EXHIBIT 1.1
3,000,000 Shares
PalEx, Inc.
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
_______________, 1997
Alex. Xxxxx & Sons Incorporated
Xxxxxxxxxx Securities
As Representatives of the
Several Underwriters
c/o Alex. Xxxxx & Sons Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
PalEx, Inc., a Delaware corporation (the "COMPANY"), proposes to sell to
the several underwriters (the "UNDERWRITERS") named in Schedule I hereto for
whom you are acting as representatives (the "REPRESENTATIVES") an aggregate of
3,000,000 shares of the Company's Common Stock, $0.01 par value (the "FIRM
SHARES"). The respective amounts of the Firm Shares to be so purchased by the
several Underwriters are set forth opposite their names in Schedule I hereto.
The Company also proposes to sell at the Underwriters' option an aggregate of up
to 450,000 additional shares of the Company's Common Stock (the "OPTION SHARES")
as set forth below.
As the Representatives, you have advised the Company that (a) you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) the several Underwriters are willing, acting severally and not jointly,
to purchase the numbers of Firm Shares set forth opposite their respective names
in Schedule I, plus their pro rata portion of the Option Shares if you elect to
exercise the over-allotment option in whole or in part for the accounts of the
several Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "SHARES."
Simultaneously with closing of the purchase of the Firm Shares by the
Underwriters, each of the Founding Companies (as hereinafter defined) will be
merged with a wholly-owned
subsidiary of the Company (collectively, the "FOUNDING COMPANY MERGERS"), the
consideration for which will be a combination of cash and shares of the
Company's Common Stock as described in the Registration Statement (as
hereinafter defined).
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form S-1 (File No. 333-______) with
respect to the Shares has been carefully prepared by the Company and
conforms with the requirements of the Securities Act of 1933, as amended
(the "ACT"), and the Rules and Regulations (the "RULES AND REGULATIONS")
of the Securities and Exchange Commission (the "COMMISSION") thereunder
and has been filed with the Commission. Copies of such registration
statement, including any amendments thereto, the preliminary prospectuses
(meeting the requirements of the Rules and Regulations) contained therein
and the exhibits, financial statements and schedules, as finally amended
and revised, have heretofore been delivered by the Company to you. Such
registration statement, together with any registration statement filed by
the Company pursuant to Rule 462 (b) of the Act, herein referred to as the
"REGISTRATION STATEMENT," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as
of the date of this Agreement. "PROSPECTUS" means (a) the form of
prospectus first filed with the Commission pursuant to Rule 424(b) or (b)
the last preliminary prospectus included in the Registration Statement
filed prior to the time it becomes effective or filed pursuant to Rule
424(a) under the Act that is delivered by the Company to the Underwriters
for delivery to purchasers of the Shares, together with the term sheet or
abbreviated term sheet, if any, filed with the Commission pursuant to Rule
424(b)(7) under the Act. Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective is herein
referred to as a "PRELIMINARY PROSPECTUS."
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. Each of Ridge
Pallets, Inc., Fraser Industries, Inc. and Interstate Pallet Co.
(collectively, the "FOUNDING COMPANIES") has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement. As of the date hereof, the Company has no
subsidiaries except those listed on
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Exhibit 21 to the Registration Statement. The Company and each of the
Founding Companies are duly qualified to transact business in all
jurisdictions in which the conduct of their respective businesses requires
such qualification, except where the failure to so qualify would not have
a material adverse effect upon the condition (financial or otherwise)
business, management, properties, assets, rights, operations, or prospects
of the Company. The outstanding shares of capital stock of each of the
Founding Companies have been duly authorized and validly issued, are fully
paid and non-assessable. As of the Closing Date (as hereinafter defined),
after giving effect to the Founding Company Mergers, all of the
outstanding shares of capital stock of each of the Founding Companies will
be owned 100% by the Company free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in any of
the Founding Companies are outstanding.
(c) The outstanding shares of Common Stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable;
the Shares to be issued and sold by the Company have been duly authorized
and when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable; and no preemptive rights of
stockholders exist with respect to any of the Shares or the issue and sale
thereof. Neither the filing of the Registration Statement nor the offering
or sale of the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock. Upon
completion of the Founding Company Mergers in the manner described in the
Registration Statement, the shares of Common Stock of the Company to be
issued in such mergers will be duly authorized, validly issued and fully
paid and non-assessable.
(d) The information set forth under the caption "CAPITALIZATION" in
the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the requirements of the Delaware
General Corporation Law ("DGCL").
(e) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares
nor, to the best of the Company's knowledge, instituted proceedings for
that purpose. The Registration Statement contains, and the Prospectus and
any amendments or supplements thereto will contain, all statements which
are required to be stated therein by, and will conform, to the
requirements of the Act and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain,
any untrue statement of a material fact and do not omit, and will not
omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus
and any amendments and supplements thereto do not contain, and will not
contain, any untrue statement of material fact; and do not
01\26\97\36074\014\10UNDAGR.003 -3-
omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Underwriter through the Representatives, specifically for
use in the preparation thereof.
(f) The financial statements of the Company and the separate
financial statements of the Founding Companies, in each case, together
with related notes and schedules, as set forth in the Registration
Statement, present fairly the financial position and the results of
operations and cash flows of the Company and each of the Founding
Companies, respectively, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as disclosed
herein, and all adjustments necessary for a fair presentation of results
for such periods have been made. The summary financial and statistical
data included in the Registration Statement present fairly the information
shown therein and such data have been compiled on a basis consistent with
the financial statements presented therein and the books and records of
the Company and the Founding Companies, as applicable. The pro forma
combined financial statements of the Company and the Founding Companies
(including supplemental pro forma information shown therein) together with
the related notes as set forth in the Registration Statement and the
Prospectus, present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, have been properly compiled on
the pro forma bases described therein and, in the opinion of the Company,
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(g) Xxxxxx Xxxxxxxx LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and
the Rules and Regulations.
