the date of execution of this
Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement
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becomes effective as you may determine on and by notice to the Company or
by release of any of the Shares for sale to the public. For the purposes of
this Section 10, the Shares shall be deemed to have been so released upon
the release of publication of any newspaper advertisement relating to the
Shares or upon the release by you of telegrams (i) advising the
Underwriters that the Shares are released for public offering, or (ii)
offering the Shares for sale to securities dealers, whichever may occur
first. By giving notice before the time this Agreement becomes effective,
you, as representative of the several Underwriters, or the Company, may
prevent this Agreement from becoming effective, without liability of any
party to any other party, except that the Company shall remain obligated to
pay costs and expenses to the extent provided in Section 6 hereof.
(b) You may terminate this Agreement, by notice to the Company, at any
time from date hereof until Closing Time (i) in accordance with the last
paragraph of Section 7 of this Agreement, or (ii) if there has been since
the respective dates as of which information is given in the Registration
Statement, any material adverse change, or any development involving a
prospective material adverse change, in or affecting the business, results
of operations or financial condition of the Company, whether or not arising
in the ordinary course of business, or (iii) if there has occurred or
accelerated any outbreak of hostilities or other national or international
calamity or crisis or change in economic or political conditions the effect
of which on the financial markets of the United States is such as to make
it, in your reasonable judgment, impracticable to market the Shares or
enforce contracts for the sale of the Shares, or (iv) if trading in any
securities of the Company has been suspended by the Commission or by the
Nasdaq Stock Market or if trading generally on the New York Stock Exchange
or in the over-the-counter market has been suspended, or limitations on
prices for trading (other than limitations on hours or numbers of days of
trading) have been fixed, or maximum ranges for prices for securities have
been required, by such exchange or the NASD or by order of the Commission
or any other governmental authority, or (v) if a banking moratorium has
been declared by federal or New York or Tennessee authorities, or (vi) any
federal or state statute, regulation, rule or order of any court or other
governmental authority has been enacted, published, decreed or otherwise
promulgated which in your reasonable opinion materially adversely affects
or will materially adversely affect the business or operations of the
Company, or (vii) any action has been taken by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in
your reasonable opinion has a material adverse effect on the securities
markets in the United States.
(c) If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party,
except to the extent provided in Section 6. Notwithstanding any such
termination, the provisions of Section 8 shall remain in effect.
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Section 11. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time or the Date of Delivery to
purchase the Shares that it or they are obligated to purchase pursuant to this
Agreement (the "Defaulted Securities"), you shall use your reasonable best
efforts to procure, within 36 hours thereafter, one or more of the non-
defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms set forth in this Agreement; if, however, you have not
completed such arrangements within such 36-hour period, then:
(a) If the aggregate number of Shares which are Defaulted Securities
does not exceed 10% of the aggregate number of Firm Shares or Option
Shares, as the case may be, to be purchased pursuant to this Agreement, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligation
proportions bear to the underwriting obligations of all non-defaulting
Underwriters, and
(b) If the aggregate number of Shares which are Defaulted Securities
exceeds 10% of the aggregate number of Firm Shares or Option Shares as the
case may be to be purchased pursuant to this Agreement, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section 11 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination of
this Agreement, either you or the Company shall have the right to postpone the
Closing Time for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus that
may thereby be made necessary. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 11.
Section 12. Default by the Company. If the Company shall fail at the
Closing Time to sell and deliver the aggregate number of Firm Shares that it is
obligated to sell, then this Agreement shall terminate without any liability on
the part of any non-defaulting party, except to the extent provided in Section 6
and except that the provisions of Section 8 shall remain in effect.
No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect to such default.
Section 13. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered,
-40-
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed c/o Xxxxxx Xxxxxx & Company, Inc., 00 Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx Xxxxx (in each case with a
copy sent in the same manner to Xxxxxx & Bird LLP, 0000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxx, XX 00000 Attention: Xxxx Xxxxxx and notices to the Company shall be
directed to the Company at 000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000,
Attention: Chairman of the Board, and notices to the Selling Shareholders, shall
be directed to them at the addresses set forth in Schedule B (with a copy sent
in the same manner to Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 Attention: Xxxxxxx X. Xxxxxxx).
Section 14. Parties. This Agreement is made solely for the benefit of and
is binding upon the Underwriters, the Company and the Selling Shareholders, to
the extent provided in Section 8, any person controlling the Company and the
Selling Shareholders, or any of the Underwriters, the officers and directors of
the Company, and their respective executors, administrators, successors and
assigns and subject to the provisions of Section 8, no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from any of the several Underwriters of the Shares.
All of the obligations of the Underwriters and the Selling Shareholders
hereunder are several and not joint.
Section 15. Governing Law and Time. This Agreement shall be governed by
the laws of the State of Tennessee. Specified time of the day refers to United
States Eastern Time. Time shall be of the essence of this Agreement.
