Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Industrial Distribution Group 148 763K
2: EX-1.1 Form of Purchase Agreement 51 223K
3: EX-4.1 Form of Common Stock Certificate 2 11K
4: EX-5.1 Opinion of Kilpatrick Stockton LLP 2 10K
5: EX-10.5 Stock Incentive Plan 34 96K
6: EX-10.9 Form of Proposed Indemnification Agreement 5 21K
7: EX-21.1 Subsidiaries of the Company 1 5K
8: EX-23.2 Consent of Arthur Andersen LLP 1 6K
9: EX-23.3 Consent of Miller & Co. LLP 1 6K
10: EX-23.4 Consent of Schenck & Assoc.,Sc 1 6K
11: EX-23.5 Consent of Baird, Kurtz & Dobson 1 6K
EXHIBIT 1.1
DRAFT OF SEPTEMBER 16, 1997
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INDUSTRIAL DISTRIBUTION GROUP, INC.
(a Delaware corporation)
3,000,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: September __, 1997
TABLE OF CONTENTS
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PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Representations and Warranties by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(i) Compliance with Registration Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 3
(ii) Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(iii) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(iv) No Material Adverse Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(v) Good Standing of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(vi) Good Standing of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(vii) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(viii) Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(ix) Authorization and Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . 6
(x) Absence of Defaults and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(xi) Absence of Labor Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(xii) Absence of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(xiii) Accuracy of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(xiv) Possession of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xv) Absence of Further Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xvi) Possession of Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xvii) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xviii) Compliance with Cuba Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(xix) Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(xx) Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(xxi) Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xxii) Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xxiii) Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xxiv) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xxv) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xxvi) Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxvii) Proper Completion of Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2. Sale and Delivery to Underwriters; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Initial Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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(b) Option Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Denominations; Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Compliance with Securities Regulations and Commission Requests . . . . . . . . . . . . . . . . . . . 13
(b) Filing of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Delivery of Registration Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Delivery of Prospectuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) Continued Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Blue Sky Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Rule 158 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) Restriction on Sale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(k) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Compliance with NASD Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Compliance with Rule 463 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(n) Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5. Conditions of Underwriters' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Effectiveness of Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Opinion of Counsel for Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Opinion of Counsel for Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Accountant's Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(f) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(g) Approval of Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) No Objection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) Lock-up Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(j) Combination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(k) Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(m) Conditions to Purchase of Option Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(o) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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SECTION 6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Indemnification of Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Indemnification of Company, Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Actions against Parties; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Settlement without Consent if Failure to Reimburse . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Indemnification for Reserved Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8. Representations, Warranties and Agreements to Survive Delivery . . . . . . . . . . . . . . . . . . . 24
SECTION 9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Termination; General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10. Default by One or More of the Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 12. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13. GOVERNING LAW AND TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 14. Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch A-1
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch B-1
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch C-1
SCHEDULE D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch D-1
Exhibit A-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1-1
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Annex A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex A-1
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INDUSTRIAL DISTRIBUTION GROUP, INC.
(a Delaware corporation)
3,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
September __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
The Robinson-Humphrey Company, Inc.
as Representative(s) of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Industrial Distribution Group, Inc., a Delaware corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other
Underwriters named in Schedule A hereto (collectively, the "Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Merrill Lynch and The
Robinson-Humphrey Company, Inc. are acting as representative(s) (in such
capacity, the "Representative(s)"), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective numbers of shares of Common Stock, par value $.01 per share,
of the Company ("Common Stock") set forth in said Schedule A, and with respect
to the grant by the Company to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 450,000 additional shares of Common Stock to cover over-allotments, if
any. The aforesaid 3,000,000 shares of Common Stock (the "Initial Securities")
to be purchased by the Underwriters and all or any part of the 450,000 shares
of Common Stock subject to the option described in Section 2(b) hereof (the
"Option Securities") are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 150,000 shares of
the Securities to be purchased by the Underwriters (the "Reserved Securities")
shall be reserved for sale by the Underwriters to certain eligible employees,
persons having business relationships with the Company and certain other
persons designated by the Company, as part of the distribution of the
Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association
of Securities Dealers, Inc. and all other applicable laws, rules and
regulations. To the extent that such Reserved Securities are not orally
confirmed for purchase by such eligible employees and persons having business
relationships with the Company by the end of the first business day after the
date of this Agreement, such Reserved Securities may be offered to the public
as part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-31539) covering the
registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). The information included in such prospectus or in such Term Sheet, as
the case may be, that was omitted from such registration statement at the time
it became effective but that is deemed to be part of such registration
statement at the time it became effective (a) pursuant to paragraph (b) of Rule
430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph (d)
of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, is herein called a "preliminary prospectus." Such
registration statement, including the exhibits thereto and schedules thereto at
the time it became effective and including the Rule 430A Information and the
Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
1933 Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in the
form first furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the "Prospectus." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary prospectus
dated August 29, 1997 together with the Term Sheet and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the Prospectus or any Term Sheet or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
2
At the Closing Time (defined below), the Company will or will cause
one or more subsidiaries of the Company to merge with each of the companies
listed on Schedule D (each a "Founding Company" and, collectively, the
"Founding Companies"), in each case pursuant to an agreement and plan of merger
and/or reorganization (each an "Acquisition Agreement" and, collectively, the
"Acquisition Agreements"), as described in the Prospectus under "The
Combination" and "Certain Transactions" (collectively, the "Combination").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof (except for the
representation set forth in paragraph (xxvii) which is given only as of the
Closing Time and as of each Delivery Date), and agrees with each Underwriter,
as follows:
(i) Compliance with Registration Requirements. Each of
the Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act, and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act, and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective, and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at
the time the Prospectus or any such amendment or supplement was issued
and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434,
and the Prospectus shall not be "materially different", as such term
is used in Rule 434, from the prospectus included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through Merrill Lynch expressly
for use in the Registration Statement or Prospectus or any amendments
or supplement thereto.
3
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering
was substantially identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii) Independent Accountants. Each of the accountants who
certified the financial statements (including the historical financial
statements) and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933
Act and the 1933 Act Regulations.