(h) Other than as set forth in the Prospectus, there is no action,
suit, claim or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of the Founding Companies before any
court or administrative agency or otherwise which if determined adversely
to the Company or such Founding Company might result in any material
adverse change in the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company and of the Founding Companies or to prevent the consummation of
either the transactions contemplated hereby or the Founding Company
Mergers, in each case except as set forth in the Registration Statement.
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(i) Each of the Company and the Founding Companies has good and
marketable title to all of the properties and assets reflected in the
financial statements (or as described in the Registration Statement)
hereinabove described, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such financial
statements (or as described in the Registration Statement) or which are
not material in amount. Each of the Company and the Founding Companies
occupies their leased properties under valid and binding leases conforming
in all material respects to the description thereof set forth in the
Registration Statement.
(j) Each of the Company and the Founding Companies have filed all
Federal, State, local and foreign income tax returns which have been
required to be filed and have paid all taxes indicated by said returns and
all assessments received by it or any of them to the extent that such
taxes have become due, except for any such returns which the Company or
any Founding Company is contesting in good faith. All tax liabilities have
been adequately provided for in the financial statements of the Company
and the Founding Companies, as applicable.
(k) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise), or prospects of the Company and the Founding
Companies taken as a whole, whether or not occurring in the ordinary
course of business, and there has not been any material transaction
entered into or any material transaction that is probable of being entered
into by the Company or the Founding Companies, other than transactions in
the ordinary course of business and changes and transactions described in
the Registration Statement, as it may be amended or supplemented. Neither
the Company nor any of the Founding Companies has any material contingent
obligations, as applicable, not disclosed in the Company's or such
Founding Company's financial statements, as applicable, the Registration
Statement or the Prospectus.
(l) Neither the Company nor any of the Founding Companies is or with
the giving of notice or lapse of time or both, will be, in violation of or
in default under its charter or by-laws or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a
party or by which it, or any of its properties, is bound and which
violation or default is of material significance in respect of the
condition (financial or otherwise) of the Company and the Founding
Companies taken as a whole, or the business, management, properties,
assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Founding Companies taken as a whole. The
Agreement and each of the Agreements and Plan of Reorganization and Merger
executed in connection with the Founding Company Mergers have been duly
authorized, executed and delivered by each of the parties hereto and
thereto in substantially the form filed as exhibits to the Registration
01\26\97\36074\014\10UNDAGR.003 -5-
Statement. The execution and delivery of this Agreement and each of the
Agreements and Plan of Reorganization and Merger executed in connection
with the Founding Company Mergers and the consummation of the transactions
herein and therein contemplated and the fulfillment of the terms hereof
and thereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any Founding Company is a party, or of the charter or by-laws
of the Company or any of the Founding Companies or any order, rule or
regulation applicable to the Company or any Founding Company of any court
or of any regulatory body or administrative agency or other governmental
body having jurisdiction. No consent, approval, authorization or order of,
or filing with, any court or governmental agency or body is required for
the consummation of the transactions contemplated by this Agreement in
connection with the issuance or sale of the securities by the Company,
except such as have been obtained under the Act and such as may be
required under state securities laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and each of the Agreements and Plan of
Reorganization and Merger and the consummation of the transactions herein
and therein contemplated (except for such additional steps as may be
required by the Commission, the National Association of Securities
Dealers, Inc. (the "NASD") or such additional steps as may be necessary to
qualify the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full
force and effect.
(n) Neither the Company nor, to the best of the Company's knowledge,
any of the Founding Companies has infringed any patents, patent rights,
trade names, trademarks or copyrights, which infringement is material to
the business of the Company or such Founding Company. The Company knows of
no material infringement by others of patents, patent rights, trade names,
trademarks or copyrights owned by or licensed to the Company or any of the
Founding Companies.
(o) Neither the Company, nor to the Company's best knowledge, any of
its affiliates or any of the Founding Companies or any of their
affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of Common Stock to facilitate the sale or resale
of the Shares.
(p) Neither the Company nor any of the Founding Companies is an
"INVESTMENT COMPANY" within the meaning of such term under the Investment
01\26\97\36074\014\10UNDAGR.003 -6-
Company Act of 1940, as amended (the "1940 ACT") and the rules and
regulations of the Commission thereunder.
(q) The Company and each of the Founding Companies maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(r) The Company and each of the Founding Companies carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar industries.
(s) The Company and each of the Founding Companies are in compliance
in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"REPORTABLE EVENT" (as defined in ERISA) has occurred with respect to any
"PENSION PLAN" (as defined in ERISA) for which the Company or any of the
Founding Companies would have any liability; neither the Company nor any
of the Founding Companies has incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "PENSION PLAN" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "CODE"); and each "PENSION PLAN"
for which the Company or any of the Founding Companies would have any
liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(t) The Company confirms as of the date hereof that it and each of
the Founding Companies are in compliance with all provisions of Section 1
of Laws of Florida, Chapter 92-198, AN ACT RELATING TO DISCLOSURE OF DOING
BUSINESS WITH CUBA, and the Company further agrees that if it or any of
the Founding Companies commences engaging in business with the government
of Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission
or with the Florida Department of Banking and Finance (the "DEPARTMENT"),
whichever date is later, or if the information reported or incorporated by
reference in the Prospectus, if any, concerning the Company's business
with Cuba or with any person or affiliate located in Cuba changes
01\26\97\36074\014\10UNDAGR.003 -7-
in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the
Department.
(u) No labor dispute with the employees of the Company or any of the
Founding Companies exists or, to the knowledge of the Company, is
threatened other than such disputes which would not individually or in the
aggregate, have a material adverse effect upon the condition (financial or
otherwise) business, management, properties, assets, rights, operations or
prospects of the Company.