Section 16. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, and upon the acceptance
hereof by Xxxxxx Xxxxxx & Company, Inc., on behalf of each of the Underwriters,
this instrument will become a binding agreement among the Company, the Selling
Shareholders, and the several Underwriters in accordance with its terms. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in the Master Agreement
among Underwriters, a copy 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,
SCP POOL CORPORATION
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By:
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
Code, Xxxxxxxx & Xxxxxxx Limited
Partnership
By: CHS Management Limited Partners, its
--------------------------------------
General Partner
---------------
By:
----------------------
Name:
-------------------
Title: General Partner
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Other Selling Shareholders
Xxxxxx X. Xxxxxx
Xxxxx X. St. Romain
St. Romain Children's Trust
Xxxxxxx X. Xxxxxxxxxx
By:
--------------------------------
Name:
---------------------------
Attorney-in-Fact acting on behalf of each of
the Other Selling Shareholders
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The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above:
XXXXXX XXXXXX & COMPANY, INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
XXXXXXX XXXX & COMPANY L.L.C.
BY: XXXXXX XXXXXX & COMPANY, INC.
BY:
-----------------------------
XXXX XXXXX
(Authorized Representative)
On Behalf of each of the Underwriters
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SCHEDULE A
Number of
Firm Shares
Underwriter to be Purchased
----------- ---------------
Xxxxxx Xxxxxx & Company, Inc.
---------------
The Xxxxxxxx-Xxxxxxxx Company, LLC
---------------
Xxxxxxx Rice & Company L.L.C.
---------------
TOTAL 2,950,000
=========
SCHEDULE B
SELLING SHAREHOLDERS
Number of
Firm Selling
Name Shareholder Shares
---- ------------------
Xxxxxx X. Xxxxxx 50,000
Xxxxx X. St. Romain 17,187
Code, Xxxxxxxx & Xxxxxxx Limited Partnership 1,500,379
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxx X. XxxXxxx, Trustee under Agreement dated
_____ for the benefit of the St. Romain Children's Trust 24,434
Xxxxxxx X. Xxxxxxxxxx 8,000
---------
TOTAL 1,600,000
=========
SCHEDULE C
SELLING SHAREHOLDERS
Number of
Name Option Shares
---- -------------
Code, Xxxxxxxx & Xxxxxxx Limited Partnership 442,500
SECTION D
SOUTH CENTRAL POOL SUPPLY, INC.
FOREIGN QUALIFICATIONS
Alabama
Arizona
Arkansas
California
Florida
Georgia
Illinois
Indiana
Kansas
Louisiana
Mississippi
Missouri
Nevada
New Mexico
North Carolina
Ohio
Oklahoma
Oregon
Tennessee
Texas
Xxxxxxxx
Xxxxxxxxxx
ANNEX 1
Pursuant to Section 7(f) of the Underwriting Agreement, Ernst & Young
LLP shall furnish letters to the Underwriters to the-effect that:
(i) they are independent public accountants with respect to the
Company and its consolidated subsidiaries within the meaning the 1933 Act
and the applicable published rules and regulations thereunder;
(ii) in their opinion, the consolidated financial statements and
schedules audited by them and included in the Prospectus, the Registration
Statement and any 462(b) Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the related published rules and regulations thereunder;
(iii) the financial statements of the Company as of and for the
period ended September 30, 1997 were reviewed by them in accordance with
the standards established by the American Institute of Certified Public
Accountants and based upon their review they are not aware of any material
modifications that should be made to such financial statements for them to
be in conformity with generally accepted accounting principles, and such
financial statements comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the applicable rules
and regulations thereunder;
(iv) On the basis of a reading of the latest available interim
unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, and of the unaudited consolidated financial
statements of the Company and its consolidated subsidiaries for the periods
from which such amounts are derived, limited procedures, not constituting
an audit 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
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) the unaudited consolidated condensed financial
statements of the Company and its consolidated subsidiaries included
in the Registration Statement and the Prospectus do not comply in form
in all material respects with the applicable accounting requirements
of the 1933 Act and the related published rules and regulations
thereunder or are not in conformity with generally accepted accounting
principles applied on a
basis substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus;
(B) as of a specified date not more than 5 days prior to the
date of such letter, there were any changes in the capital stock
(other than the issuance of capital stock upon exercise of options
which were outstanding on the date of the latest balance sheet
included in the Prospectus) or any increase in inventories or the
long-term debt or short-term debt of the Company and its subsidiaries,
or any decreases in net current assets or net assets or other items
specified by the Underwriters, or any increases in any 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
(C) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (B) there were any decreases in net sales or operating
income or the total or per share amounts of net income or other items
specified by the Underwriters, or any increases in any items specified
by the Underwriters, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur which are described in such letter; and
(v) In addition to the audit 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 paragraph (iv) above,
they have carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified
by the Underwriters which are derived from the general accounting records
of the Company and its subsidiaries, included in the Registration Statement
and the Prospectus, or which appear 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.
(vi) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included in the Registration
Statement and the Prospectus, carrying out certain specified procedures
that would not necessarily
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reveal matters of significance with respect to the comments set forth in
this paragraph (vi), inquiries of certain officials of the Company and its
consolidated subsidiaries and Xxxxxxxx Xxxxxx who have responsibility for
financial and accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in the
unaudited pro forma consolidated condensed financial statements, nothing
came to their attention that caused them to believe that the unaudited pro
forma consolidated condensed financial statements do not comply as to form
in all material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X or that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of such
statements.
References to the Registration Statement and the Prospectus in
this Annex 1 shall include any amendment or supplement thereto at the date
of such letter.
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