(iii) Financial Statements. The historical financial
statements included in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the
financial position of the Company, each Founding Company and their
respective consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Company, each Founding Company and their respective consolidated
subsidiaries for the periods specified; each of said financial
statements has been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma combined
financial statements and the related notes thereto included 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 combined
financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein.
No other financial statements or schedules of the Company or the
Founding Companies are required by the 1933 Act or the 1933 Act
Regulations to be included in the Registration Statement or the
Prospectus.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries (defined below)
considered as one enterprise, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its
Subsidiaries, other than those in the ordinary course of business,
which are material with
4
respect to the Company and its Subsidiaries considered as one
enterprise, (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock and (D) except for regular dividends on the capital stock of the
Founding Companies in amounts per share that are consistent with past
practice, there has been no dividend or distribution of any kind
declared, paid or made by any Founding Company on any class of its
capital stock.
(v) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of
the Company, including without limitation each of the Founding
Companies and each of their respective subsidiaries (each a
"Subsidiary" and, collectively, the "Subsidiaries"), has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse Effect; all of
the issued and outstanding capital stock of each such Subsidiary has
been duly authorized and validly issued, is fully paid and
non-assessable and after giving effect to the Combination will be
owned by the Company, directly or through Subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity 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 Subsidiary are outstanding; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
The only subsidiaries of the Company immediately after giving effect
to the Combination will be the Subsidiaries listed on Exhibit 21.1 to
the Registration Statement.
(vii) Capitalization. As of the Closing Time, the Company
has authorized capital stock consisting of 50,000,000 shares of Common
Stock, par value $.01 per share, and 10,000,000 shares of Preferred
Stock, par value $.10 per share (the "Preferred Stock"); prior to the
closing of the transactions contemplated by the Acquisition Agreements
and the issuance of shares of Common Stock as contemplated
5
thereby and hereby, the Company had issued and outstanding 129,749
shares of Common Stock and no shares of Preferred Stock; upon
consummation of the Combination and the issuance of 3,330,224 shares
of Common Stock as contemplated by the Acquisition Agreements (which,
together the 129,749 shares of Common Stock issued prior to the
Combination, are all the shares of Common Stock issued or to be issued
prior to the issuance and sale of the Securities), without giving
effect to the issuance of the Securities pursuant to the terms of this
Agreement, the Company will have issued and outstanding 3,459,973
shares of Common Stock and no shares of Preferred Stock. All of such
shares of Common Stock have been duly authorized and, when issued and
delivered to the purchasers thereof against payment therefor as
provided in the Acquisition Agreements, will be validly issued, fully
paid and nonassessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company. Except as
described in the Prospectus, there are no outstanding options,
warrants or other rights calling for the issuance of, and there are no
commitments to issue any shares of, capital stock of the Company or
any security convertible into or exchangeable or exercisable for
capital stock of the Company.
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid
and non-assessable; the Common Stock conforms to all statements
relating thereto contained in the Prospectus and such description
conforms to the rights set forth in the instruments defining the same;
no holder of the Securities will be subject to personal liability
solely by reason of being such a holder; and the issuance of the
Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the
Company nor any Subsidiary is in violation of its charter or bylaws or
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or such Subsidiary
is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or such Subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and in the Registration Statement
(including the Combination and the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder have been
duly authorized by all necessary corporate action and do not and will
not, whether with
6
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any Subsidiary pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that have been or will be waived by the beneficiary
thereof at the Closing Time or would not result in a Material Adverse
Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any Subsidiary
or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their assets, properties or operations except
such violations that would not have a Material Adverse Effect. As
used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any Subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the actual
knowledge of Martin S. Pinson, Douglass C. Smith, Jack P. Healy and
the president of each Subsidiary (the "Designated Officers"), is
imminent, and the Designated Offices are not aware of any existing or
imminent labor disturbance by the employees of any of its or any
Subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any Subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
Combination or the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder or the
performance by the Company or any Subsidiary of their obligations in
connection with the Combination; the aggregate of all pending legal or
governmental proceedings to which the Company or any Subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse
Effect.
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto which
have not been so described and filed as required.
7
(xiv) Possession of Intellectual Property. The Company and
the Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them and to be
operated following the Combination, and neither the Company nor any of
its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of the Company or any of its Subsidiaries
therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance
or sale of the Securities hereunder or the consummation of the
Combination or the transactions contemplated by this Agreement, except
(i) such as have been already obtained or as may be required under the
1933 Act or the 1933 Act Regulations or state securities laws and (ii)
such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved
Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and
its Subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them, except where the failure to possess the same would not have a
Material Adverse Effect; the Company and its Subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or
in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its Subsidiaries
have good and marketable title to all real property owned by the
Company or any Subsidiary and good title to all other properties owned
by any of them, in each case, free and clear of all
8
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except liens for taxes not yet due and
payable except such as (a) are described in the Prospectus or (b)
would not reasonably be expected to have a Material Adverse Effect;
and all of the leases and subleases material to the business of the
Company and the Subsidiaries, considered as one enterprise are in full
force and effect, and neither the Company nor any Subsidiary has
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such Subsidiary
to the continued possession of the leased or subleased premises under
any such lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with
Cuba, codified as Section 517.075 of the Florida statutes, and the
rules and regulations thereunder (collectively, the "Cuba Act") or is
exempt therefrom.
(xix) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any Subsidiary is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code or
policy, or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to Hazardous Materials (as hereinafter defined) or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
Hazardous Materials or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and
its Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company or any Subsidiary and (D) there are no events
or circumstances that might reasonably be expected to form the basis
of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its Subsidiaries relating
to Hazardous Materials or any Environmental Laws. "Hazardous
Materials"
9
mean any and all materials whose presence, quantities or
concentrations are or are reasonably likely to be regulated under any
Environmental Law.
(xxi) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xxii) Tax Returns. The Company and each Subsidiary 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 and are not being contested in
good faith, except for the filing of those returns, and the paying of
those taxes, the failure to file or pay, respectively, individually or
in the aggregate, would not have a Material Adverse Effect. All tax
liabilities have been adequately provided for in the financial
statements of the Company and the Subsidiaries, as applicable.