[(v) (i) To the best of the Company's knowledge and belief, except
as set forth in the Agreements and Plan of Reorganization and Merger, (A)
the Company and each of the Founding Companies has conducted its
businesses in compliance with applicable Environmental Laws, including,
without limitation, having all permits, licenses and other approvals and
authorizations necessary for the operation of their respective businesses
as presently conducted, (B) none of the properties owned by the Company or
the Founding Companies contain any Hazardous Substance as a result of any
activity of the Company or any of the Founding Companies in amounts
exceeding the levels permitted by applicable Environmental Laws, (C)
neither the Company nor any of the Founding Companies has received any
notices, demand letters or requests for information from any Federal,
state, local or foreign governmental entity or third party indicating that
the Company or any of the Founding Companies may be in violation of, or
liable under, any Environmental Law in connection with the ownership or
operation of its business, (D) there are no civil, criminal or
administrative actions, suits, demands, clams, hearings, investigations or
proceedings pending or threatened, against the Company or any of the
Founding Companies relating to any violation, or alleged violation, of any
Environmental Law, (E) no reports have been filed, or are required to be
filed, by the Company or any of the Founding Companies concerning the
release of any Hazardous Substance or the threatened or actual violation
of any Environmental Law, (F), no Hazardous Substance has been disposed
of, released or transported in violation of any applicable Environmental
Law from any properties owned by the Company or any of the Founding
Companies as a result of any activity of the Company or any of the
Founding Companies during the time such properties were owned, leased or
operated by the Company or any of the Founding Companies, (G) there have
been no environmental investigations, studies, audits, tests, reviews or
other analysis regarding compliance or non-compliance with any applicable
Environmental Law conducted by or which are in the possession of the
Company or any of the Founding Companies relating to the activities of the
Company or any of the Founding Companies which are not described in the
Agreements and Plan or Reorganization and Merger prior to the date hereof,
(H) there are no underground storage tanks on, in or under any properties
owned by the Company or any of the Founding Companies and no underground
storage tanks have been closed or removed from any of such properties
during the time such properties were owned, leased or operated by the
Company or any of the Founding Companies, (I) there is no asbestos or
asbestos containing material present in any of the properties owned by the
Company
01\26\97\36074\014\10UNDAGR.003 -8-
or any of the Founding Companies, and no asbestos has been removed from
any of such properties during the time such properties were owned, leased
or operated by the Company or any of the Founding Companies, and (J)
neither the Company or any Founding Companies nor any of their respective
properties are subject to any material liabilities or expenditures (fixed
or contingent) relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or claim asserted
or arising under any Environmental Law, except for violations of the
foregoing clauses (A) through (K) that, singly or in the aggregate, would
not reasonably be expected to have a material adverse effect on the
condition or (financial or otherwise) business, management, properties,
assets, rights, operations or prospects of the Company and the Founding
Companies taken as a whole.]
(ii) As used herein, "ENVIRONMENTAL LAW" means any Federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any governmental entity
relating to (A) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource) or to human health or
safety or (B) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances, in each case as amended and
as in effect on the Closing Date. The term Environmental Law includes,
without limitation, (X) the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid
Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Federal Occupational Safety and Health Act of
1970, each as amended and as in effect on the Closing Date, and (Y) any
common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations
for injuries or damages due to , or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
(iii) As used herein, "HAZARDOUS SUBSTANCE" means any substance
presently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive, or dangerous, or otherwise regulated, under
any Environmental Law. Hazardous Substance includes any substance to which
exposure is regulated by any governmental authority or any Environmental
Law including, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance or petroleum or any derivative or
by-product thereof, radon,
01\26\97\36074\014\10UNDAGR.003 -9-
radioactive material, asbestos or asbestos containing material, urea,
formaldehyde, foam insulation, lead or polychlorinated biphenyls.
(w) Neither the Company nor any of the Founding Companies has
violated any federal or state law relating to discrimination in the
hiring, promotion or pay of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated thereunder, which in
each case might result in any material adverse change in the business,
prospects, financial condition or results of operations of the Company and
the Founding Companies taken as a whole.
(x) The Company and each of the Founding Companies have such
permits, licenses, certificates, franchises and authorizations of
governmental or regulatory authorities ("PERMITS"), including, without
limitation, under any applicable Environmental Laws, as are necessary to
own, lease and operate its respective properties and to conduct their
respective businesses; the Company and each of the Founding Companies has
fulfilled and performed all of its material obligations with respect to
such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such
permit; and, except as described in the Prospectus, such permits contain
no restrictions that are materially burdensome to the Company or any of
the Founding Companies.
(y) In the ordinary course of their respective businesses, the
Company and each of the Founding Companies conducts a periodic review of
the effect of Environmental Laws on the business, operations and
properties of the Company and the Founding Companies, in the course of
which the Company and each Founding Company identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a material adverse
effect on the Company and the Founding Companies.
(z) The Company has filed a registration statement pursuant to
Section 12(g) of the Exchange Act, to register the Common Stock, has filed
an application to list the Shares on the NASDAQ NMS, and has received
notification that the listing has been approved, subject to notice of
issuance of the Shares.
(aa) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership
01\26\97\36074\014\10UNDAGR.003 -10-
interest in, the Company or any of the Founding Companies except as
otherwise disclosed in the Registration Statement.