(xxiii) Certain Actions. Neither the Company nor, to the
Company's best knowledge, any of its affiliates or any of the
Subsidiaries or any of their affiliates has taken or will take,
directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
shares of Common Stock to facilitate the sale or resale of the
Securities.
(xxiv) Insurance. The Company and the Subsidiaries carry,
or are covered by, insurance in such amounts and covering such risks
as is reasonably adequate for the conduct of their respective
businesses and the value of their respective properties and as is
customary for companies in the Company's industry.
(xxv) ERISA. The Company and the Subsidiaries 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 Subsidiaries would have any liability;
neither the Company nor any of the Subsidiaries has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan," or (ii)
Section 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 Subsidiaries 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.
10
(xxvi) Related Party Transactions. No relationship, direct
or indirect, exists between or among the Company and its Subsidiaries
on the one hand, and the directors, officers, shareholders, customers
or suppliers of the Company and its Subsidiaries on the other hand,
which is required to be described in the Prospectus which is not so
described.
(xxvii) Proper Completion of Combination. The Closing (as
defined in each Acquisition Agreement) contemplated by each
Acquisition Agreement has occurred or is occurring simultaneously with
the Closing Time and all conditions to the obligations of the Company
under each Acquisition Agreement have been satisfied on or prior to
the Closing Time, except for waivers thereof as to which the
Underwriters have been informed in writing by the Company at or prior
to the Closing Time. At or prior to the Closing Time, each Founding
Company has been or will be merged with and into, or acquired by, the
Company or a Subsidiary of the Company upon the terms described in the
Prospectus, and each Founding Company shall be a wholly-owned direct
or indirect subsidiary of the Company.
(xxviii) Reserved Shares. Each of the persons identified by
the Company to the Underwriters to receive Reserved Shares is a
citizen of the United States and currently is a resident of one of the
United States.
(b) Officer's Certificates. Any certificate signed by any
officer of the Company or any of its Subsidiaries delivered to the
Representative(s) or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. 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
Underwriters, severally and not jointly, to purchase up to an additional
450,000 shares of Common Stock at the price per share set forth in Schedule B,
less an amount per share equal to any dividends or distributions declared by
the Company and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering
11
and distribution of the Initial Securities upon notice by the Representative(s)
to the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representative(s),
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Kilpatrick Stockton LLP, 1100 Peachtree Street Atlanta, Georgia, or at such
other place as shall be agreed upon by the Representative(s) and the Company,
at 9:30 A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date hereof
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representative(s) and the Company (such time and date of payment
and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representative(s) and the Company, on each Date of Delivery as specified in the
notice from the Representative(s) to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery
to the Representative(s) for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representative(s), for its account, to
accept delivery of, receipt for, and make payment of the purchase price for,
the Initial Securities and the Option Securities, if any, which it has agreed
to purchase. Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations
and registered in such names as the Representative(s) may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities
12
and the Option Securities, if any, will be made available for examination and
packaging by the Representative(s) in the City of New York not later than 10:00
A.M. (Eastern time) on the business day immediately prior to the Closing Time
or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with
each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify the
Representative(s) immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become effective,
or any supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the
Representative(s) notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to
the Prospectus and will furnish the Representative(s) with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the
Representative(s) or counsel for the Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Representative(s) and counsel for the
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representative(s), without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits)
for each of the Underwriters. The copies of the Registration Statement and
each amendment thereto furnished to the Underwriters will be substantially
identical to the electronically
13
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will substantially identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representative(s) may designate and
to maintain such qualifications in effect for a period of not less than one
year from the later of the effective date of the Registration Statement and any
Rule 462(b) Registration Statement; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification
14
in effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and
maintain the listing of the Securities on the New York Stock Exchange under the
symbol IDG and will file with the New York Stock Exchange all documents and
notices required by the New York Stock Exchange of companies that have
securities that are traded on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectus, the Company will not, without the prior
written consent of Merrill Lynch, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder, (B) any
shares of Common Stock issued by the Company to the holders of securities of
the Founding Companies on the Closing Date in connection with the Combination,
(C) any shares of Common Stock issued by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
hereof and referred to in the Prospectus, (D) any shares of Common Stock issued
or options to purchase Common Stock granted pursuant to existing employee
benefit plans of the Company referred to in the Prospectus or (E) any shares of
Common Stock issued pursuant to any non-employee director stock plan or
dividend reinvestment plan.
(k) Reporting Requirements. The Company, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the 1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment,
15
pledge or hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons will
need to be so restricted. At the request of the Underwriters, the Company will
direct the transfer agent to place a stop transfer restriction upon such
securities for such period of time. Should the Company release, or seek to
release, from such restrictions any of the Reserved Securities, the Company
agrees to reimburse the Underwriters for any reasonable expenses (including,
without limitation, legal expenses) they incur in connection with such release.
(m) Compliance with Rule 463. The Company shall report to the
Commission its use of proceeds from the sale of the Securities as required
pursuant to Rule 463 of the 1933 Act Regulations.
(n) Combination. The Company will (i) use its best efforts to
satisfy all conditions to the consummation of the Combination, (ii) use its
best efforts to cause each Founding Company to satisfy all conditions to the
consummation of the Combination and (iii) promptly notify the Representatives
of the occurrence of any event which may result in the non-consummation of the
Combination.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will
pay all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to
the Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Securities to
the Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectus and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the
Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities, (x) the fees and
expenses incurred in connection with the inclusion of the Securities on the New
York Stock Exchange and (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to employees and others having a business relationship
with the Company.