(ab) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
(ac) There is (i) no significant unfair labor practice complaint
pending against the Company or any of the Founding Companies or, to the
best knowledge of the Company, threatened against any of them, before the
National Labor Relations Board or any state or local labor relations
board, and no significant grievance or more significant arbitration
proceeding arising out of or under any collective bargaining agreement is
so pending against the Company or any of the Founding Companies or, to the
best knowledge of the Company, threatened against any of them, and (ii) no
significant strike, labor dispute, slowdown or stoppage pending against
the Company or any of the Founding Companies or, to the best knowledge of
the Company, threatened against it or any of the Founding Companies except
for such actions specified in clause (i) or (ii) above, which, singly or
in the aggregate could not reasonably be expected to have a material
adverse effect on the Company and the Founding Companies, taken as a
whole.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $_____ per share,
the number of Firm Shares set forth opposite the name of each Underwriter
in Schedule I hereof, subject to adjustments in accordance with Section 9
hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made
in New York Clearing House funds by wire transfer of immediately available
funds to the order of the Company against delivery of certificates
therefor to the Representatives for the several accounts of the
Underwriters. Such payment and delivery are to be made at the offices of
Alex. Xxxxx & Sons Incorporated, 0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, at
10:00 a.m., Baltimore time, on the fourth business day after the date of
this Agreement or at such other time and date not later than five business
days thereafter as you and the Company shall agree upon, such time and
date being herein referred to as the "CLOSING DATE." (As used herein,
"BUSINESS DAY" means a day on which the New York Stock Exchange is open
for trading and on which banks in New York are open for business and are
not permitted by law or executive order to be closed.) The certificates
for the Firm Shares will be delivered in such denominations and in such
registrations as the Representatives request in writing not later than the
01\26\97\36074\014\10UNDAGR.003 -11-
second full business day prior to the Closing Date, and will be made
available for inspection by the Representatives at least one business day
prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company hereby grants an option to the several Underwriters to
purchase the Option Shares at the price per share as set forth in
paragraph (a) of this Section 2. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time
before the Closing Date and (ii) only once thereafter within 30 days after
the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company setting forth the number of Option Shares as
to which the several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time
and date at which such certificates are to be delivered. The time and date
at which certificates for Option Shares are to be delivered shall be
determined by the Representatives but shall not be earlier than three nor
later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein
referred to as the "OPTION CLOSING DATE"). If the date of exercise of the
option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The number
of Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to
3,000,000, adjusted by you in such manner as to avoid fractional shares.
The option with respect to the Option Shares granted hereunder may be
exercised only to cover over-allotments in the sale of the Firm Shares by
the Underwriters. You, as Representatives of the several Underwriters, may
cancel such option at any time prior to its expiration by giving written
notice of such cancellation to the Company. To the extent, if any, that
the option is exercised, payment for the Option Shares shall be made on
the Option Closing Date in New York Clearing House funds by wire transfer
of immediately available funds to the order of the Company against
delivery of certificates therefor at the offices of Alex. Xxxxx & Sons
Incorporated, 0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the
public at the initial public offering price set forth in the Prospectus.
The Representatives may from time to time thereafter change the public
offering price and other selling terms. To the extent, if at all, that any
Option Shares are purchased pursuant to Section 2 hereof, the Underwriters
will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance
with a Master
01\26\97\36074\014\10UNDAGR.003 -12-
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (i) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule
430A of the Rules and Regulations is followed, to prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a
Prospectus in a form approved by the Representatives containing
information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and
Regulations, and (ii) not file any amendment to the Registration Statement
or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not
in compliance with the Rules and Regulations.
(b) The Company will advise the Representatives promptly (i) when
the Registration Statement or any post-effective amendment thereto shall
have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the use of the Prospectus or of the institution of any proceedings for
that purpose. The Company will use its best efforts to prevent the
issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(c) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated
in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose,
provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to
continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period
when delivery of a Prospectus is
01\26\97\36074\014\10UNDAGR.003 -13-
required under the Act, as many copies of the Prospectus in final form, or
as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives and
their counsel at or before the Closing Date, three signed copies of the
Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Representatives such number of
copies of the Registration Statement (including such number of copies of
the exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representatives may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (the "EXCHANGE ACT"),
and the rules and regulations of the Commission thereunder, so as to
permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer,
any event shall occur as a result of which, in the judgment of the Company
or in the reasonable opinion of the Underwriters, it becomes necessary to
amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not,
in the light of the circumstances when it is so delivered, be misleading,
or so that the Prospectus will comply with the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail,
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earnings statement
shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of
the Rules and Regulations and will advise you in writing when such
statement has been so made available.
(g) The Company will, for a period of five years from the Closing
Date, deliver to the Representatives copies of annual reports and copies
of all other documents, reports and information furnished by the Company
to its stockholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act
or the Exchange Act. The Company will deliver to the Representatives
annual reports or reports furnished by the Company to its stockholders
with respect to significant subsidiaries, as that term is defined in the
Rules and Regulations, which are not consolidated in the Company's
financial statements.
01\26\97\36074\014\10UNDAGR.003 -14-
(h) No offering, sale, short sale or other disposition of any shares
of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of
Common Stock (or agreement for such) will be made for a period of 180 days
after the date of the Prospectus, directly or indirectly, by the Company
otherwise than hereunder or with the prior written consent of Alex. Xxxxx
& Sons Incorporated except for grants of employee stock options under the
Company's 1996 Stock Option Plan and shares issued (i) in connection with
acquisitions and (ii) pursuant to the exercise of options granted under
the 1996 Stock Option Plan.
(i) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the NASDAQ NMS.
(j) The Company has caused each executive officer, director and
director nominee and stockholder of the Company to furnish to you, on or
prior to the date of this Agreement, a letter or letters, in form and
substance satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose of
any shares of Common Stock of the Company or other capital stock of the
Company, or any other securities convertible, exchangeable or exercisable
for shares of Common Stock or derivative of shares of Common Stock owned
by such person (or as to which such person has the right to direct
disposition of) or request the registration for the offer or sale of any
of the foregoing for a period of 180 days after the date of the
Prospectus, directly or indirectly, except with the prior written consent
of Alex. Xxxxx & Sons Incorporated ("LOCKUP AGREEMENTS").