16
(b) Termination of Agreement. If this Agreement is terminated by
the Representative(s) in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The
obligations of the several Underwriters hereunder are subject to the accuracy
of the representations and warranties of the Company contained in Section 1
hereof or in certificates of any officer of the Company or any subsidiary of
the Company delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective, and at Closing Time, no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriters. A
prospectus containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A) or, if the Company has elected
to rely upon Rule 434, a Term Sheet shall have been filed with the Commission
in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Representative(s) shall have received the favorable opinion, dated as of
Closing Time, of Kilpatrick Stockton LLP, counsel for the Company, in form and
substance reasonably satisfactory to counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Underwriters may reasonably request, and to the extent
necessary, Kilpatrick Stockton LLP may rely as to matters of other than the
laws of the State of Georgia, the General Corporation Law of the State of
Delaware and federal laws on opinions of local counsel reasonably satisfactory
to counsel to the Underwriters. Such counsel may also state that they have
relied, as to factual matters, upon certificates of officers of the Company and
subsidiaries and certificates of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representative(s) shall have received the favorable opinion, dated as of
Closing Time, of Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters with respect to the matters set forth in clauses
(i), (ii), (v), (vi) (solely as to preemptive or other similar rights arising
by operation of law or under the charter or bylaws of the Company), (viii)
through (x), inclusive, (xii), (xiv) (solely as to the information in the
Prospectus under "Description of Capital Stock--Common Stock") and the
penultimate paragraph of Exhibit A hereto. In giving such opinion such counsel
17
may rely, as to all matters governed by the laws of jurisdictions other than
the law of the State of Illinois, the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representative(s). Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representative(s) shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.
(e) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Representative(s) shall have received from each of Arthur
Andersen LLP, Miller & Co. LLP, Schenck & Associates, SC and Baird, Kurtz &
Dobson a letter dated such date, in form and substance satisfactory to the
Representative(s), together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information prepared
by them contained in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the
Representative(s) shall have received from each of Arthur Andersen LLP, Miller
& Co. LLP, Schenck & Associates, SC and Baird, Kurtz & Dobson a letter, dated
as of Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall
have been approved for inclusion on the New York Stock Exchange, subject only
to official notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
18
(i) Lock-up Agreements. At the date of this Agreement, the
Representative(s) shall have received an agreement substantially in the form of
Exhibit B (a "Lock-up Agreement") hereto signed by the persons listed on
Schedule C hereto provided, however, that such persons may during the period
set forth in a Lock-up Agreement transfer Common Stock by way of off-market
transfers to those of their respective affiliates (as that term is defined in
Rule 144 under the Act) which agree in writing with the Representatives to be
bound by the provisions of a Lock-up Agreement, and may also during the period
set forth in the Lock-up Agreement pledge Common Stock to any person which,
prior to such pledge taking effect, agrees to be bound by the provisions of the
Lock-up Agreement.
(j) Combination. Each Founding Company shall have been merged
with and into, or acquired by, the Company or a Subsidiary of the Company upon
the terms described in the Prospectus simultaneously with the closing of the
purchase of the Initial Shares by the Underwriters, and each Founding Company
shall be a wholly-owned direct or indirect subsidiary of the Company.
(k) Credit Agreement. At or before Closing Time, the Company
shall have entered into a credit agreement with _______________ pursuant to
which the Company shall have available to it a credit facility in the amount of
$__________.
(l) Employment Agreement. At or before Closing Time, the Company
shall have entered into an employment agreement with each of Martin S. Pinson,
Douglass C. Smith and Jack P. Healey.
(m) Conditions to Purchase of Option Securities. In the event
that the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any Subsidiary hereunder shall be true
and correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Representative(s) shall have received:
(i) Officers' Certificate. A certificate, dated such
Date of Delivery, of the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(d) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for Company. The favorable
opinion of Kilpatrick Stockton LLP, counsel for the Company, in form
and substance reasonably satisfactory to counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
19
(iii) Opinion of Counsel for Underwriters. The favorable
opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(iv) Bring-down Comfort Letter. A letter from each of
Arthur Andersen LLP, Miller & Co. LLP, Schenck & Associates, SC and
Baird, Kurtz & Dobson, in form and substance satisfactory to the
Representative(s) and dated such Date of Delivery, substantially in
the same form and substance as the letter furnished to the
Representative(s) pursuant to Section 5(f) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph
shall be a date not more than five days prior to such Date of
Delivery.
(n) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance
to the Representative(s) and counsel for the Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representative(s) by notice to the Company
at any time at or prior to Closing Time or such Date of Delivery, as the case
may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7
and 8 shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the
20
Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above, or
pursuant to the terms of that certain letter agreement between the
Representatives and the Company of even date herewith;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further,
that the Company will not be liable to an Underwriter with respect to any
preliminary prospectus to the extent that the Company shall sustain the burden
of proving that any such loss, liability, claim, damage or expense resulted
from the fact that such Underwriter, in contravention of a requirement of this
Agreement or applicable law, sold Securities to a person to whom such
Underwriter failed to send or give, at or prior to the Closing Date, a copy of
the final Prospectus as then amended or supplemented if (i) the Company has
previously furnished copies thereof (sufficiently in advance of the Closing
Date to allow for distribution by the Closing Date) to the Underwriters and the
loss, liability, claim, damage or expense of such Underwriter resulted from an
untrue statement or omission or alleged untrue statement or omission of a
material fact contained in or omitted from the preliminary prospectus which was
corrected in the final Prospectus as, if applicable, amended or supplemented
prior to the Closing Date and (ii) such failure to give or send such final
Prospectus by the Closing Date to the party or parties asserting such loss,
liability, claim, damage or expense would have constituted the sole defense to
the claim asserted by such person.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within
21
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Merrill Lynch
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying
22
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with
the offer and sale of the Reserved Securities, the Company agrees, promptly
upon a request in writing, to indemnify and hold harmless the Underwriters from
and against any and all losses, liabilities, claims, damages and expenses
incurred by them as a result of the failure of eligible employees and persons
having a business relationship with the Company to pay for and accept delivery
of Reserved Securities which, by the end of the first business day following
the date of this Agreement, were subject to a properly confirmed agreement to
purchase.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) 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 hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand and
of the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, 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 hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the Prospectus, or, if Rule 434 is
used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters 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 contribution pursuant to this Section 7 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 7.