(k) The Company will: (i) use its best efforts to satisfy all
conditions to consummation of the Founding Company Mergers as set forth in
the Agreements and Plan of Reorganization and Merger with respect thereto;
(ii) use its best efforts to cause each other party to such Agreements and
Plan of Reorganization and Merger to satisfy all conditions to the
consummation of the Founding Company Mergers; and (iii) promptly notify
the Representatives of the occurrence of any event which may result in the
non-consummation of any of the Founding Company Mergers on the Closing
Date.
(l) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Shares and the application of
the proceeds therefrom as may be required in accordance with Rule 463
under the Act.
(m) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as
would require the Company or any of the Founding Companies to register as
an investment company under the 1940 Act.
01\26\97\36074\014\10UNDAGR.003 -15-
(n) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for
the Common Stock.
(o) The Company will not take, 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 securities of the Company.
(p) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company
prior to the Closing Date or any Option Closing Date, as the case may be,
and to satisfy all conditions precedent to the delivery of the Shares.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement and in
connection with the Founding Company Mergers, including, without limiting
the generality of the foregoing, the following: accounting fees of the
Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies
of the Registration Statement, Preliminary Prospectuses, the Prospectus,
this Agreement, the Underwriters' Invitation Letter; the filing fees of
the Commission; the filing fees and expenses (including legal fees and
disbursements) incident to securing any required review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the
sale of the Shares; the Listing Fee of the NASDAQ NMS; and the expenses,
including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Shares under State
securities or Blue Sky laws if any qualification is required. The Company
shall not, however, be required to pay for any of the Underwriters
expenses (other than those related to qualification under NASD regulation
and State securities or Blue Sky laws) except that, if this Agreement
shall not be consummated because the conditions in Section 6 hereof are
not satisfied, or because this Agreement is terminated by the
Representatives pursuant to Section 11 hereof, or by reason of any
failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with
any of the terms hereof on its part to be performed, unless such failure
to satisfy said condition or to comply with said terms be due to the
default or omission of any Underwriter, then the Company shall reimburse
the several Underwriters for reasonable out-of-pocket expenses, including
fees and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for
damages on account of loss of anticipated profits from the sale by them of
the Shares.
01\26\97\36074\014\10UNDAGR.003 -16-
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and
warranties of the Company contained herein, and to the performance by the
Company of its covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by
Rule 424 and Rule 430A of the Rules and Regulations shall have been made,
and any request of the Commission for additional information (to be
included in the Registration Statement or otherwise) shall have been
disclosed to the Representatives and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been taken or, to
the knowledge of the Company, shall be contemplated by the Commission and
no injunction, restraining order, or order of any nature by a Federal or
state court of competent jurisdiction shall have been issued as of the
Closing Date, or the Option Closing Date, as the case may be, which would
prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Xxxxxxx &
Xxxxx L.L.P., counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters
(and stating that it may be relied upon by counsel to the Underwriters) to
the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own or
lease its properties and conduct its business as described in the
Registration Statement; each of the Company's subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement;
the Company and each of the subsidiaries are duly qualified to
transact business in all jurisdictions in which the conduct of their
business requires such qualification, or in which the failure to
qualify would have a materially adverse effect upon the business of
the Company and the subsidiaries taken as a whole; the outstanding
shares of capital stock of each of the subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and
are owned 100% by the Company; to the best of
01\26\97\36074\014\10UNDAGR.003 -17-
such counsel's knowledge, after due inquiry, the outstanding shares
of capital stock of each of the Company's subsidiaries is owned free
and clear of all liens, encumbrances and equities and claims, and no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock of or ownership interests in the
Company's subsidiaries are outstanding; and upon completion of the
Founding Company Mergers, the outstanding shares of capital stock of
each of the Founding Companies will be owned 100% by the Company
and, to the best of such counsel's knowledge, after due inquiry,
upon completion of the Founding Company Mergers, the outstanding
shares of capital stock of each of the Founding Companies will be
owned by the Company free and clear of all liens, encumbrances and
equities and claims, and no options, warrants or other rights to
convert any obligations into any shares of capital stock of
ownership interests in any of the Founding Companies are
outstanding.
(ii) The Company has authorized and outstanding capital stock
as set forth under the caption "CAPITALIZATION" in the Prospectus;
the authorized shares of the Company's Preferred Stock and Common
Stock have been duly authorized; the outstanding shares of the
Company's Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable; all of the Shares conform to
the description thereof contained in the Prospectus; the
certificates for the Shares, assuming they are in the form filed
with the Commission, are in due and proper form; the Shares to be
sold by the Company pursuant to this Agreement and the shares of
Common Stock of the Company to be issued in connection with the
Founding Company Mergers have been duly authorized and will be
validly issued, fully paid and non-assessable when issued and paid
for as contemplated by this Agreement, or upon consummation of the
Founding Company Mergers, as the case may be; and no preemptive
rights of stockholders exist with respect to any of the Shares or
the shares of Common Stock to be issued in the Founding Company
Mergers.
(iii) Except as described in or contemplated by the
Prospectus, to the best of the knowledge of such counsel, after due
inquiry, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of capital stock of the Company and
there are no outstanding or authorized options, warrants or rights
of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of such
stock; and except as described in the
01\26\97\36074\014\10UNDAGR.003 -18-
Prospectus, to the best knowledge of such counsel, after due
inquiry, no holder of any securities of the Company or any other
person has the right, contractual or otherwise, which has not been
satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale
of, any of the Shares or the right to have any shares of Common
Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of
the Registration Statement, to require registration under the Act of
any shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending
or threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material
respects with the requirements of the Act and the Rules and
Regulations (except that such counsel need express no opinion as to
the financial statements and related schedules therein).
(vi) The statements under the captions "ManagementEmployment
Agreements," "- 1996 Stock Option Plan," "Certain Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future Sale"
in the Prospectus, insofar as such statements constitute a summary
of documents referred to therein or matters of law, are accurate
summaries thereof and fairly present in all material respects the
information called for with respect to such documents and matters.
(vii) This Agreement and each of the Agreements and Plan of
Reorganization and Merger with respect to the Founding Company
Mergers (which have been filed with the Commission as exhibits to
the Registration Statement) have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company, except as such obligations may be
subject to or limited by bankruptcy, insolvency and general
principles of equity; the Certificate or Articles of Merger referred
to in such Agreements and the Plan of Reorganization and Merger,
assuming the due filing thereof with the appropriate regulatory
authorities, will cause the statutory merger of the respective
Company's subsidiaries with the Founding Companies that are parties
thereto.
01\26\97\36074\014\10UNDAGR.003 -19-
(viii) The Company is not in violation of its charter or
by-laws and, to the best of such counsel's knowledge, after due
inquiry, the Company is not in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other
agreement, indenture or instrument material to the conduct of the
business of the Company to which the Company is a party or by which
the Company or its property is bound.
(ix) To the best of such counsel's knowledge, after due
inquiry, except as otherwise set forth in the Prospectus all leases
to which the Company is a party are valid and binding and no default
has occurred or is continuing thereunder, which might result in any
material adverse change in the business, prospects, financial
condition or results of operations of the Company, and to the best
of such counsel's knowledge, after due inquiry, the Company enjoys
peaceful and undisturbed possession under all such leases to which
it is a party as lessee with such exceptions as do not materially
interfere with the use made by the Company.
(x) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are
not so filed or described as required.
(xi) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Founding Companies except as set forth in the Prospectus.
(xii) The execution and delivery of this Agreement and each of
the Agreements and Plan of Reorganization and Merger executed and
delivered in connection with the Founding Company Mergers and the
consummation of the transactions herein and therein contemplated do
not and will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or
any court having jurisdiction over the Company or any of its
properties, known to such counsel, the charter or by-laws of the
Company, or any agreement or instrument known to such counsel to
which the Company is a party or by which the Company may be bound or
to which any of the properties of the Company is subject.
(xiii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other
01\26\97\36074\014\10UNDAGR.003 -20-
governmental body is necessary in connection with the execution and
delivery of this Agreement and each of the Agreements and Plan of
Reorganization and Merger and the consummation of the transactions
herein and therein contemplated (other than as may be required by
the NASD or as required by State securities and Blue Sky laws as to
which such counsel need express no opinion) except such as have been
obtained or made, specifying the same.
(xiv) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the
Prospectus, an "INVESTMENT COMPANY" or an entity "CONTROLLED BY AN
INVESTMENT COMPANY", as such terms are defined under the 1940 Act.
(xv) All offer and sales of the Company's capital stock prior
to the date hereof were at all relevant times and the capital stock
to be issued by the Company in the Founding Company Mergers will be,
exempt from the registration requirements of the Act and were or
will be, as the case may be, duly registered or the subject of an
available exemption from the registration requirements of the
applicable State securities or blue sky laws.
In rendering such opinion Xxxxxxx & Xxxxx L.L.P. may rely as to
matters governed by the laws of states other than Delaware and Texas or
Federal laws on local counsel in such jurisdictions, provided that in each
case Xxxxxxx & Xxxxx L.L.P. shall state that they believe that they and
the Underwriters are justified in relying on such other counsel. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement,
at the time it became effective under the Act (but after giving effect to
any modifications incorporated therein pursuant to Rule 430A under the
Act) and as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the Prospectus, or any
supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements, in the
light of the circumstances under which they are made, not misleading
(except that such counsel need express no view as to financial statements,
schedules and statistical information therein). With respect to such
statement, Xxxxxxx & Xxxxx L.L.P. may state that their belief is based
upon the procedures set forth therein, but is without independent check
and verification.
01\26\97\36074\014\10UNDAGR.003 -21-
(c) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of
____________________, counsel for the Fraser, ___________________, counsel
for Ridge and ____________________, counsel for Interstate with respect to
each of their respective clients, each dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters
(and stating that it may be relied upon by counsel to the Underwriters) to
the effect that:
(i) The Founding Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement; each of the Founding
Company's subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement; the Founding Company and
each of the subsidiaries are duly qualified to transact business in
all jurisdictions in which the conduct of their business requires
such qualification, or in which the failure to qualify would have a
materially adverse effect upon the business of the Founding Company
and the subsidiaries taken as a whole; the outstanding shares of
capital stock of each of the subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned
100% by the Founding Company; and, to the best of such counsel's
knowledge, after due inquiry, the outstanding shares of capital
stock of each of the Founding Company's subsidiaries is owned free
and clear of all liens, encumbrances and equities and claims, and no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock of or ownership interests in the
Founding Company's subsidiaries are outstanding.
(ii) To the best of the knowledge of such counsel, after due
inquiry, there are no outstanding securities of the Founding Company
convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of capital stock of the Founding Company
and there are no outstanding or authorized options, warrants or
rights of any character obligating the Founding Company to issue or
sell any shares of its capital stock or any securities convertible
or exchangeable into or evidencing the right to purchase or
subscribe for any shares of such stock.