23
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution with
respect thereto from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative(s) may terminate
this Agreement, by notice to the Company, at any time at or prior to Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or
24
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the
Representative(s), impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in any securities
of the Company has been suspended or materially limited by the Commission or
the New York Stock Exchange, or if trading generally on the American Stock
Exchange or the New York Stock Exchange or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities or (v) there has occurred any event that makes untrue or incorrect
in any material respect any statement or information contained in the
Registration Statement or Prospectus or that is not reflected in the
Registration Statement or Prospectus but should be reflected therein in order
to make the statements or information therein (in the case of the Prospectus,
in light of the circumstances in which they were made) not misleading in any
material respect.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representative(s) shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, the Representative(s)
shall not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the
Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
25
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the Underwriters to purchase and the Company to sell the relevant
Option Securities, as the case may be, either the Representative(s) or the
Company shall have the right to postpone the Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative(s) at Sears Tower
Building, Suite 5500, Chicago, Illinois 60606, attention of Gray Stevens; with
a copy to William R. Kunkel, Skadden, Arps, Slate, Meagher & Flom (Illinois),
Suite 2100, 333 West Wacker Drive, Chicago, Illinois 60606; and notices to the
Company shall be directed to it at 2500 Royal Place, Tucker, Georgia 30084,
attention of Martin S. Pinson; with a copy to W. Randy Eaddy, Kilpatrick
Stockton LLP, Suite 2800, 1100 Peachtree Street, Atlanta, Georgia 30309-4530.
SECTION 12. Parties. This Agreement shall each inure to the benefit
of and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Underwriters and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
INDUSTRIAL DISTRIBUTION GROUP, INC.
By
-----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-----------------------------------
Authorized Signatory
For themselves and as Representative(s) of the other Underwriters named in
Schedule A hereto.
27
SCHEDULE A
[Enlarge/Download Table]
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Robinson-Humphrey Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
---------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
===============
Sch A-1
SCHEDULE B
INDUSTRIAL DISTRIBUTION GROUP, INC.
3,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $__________.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $__________, being an amount equal to the
initial public offering price set forth above less $__________ per share;
provided that the purchase price per share for any Option Securities purchased
upon the exercise of the over-allotment option described in Section 2(b) shall
be reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not payable
on the Option Securities.
Sch B-1
SCHEDULE C
List of Persons and Entities
Subject to Lock-up
David K. Barth
Charles T. Burkland
Martin C. Burkland
William J. Burkland
William R. Fenoglio
Jack P. Healy
Industrial Distribution Group, Inc.
William J. Janner, Jr.
Charles A. Lingenfelter
William T. Parr
Martin S. Pinson
George L. Sachs, Jr.
Richard M. Seigel
Andrew B. Shearer
Douglass C. Smith
Paul Smith
Thomas W. Stewart
Roy R. Woleben
Robert C. Skidmore
John Zimmer
[OTHER PERSONS RECEIVING COMPANY STOCK BEFORE THE OFFER]
Sch C-1
SCHEDULE D
List of Founding Companies
Associated Suppliers, Inc.
B & J Industrial Supply Company
Cramer Industrial Supplies, Inc.
Grinding Supplies Company
Industrial Distribution Group, Inc. ("Predecessor-IDG")
J.J. Stangel Co.
Shearer Industrial Supply Co.
Slater Industrial Supply, Inc.
Tri-Star Industrial Supply, Inc.
Sch D-1
Exhibit A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Purchase Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(iv) As of the Closing Date, the Company has authorized
capital stock consisting of 50,000,000 shares of Common Stock, par
value $.01 per share, and 10,000,000 shares of Preferred Stock, par
value $.10 per share (the "Preferred Stock"); prior to the closing of
the transactions contemplated by each of the Acquisition Agreements
and the issuance of shares of Common Stock as contemplated thereby and
by the Purchase Agreement, the Company had issued and outstanding
129,749 shares of Common Stock and no shares of Preferred Stock; upon
consummation of the Combination and the issuance of 3,330,224 shares
of Common Stock as contemplated by the Acquisition Agreements, (which,
together with the 129,749 shares of Common Stock issued prior to the
Combination, are all the shares of Common Stock issued or to be issued
prior to the issuance and sale of the Securities), but without giving
effect to the issuance of the Securities pursuant to the terms of this
Agreement, the Company will have issued and outstanding 3,459,973
shares of Common Stock and no shares of Preferred Stock. All of such
shares of Common Stock have been duly authorized and, when issued and
delivered to the purchasers thereof against payment therefor as
provided in the Acquisition Agreements, will be validly issued, fully
paid and nonassessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company, arising by
operation of law or under the Certificate of Incorporation or bylaws
of the Company and to our knowledge under any agreement to which the
Company or its Subsidiaries are parties. Except as described in the
Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and there are no commitments to
A-1-1
issue any shares of, capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of
the Company.
(v) The Securities have been duly authorized for issuance
and sale to the Underwriters pursuant to the Purchase Agreement and,
when issued and delivered by the Company pursuant to the Purchase
Agreement against payment of the consideration set forth in the
Purchase Agreement, will be validly issued and fully paid and
non-assessable and no holder of the Securities is or will be subject
to personal liability solely by reason of being such a holder.
(vi) The issuance of the Securities is not subject to
preemptive or other similar rights of any securityholder of the
Company arising by operation of law under the Certificate of
Incorporation or By-Laws of the Company or to the best of our
knowledge under any agreement to which the Company is a party.
(vii) Each subsidiary of the Company existing on the date
prior to the date of this opinion letter, which does not include any
Founding Company (such existing subsidiaries are collectively referred
to herein as "Existing Subsidiaries" and individually referred to as
an "Existing Subsidiary"), and, based solely on opinions of counsel to
each Founding Company, the names of which firms are set forth on
schedule 1 hereto, upon which we rely with your permission
(collectively the "Founding Company Counsel Opinions"), each Founding
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all the issued and outstanding capital stock
of each Existing Subsidiary, and, based solely on the Founding Company
Counsel Opinions, of each Founding Company has been duly authorized
and validly issued, is fully paid and non-assessable; after giving
effect to the Combination, and with respect to a Founding Company,
based solely on a review of the stock records and minute books of each
Founding Company; all of the issued and outstanding capital stock of
each Existing Subsidiary and each Founding Company will be owned by
the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim,
shareholders agreement, or voting trust and no options, warrants or
other rights to purchase, agreements, or other obligations to issue or
other rights to convert any other obligations into shares of capital
stock or ownership interests in any Existing Subsidiary or Founding
Company is outstanding; none of the outstanding shares of the capital
stock of any Existing Subsidiary or, based solely on the Founding
Company Counsel Opinions, of any Founding Company was issued in
violation of the preemptive or similar rights of any security holder
thereof arising by operation of law, under its
A-1-2
charter or by-laws or to the best of our knowledge under any agreement
to which any Existing Subsidiary or Founding Company, as the case may
be, is a party.
(viii) The Purchase Agreement has been duly authorized,
executed and delivered by the Company.
(ix) Based solely on a telephone conversation between
_____ of the Staff and Jan M. Davidson of this firm, the Registration
Statement, not including any Rule 462(b) Registration Statement, which
was effective upon filing, has been declared effective under the 1933
Act as of _______, 1997; any required filing of the Prospectus
pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); and, to the best of our
knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has
been issued under the 1933 Act, and no proceedings for that purpose
have been instituted or are pending or threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus and each amendment or
supplement to the Registration Statement and Prospectus as of their
respective effective or issue dates (other than the financial
statements and other financial information derived therefrom and
supporting schedules included therein or omitted therefrom, as to
which we need express no opinion) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was
not "materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it
became effective.
(xii) The Securities, subject to official notice of
issuance, have been duly approved for listing on the New York Stock
Exchange. The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the Certificate of
Incorporation, as amended, and bylaws of the Company and the
requirements of the New York Stock Exchange.
(xiii) To the best of our knowledge, there is not pending or
threatened in writing any action, suit, proceeding, inquiry or
investigation, to which the Company or any subsidiary is a party, or
to which the property of the Company or any subsidiary is subject,
before or brought by any court or governmental agency or body,
domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or
the consummation of the Combination or the transactions contemplated
in the Purchase Agreement or the performance by the Company of its
obligations
A-1-3
thereunder or the performance by the Company of its obligations in
connection with the Combination.
(xiv) The information in the Prospectus under "Description
of Capital Stock," "Risk Factors--Legal Proceeding," "Business--Legal
Matters," and "Shares Eligible for Future Sale" and in the
Registration Statement under Item 14, to the extent that it
constitutes matters of law, summaries of legal matters, the Company's
Certificate of Incorporation, as amended, and by-laws or legal
proceedings, or legal conclusions, has been reviewed by us and fairly
presents the information set forth therein.
(xv) To the best of our knowledge, there are no statutes
or regulations that are required to be described in the Prospectus
that are not so described.
(xvi) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its Subsidiaries
are a party are accurate in all material respects; to the best of our
knowledge, there are no franchises, contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred to therein
or filed or incorporated by reference as exhibits thereto, and the
descriptions thereof or references thereto are correct in all material
respects.
(xvii) To the best of our knowledge and, with respect to
each Founding Company, based solely on the respective Founding Company
Counsel Opinion, neither the Company, any Founding Company nor any
Existing Subsidiary is in violation of its charter or by-laws, and no
default by the Company, any Founding Company or any Existing
Subsidiary exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement (a "Material
Contract").
(xviii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, either federal or Delaware (other
than under the 1933 Act and the 1933 Act Regulations, which have been
obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we need express no opinion) is
necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering,
issuance or sale of the Securities.
(xix) The execution, delivery and performance of the
Purchase Agreement and the consummation of the transactions
contemplated in the Purchase Agreement and in the Registration
Statement (including the Combination, the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectus
A-1-4
under the caption "Use Of Proceeds") and compliance by the Company
with its obligations under the Purchase Agreement do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined in Section 1(a)(x) of the Purchase Agreement) under or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, any Founding
Company (based solely on the respective Founding Company Opinions) or
any Existing Subsidiary pursuant to any Material Contract, (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not have a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company, any Founding Company (based solely on the respective
Founding Company Opinions) or any Existing Subsidiary, any law,
statute, rule, regulation, which in our experience are applicable to
transactions of this type, or any judgment, order, writ or decree,
known to us, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties, assets or
operations.
(xx) To the best of our knowledge, there are no agreements
between the Company and any person granting such person the right to
require the Company to file a registration statement under the 1933
Act with respect to any securities of the Company or to require the
Company to include such securities in a registration statement filed
under the 1933 Act.
(xxi) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the 1940 Act.
(xxii) Each Acquisition Agreement (which have been filed
with the Commission as exhibits to the Registration Statement) with
respect to the Combination has been duly and validly authorized,
executed and delivered by the Company, the respective Founding Company
and the respective Existing Subsidiary and constitutes the valid and
binding obligation of each of the Company, each Founding Company
(based solely on the respective Founding Company Opinion) and the
respective Existing Subsidiary enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency and other
laws affecting creditors' rights generally, or as may be modified by a
court of equity; to the best of our knowledge, no Founding Company
shareholder has elected dissenters rights other than Alvis Jay Waite
and no other contractual rights exist giving any of the owners of the
Founding Companies any preemptive rights or rights of first offer or
first refusal with respect to the Securities.
(xxiii) The transactions contemplated by each Acquisition
Agreement have been consummated in accordance with the terms of the
respective Acquisition Agreement. Each of the acquisitions of the
Founding Companies by an Existing Subsidiary of the Company is
effective under the law of the jurisdiction of the surviving entity.
A-1-5
(xxiv) The shares of Common Stock issued and sold to the
shareholders of the Founding Companies pursuant to the Acquisition
Agreements (the "Combination Common Stock") (a) are not be subject to
any preemptive or similar rights of any securityholder of the Company
arising by operation of law, under the Certificate of Incorporation or
by-laws of the Company or to the best of our knowledge under any
agreement to which the Company is a party. Based solely upon, as to
certain factual matters, the representations and warranties of all of
the parties to the Acquisition Agreements and certain other documents
delivered in connection therewith (including, but not limited to,
investor questionnaires), the sale of the Combination Common Stock
will be exempt from the registration requirements of the 1933 Act and
will be the subject of an available exemption from the requirements of
all applicable state securities or Blue Sky laws.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data
included therein or omitted therefrom, as to which we need make no statement),
at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) on the Founding
Company Opinions and (B), as to matters of fact (but not as to legal
conclusions), to the extent they deem proper, on certificates of responsible
officers of the Company, the Founding Companies and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
A-1-6
FORM OF LOCK-UP FROM DIRECTORS, OFFICERS
OR OTHER STOCKHOLDERS PURSUANT TO SECTION 5(I)
Exhibit B
__________ ___, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
The Robinson-Humphrey Company, Inc.
as Representative(s) of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by Industrial Distribution Group, Inc.