01\26\97\36074\014\10UNDAGR.003 -22-
(iii) The Agreement and Plan of Reorganization and Merger with
respect to the Founding Company Mergers has been duly authorized,
executed and delivered by the Founding Company and constitutes the
legal, valid and binding obligations of the Founding Company, except
as such obligations may be subject to or limited by bankruptcy,
insolvency and general principles of equity; the Certificate or
Articles of Merger referred to in such Agreement and the Plan of
Reorganization and Merger, assuming the due filing thereof with the
appropriate regulatory authorities will cause the statutory merger
of the Company's subsidiary with the Founding Company.
(iv) The Founding Company is not in violation of its charter
or by-laws and, to the best of such counsel's knowledge, after due
inquiry, the Founding Company is not in default in the performance
of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material to the conduct of
the business of the Founding Company, to which the Founding Company
is a party or by which the Founding Company or its property is
bound.
(v) To the best of such counsel's knowledge, after due
inquiry, except as otherwise set forth in the Prospectus all leases
to which the Founding Company is a party are valid and binding and
no default has occurred or is continuing thereunder, which might
result in any material adverse change in the business, prospects,
financial condition or results of operations of the Founding
Company, and to the best of such counsel's knowledge, after due
inquiry, the Founding Company enjoys peaceful and undisturbed
possession under all such leases to which it is a party as lessee
with such exceptions as do not materially interfere with the use
made by the Founding Company.
(vi) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Founding Company
except as set forth in the Prospectus.
(vii) The execution and delivery of the Agreement and Plan of
Reorganization and Merger executed and delivered in connection with
the Founding Company Merger and the consummation of the transactions
therein contemplated do not and will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a
default under, any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over
the Company or any of its properties, known to such counsel, the
charter or by-laws of the Founding Company, or any agreement or
instrument
01\26\97\36074\014\10UNDAGR.003 -23-
known to such counsel to which the Founding Company is a party or by
which the Founding Company may be bound or to which any of the
properties of the Founding Company is subject.
(viii) The Agreement and Plan of Organization and Merger has
been duly authorized, executed and delivered by the Founding
Company.
(ix) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the
execution and delivery of the Agreement and Plan of Reorganization
and Merger and the consummation of the transactions therein
contemplated, except such as have been obtained or made, specifying
the same.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention
of such counsel which leads them to believe that (i) the Registration
Statement, at the time it became effective under the Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant
to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as
to financial statements, schedules and statistical information therein).
With respect to such statement, such counsel may state that their belief
is based upon the procedures set forth therein, but is without independent
check and verification.
(d) The Representatives shall have received from XxXxxxxxx, Will &
Xxxxx, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, substantially to the effect
specified in subparagraphs (ii), (iv) and (xii) of Paragraph (b) of this
Section 6, and that the Company is a validly existing corporation under
the laws of the State of Delaware. In rendering such opinion XxXxxxxxx,
Will & Xxxxx may rely as to all matters governed other than by the laws of
the State of Delaware or Federal laws on the opinion of counsel referred
to in Paragraph (b) of this Section 6. In addition to the matters set
forth above, such opinion shall also include a statement to the effect
that nothing has come to the attention of such counsel which leads them to
believe that (i) the Registration Statement, or any amendment thereto, as
of the time it became effective under the Act (but after giving effect to
any modifications incorporated therein pursuant to Rule
01\26\97\36074\014\10UNDAGR.003 -24-
430A under the Act) as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant
to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact, necessary in order to
make the statements, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as
to financial statements, schedules and statistical information therein).
With respect to such statement, XxXxxxxxx, Will & Xxxxx may state that
their belief is based upon the procedures set forth therein, but is
without independent check and verification.
(e) The Representatives shall have received, on the date hereof, the
Closing Date and the Option Closing Date, as the case may be, letters
dated the date hereof, the Closing Date or the Option Closing Date, as the
case may be, in form and substance satisfactory to the Representatives, of
Xxxxxx Xxxxxxxx LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules of the Company and the Founding
Companies examined by them and included in the Registration Statement
comply in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations;
and containing such other statements and information as is ordinarily
included in accountants' "COMFORT LETTERS" to Underwriters with respect to
the financial statements and certain financial and statistical information
contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates
of the Chief Executive Officer and the Chief Accounting Officer of the
Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the
Registrations Statement has been issued, and, to his knowledge, no
proceedings for such purpose have been taken or are contemplated by
the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
01\26\97\36074\014\10UNDAGR.003 -25-
(iv) He has carefully examined the Registration Statement and
the Prospectus and as of the effective date of the Registration
Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and
Prospectus did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading, and since the effective date of the Registration
Statement, no event has occurred which should have been set forth in
a supplement to or an amendment of the Prospectus which has not been
so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a
prospective material adverse change in or affecting the condition
(financial or otherwise) of the Company or any of the Founding
Companies taken as a whole or the earnings, business, management,
properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company or any of the Founding
Companies taken as a whole, whether or not arising in the ordinary
course of business.
(g) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters
as the Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been approved
for designation upon notice of issuance on the NASDAQ NMS.
(i) The Lockup Agreements described in Section 4(j) are in full
force and effect.
(j) Each of the Founding Company Mergers shall have been completed
upon the terms set forth in the Prospectus simultaneously with the closing
of the purchase of the Firm Shares by the Underwriters.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in
all material respects satisfactory to the Representatives and to
XxXxxxxxx, Will & Xxxxx, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled and such failure is not attributable to any action or omission
of the Underwriters, the obligations of the Underwriters hereunder may be
terminated by the Representatives by notifying
01\26\97\36074\014\10UNDAGR.003 -26-
the Company of such termination in writing or by telegram at or prior to
the Closing Date or the Option Closing Date, as the case may be.