Dear Sirs:
The undersigned, a stockholder of a Founding Company (as defined in
the Purchase Agreement) or an officer or director of Industrial Distribution
Group, Inc., a Delaware corporation (the "Company"), understands that Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") and The Robinson-Humphrey Company, Inc. propose to enter into a
Purchase Agreement (the "Purchase Agreement") with the Company providing for
the public offering of shares (the "Securities") of the Company's common stock,
par value $.01 per share (the "Common Stock"). In recognition of the benefit
that such an offering will confer upon the undersigned, as a stockholder of a
Founding Company or as an officer or director of the Company, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned agrees with each underwriter to be named
in the Purchase Agreement that, during a period of 180 days from the date of
the Purchase Agreement, the undersigned will not, without the prior written
consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or
any securities convertible into or exchangeable or exercisable for Common
Stock, whether now owned or hereafter acquired by the undersigned or with
respect to which the undersigned has or hereafter acquires the power of
disposition, or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or
B-1
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise. Notwithstanding the foregoing, the
undersigned may, during the 180 days from the date of the Purchase Agreement,
transfer Common Stock by way of off-market transfers to its respective
affiliates (as that term is defined in Rule 144 under the Securities Act of
1933, as amended) which agree in writing with Merrill Lynch to be bound by the
provisions of a Lock-up Agreement (as defined in the Purchase Agreement) and
may also pledge Common Stock to any person which, prior to such pledge taking
effect, agrees to be bound by the provisions of a Lock-up Agreement (as defined
in the Purchase Agreement).
Very truly yours,
Signature: _________________________
Print Name: _______________________
B-2
Annex A
FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)
We are independent public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable published 1933 Act Regulations:
(i) in our opinion, the audited financial statements [and
the related financial statement schedules] included in the
Registration Statement and the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim [consolidated] financial statements
of the Company for the [three month periods ended _________, 19___ and
_________, 19___ , the three and six month periods ended _________,
19___ and _________, 19___ and the three and nine month periods ended
_________, 19___ and _________, 19___, included in the Registration
Statement and the Prospectus (collectively, the "Quarterly
Financials")](1), a reading of the unaudited interim [consolidated]
financial statements of the Company for the _____-month periods ended
_________, 19___ and _________, 19___, included in the Registration
Statement and the Prospectus (the "____-month financials")]
(2) [, a reading of the latest available
unaudited interim [consolidated] financial statements of the
Company], (3) a reading of the minutes of all meetings of the
stockholders and directors of the Company [and its subsidiaries] and
the _________________ and __________________ Committees of the
Company's Board of Directors [and any subsidiary committees] since
[day after end of last audited period], inquiries of certain officials
of the Company [and its subsidiaries] responsible for financial and
accounting matters, a review of interim financial information in
accordance with standards established by the American Institute of
Certified Public Accountants in Statement on Auditing Standards No.
71, Interim Financial Information ("SAS 71"),
________________________
(1) Include the appropriate dates of the Quarterly Financials.
(2) Include if non-Quarterly unaudited interim financial statements are
included in the Registration Statement.
(3) Include if the most recent unaudited interim financial statements are
not included in the Registration Statement.
(4) Note that a review in accordance with Statements on Auditing Standards
("SAS") No. 71 is required for an accountant to give negative
assurance on unaudited interim financial information. A review in
accordance with SAS No. 71 will only be performed at the
(continued..)
Annex A-1
request of the Company and the accountant's report, if any, related to
that review will be addressed only to the Company. Many companies
have a SAS No. 71 review performed in connection with the preparation
of their Quarterly financial statements. See Codification of Statements
on Auditing Standards, AU # 722 for a description of the procedures
that constitute such a review. The comfort letter itself should recite
that the review was performed and a copy of the report, if any, should
be attached to the comfort letter. Any report issued pursuant to SAS
No. 71 that is mentioned in the Registration Statement should also be
included in the Registration Statement as an exhibit. If a review in
accordance with SAS No. 71 has not and will not be performed by the
accountants, they should be prepared to perform certain agreed-upon
procedures on the interim financial information and to report their
findings thereon in the comfort letter. See SAS No. 75 for a
discussion of reports related to the accountant's performance of
agreed-upon procedures. Any question as to whether a review in
accordance with SAS No. 71 will be performed by the accountants should
be resolved early. periods](5) and such other inquiries and procedures
as may be specified in such letter, nothing came to our attention that
caused us to believe that:
[(A) the Quarterly Financials included in the Registration
Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act and the 1933 Act Regulations or any material
modifications should be made to the unaudited [consolidated]
financial statements included in the Registration Statement
and the Prospectus for them to be in conformity with generally
accepted accounting principles;](6)
[( ) the _____-month financials included in the
Registration Statement and the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations
applicable to unaudited interim financial statements included
in registration statements or any material modifications
should be made to the _____-month financials included in the
Registration Statement and the Prospectus for them to be in
conformity with generally accepted accounting principles;]
(7)
__________________________________
(4)(..continued)
request of the Company and the accountant's report, if any, related to
that review will be addressed only to the Company. Many companies have a
SAS No. 71 review performed in connection with the preparation of their
Quarterly financial statements. See Codification of Statements on Auditing
Standards, AU Section 722 for a description of the procedures that
constitute such a review. The comfort letter itself
(5) The relevant periods include interim unaudited condensed consolidated
financial statements included or incorporated by reference into the
Registration Statement.
(6) Include if the Quarterly financials are included in the Registration
Statement.
(7) Include if non-quarterly, unaudited interim financial statements, not just
selected unaudited data, are included in the Registration Statement.