In such event, the Company and the Underwriters shall not be under
any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of
the Shares required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the
Option Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in
effect or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities
to which such Underwriter or any such controlling person may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage or
liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Shares, whether or not
such Underwriter or controlling person is a party to any action or
proceeding; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such amendment
or supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically
for use in the preparation thereof. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities to which the
01\26\97\36074\014\10UNDAGR.003 -27-
Company or any such director, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however,
that each Underwriter will be liable in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission has been made in the Registration Statement,
any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically
for use in the preparation thereof; and provided further, that the Company
shall not be liable to the Underwriters under the indemnity agreement in
subsection (a) with respect to any Prospectus to the extent that any such
loss, claim, damage or liability of the Underwriters results from the fact
that such Underwriters sold Shares to a person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus as then amended or
supplemented in any case where such delivery is required by the Act if the
Company had previously furnished copies thereof in sufficient quantities
to the Underwriters and the loss, claim, damage or liability of the
Underwriters results from an untrue statement or omission of a material
fact contained in the Prospectus which was identified in writing at such
time by the Company to the Underwriters and corrected in the Prospectus as
then amended or supplemented. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 8, such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to
any party who shall fail to give notice as provided in this Section 8(c)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or
they may have to the indemnified party for contribution or otherwise than
on account of the provisions of Section 8(a) or (b). In case any such
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be
01\26\97\36074\014\10UNDAGR.003 -28-
entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party
and shall pay as incurred the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as
incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have failed
to assume the defense and employ counsel acceptable to the indemnified
party within a reasonable period of time after notice of commencement of
the action. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant
to Section 8(a) and by the Company in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement
or judgment. In addition, the indemnifying party will not, without the
prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to
such claim, action or proceeding) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from
all liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on
the one hand
01\26\97\36074\014\10UNDAGR.003 -29-
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities,
(or actions or proceedings in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Section 8(d)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
subsection (d), (i) no Underwriter shall be required to contribute any
amount in excess of the underwriting discounts and commissions applicable
to the Shares purchased by such Underwriter and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon him or it by any other
contributing party and consents to the service of such process and agrees
that any other contributing party may join him or it as an additional
defendant in any such proceeding in which such other contributing party is
a party.
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims,
01\26\97\36074\014\10UNDAGR.003 -30-
damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such
date (otherwise than by reason of any default on the part of the Company,
you, as Representatives of the Underwriters, shall use your reasonable
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as
may be agreed upon and upon the terms set forth herein, the Firm Shares or
Option Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any
others, to purchase the Firm Shares or Option Shares, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then
(a) if the aggregate number of shares with respect to which such default
shall occur does not exceed 10% of the Firm Shares or Option Shares, as
the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm
Shares or Option Shares, as the case may be, which they are obligated to
purchase hereunder, to purchase the Firm Shares or Option Shares, as the
case may be, which such defaulting Underwriter or Underwriters failed to
purchase, or (b) if the aggregate number of shares of Firm Shares or
Option Shares, as the case may be, with respect to which such default
shall occur exceeds 10% of the Firm Shares or Option Shares, as the case
may be, covered hereby, the Company or you as the Representatives of the
Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this
Agreement without liability on the part of the non-defaulting Underwriters
or of the Company except to the extent provided in Section 8 hereof. In
the event of a default by any Underwriter or Underwriters, as set forth in
this Section 9, the Closing Date or Option Closing Date, as the case may
be, may be postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "UNDERWRITER" includes any person
substituted for a defaulting Underwriter. Any
01\26\97\36074\014\10UNDAGR.003 -31-
action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter
under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Alex.
Xxxxx & Sons Incorporated, 0 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000,
Attention: __________; with a copy to Alex. Xxxxx & Sons Incorporated, 0
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000, Attention: General Counsel
and, if to the Company to PalEx, Inc., 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxx X. Xxxxxxxx, Xx.; with a copy to
Xxxxxxx & Xxxxx L.L.P., Texas Commerce Tower, 000 Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000, Attention: Xxxx X. Xxxxxxxx.
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company as
follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following
has occurred: (i) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition (financial or otherwise) of the
Company and the Founding Companies taken as a whole or the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the Founding
Companies taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration
of war or national emergency or other national or international calamity
or crisis or change in economic or political conditions if the effect of
such outbreak, escalation, declaration, emergency, calamity, crisis or
change on the financial markets of the United States would, in your
reasonable judgment, make it impracticable to market the Shares or to
enforce contracts for the sale of the Shares, (iii) suspension of trading
in securities generally on the New York Stock Exchange or the American
Stock Exchange or limitation on prices (other than limitations on hours or
numbers of days of trading) for securities on either such Exchange, (iv)
the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects or may materially
and adversely affect the business or operations of the Company, (v)
declaration of a banking
01\26\97\36074\014\10UNDAGR.003 -32-
moratorium by United States or New York State authorities; (vi) the
suspension of trading of the Company's Common Stock by the Commission on
the NASDAQ NMS or (vii) the taking of any action by any governmental body
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; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any
right or obligation hereunder. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company
for inclusion in any Prospectus or the Registration Statement consists of
the information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), legends
required by Item 502(d) of Regulation S-K under the Act and certain
information under the caption "UNDERWRITING" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation
made by or on behalf of any Underwriter or controlling person of any
Underwriter, or by or on behalf of the Company or its directors or
officers or any person controlling the Company and (c) acceptance of the
Shares and payment therefor pursuant to this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
01\26\97\36074\014\10UNDAGR.003 -33-
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
PALEX, INC.
By:
President
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
ALEX. XXXXX & SONS INCORPORATED
XXXXXXXXXX SECURITIES
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Xxxxx & Sons Incorporated
By:
Authorized Officer
01\26\97\36074\014\10UNDAGR.003 -34-
SCHEDULE I
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM
SHARES TO
UNDERWRITER BE PURCHASED
Alex. Xxxxx & Sons Incorporated.........................
Xxxxxxxxxx Securities...................................
Total 3,000,000
01\26\97\36074\014\10UNDAGR.003 -35-