Annex A-2
( ) at [_________, 19___ and at](8) a specified date not
more than five days(9) prior to the date of this Agreement,
there was any change in the ___________ of the Company [and
its subsidiaries] or any decrease in the __________ of the
Company [and its subsidiaries] or any increase in the
__________ of the Company [and its subsidiaries,](10) in each
case as compared with amounts shown in the latest balance
sheet included in the Registration Statement, except in each
case for changes, decreases or increases that the Registration
Statement discloses have occurred or may occur; or
( ) [for the period from _________, 19___ to _________,
19___ and ](11) for the period from _________, 19___ to a
specified date not more than five days prior to the date of
this Agreement, there was any decrease in _________,
__________ or ___________,(12) in each case as compared with
the comparable period in the preceding year, except in each
case for any decreases that the Registration Statement
discloses have occurred or may occur;
__________________________________
(8) Include, and insert the date of most recent balance sheet of the
Company, if those statements are more recent than the unaudited
interim financial statements included in the Registration Statement.
(9) According to Example A of SAS No. 72, the specified date should be
five calendar days prior to the date of the Underwriting
Agreement rather than five business days prior to such date.
However, in unusual circumstances, five business days may be used.
(10) The blanks should be filled in with significant balance sheet items,
selected by the banker and tailored to the issuer's industry in
general and operations in particular. While the ultimate decision of
which items should be included rests with the banker, comfort is
routinely requested for certain balance sheet items, including
long-term debt, stockholders' equity, capital stock and net current
assets.
(11) Include, and insert dates to describe the period from the date of
the most recent financial statements in the Registration
Statement to the date of the most recent unaudited interim financial
statements of the Company, if those dates are different. Regardless
of whether this language is inserted or not, the period including
five days prior to the date of the Underwriting Agreement should run
from the date of the last financial statement included in the
Registration Statement, not from the later one that is not included
in the Registration Statement.
(12) The blanks should be filled in with significant income statement
items, selected by the banker and tailored to the issuer's
industry in general and operations in particular. While the ultimate
decision of which items should be included rests with the banker,
comfort is routinely requested for certain income statement items,
including net sales, total and per share amounts of income before
extraordinary items and of net income.
Annex A-3
(iii) based upon the procedures set forth in clause (ii)
above and a reading of the [Selected Financial Data] included
in the Registration Statement [and a reading of the financial
statements from which such data were derived], (13) nothing came to
our attention that caused us to believe that the [Selected Financial
Data] included in the Registration Statement do not comply as to form
in all material respects with the disclosure requirements of Item 301
of Regulation S-K of the 1933 Act [, that the amounts included in the
[Selected Financial Data] are not in agreement with the corresponding
amounts in the audited [consolidated] financial statements for the
respective periods or that the financial statements not included in
the Registration Statement from which certain of such data were
derived are not in conformity with generally accepted accounting
principles];(14)
(iv) we have compared the information in the Registration
Statement under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures
specified herein. nothing came to our attention that caused us to
believe that this information does not comply as to form in all
material respects with the disclosure requirements of Items 302, 402
and 503(d), respectively, of Regulation S-K;
[(v) based upon the procedures set forth in clause (ii)
above, a reading of the unaudited financial statements of the Company
for [the most recent period] that have not been included in the
Registration Statement and a review of such financial statements in
accordance with SAS 71, nothing came to our attention that caused us
to believe that the unaudited amounts for _____________ for the [most
recent period] do not agree with the amounts set forth in the
unaudited consolidated financial statements for those periods or that
such unaudited amounts were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited
[consolidated] financial statements;](15)
__________________________________
(13) Include only if there are selected financial data that have been
derived from financial statements not included in the Registration
Statement.
(14) In unusual circumstances, the accountants may report on "Selected
Financial Data" as described in SAS No. 42, Reporting on
Condensed Financial Statements and Selected Financial Data, and
include in their report in the Registration Statement the paragraph
contemplated by SAS No. 42.9. This situation may arise only if the
Selected Financial Data do not include interim period data and the
five-year selected data are derived entirely from financial statements
audited by the auditors whose report is included in the Registration
Statement. If the guidelines set forth in SAS No. 42 are followed and
the accountant's report as included in the Registration Statement
includes the additional language prescribed by SAS No. 42.9, the
bracketed language may be eliminated.
(15) This language should be included when the Registration Statement
includes earnings or other data for a period after the date of
the latest financial statements in the Registration Statement, but
the unaudited interim financial statements from which the earnings
orother data is derived is not included in the Registration
Statement. The blank should be filled in with a description of the
financial statement item(s) included.
Annex A-4
[(vi)] we are unable to and do not express any opinion on
the [Pro Forma Combining Statement of Operations] (the "Pro Forma
Statement") included in the Registration Statement or on the pro forma
adjustments applied to the historical amounts included in the Pro
Forma Statement; however, for purposes of this letter we have:
(A) read the Pro Forma Statement;
(B) performed [an audit] [a review in accordance
with SAS 71] of the financial statements to which the pro
forma adjustments were applied;
(C) made inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters about the basis for their determination of the pro
forma adjustments and whether the Pro Forma Statement complies
as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X; and
(D) proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the Pro Forma Statement; and
on the basis of such procedures and such other inquiries and
procedures as specified herein, nothing came to our attention
that caused us to believe that the Pro Forma Statement
included in the Registration Statement does not comply as to
form in all material respects with the applicable requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;(16) and
[(vii)] in addition to the procedures referred to in clause
(ii) above, we have performed other procedures, not constituting an
audit, with respect to certain amounts, percentages, numerical data
and financial information appearing in the Registration Statement,
which are specified herein, and have compared certain of such items
with, and
__________________________________
(16) If an audit or a review in accordance with SAS No. 71 has not been
performed by the accountants with respect to the underlying
historical financial statements, or if negative assurance on the
Company's pro forma financial statements is not otherwise available,
the accountants should be requested to perform certain other
procedures with respect to such pro forma financial statements. See
Example O of SAS No. 72.
Annex A-5
have found such items to be in agreement with, the accounting and
financial records of the Company; (17) and
[(viii) in addition, we [COMFORT ON A FINANCIAL FORECAST THAT
IS INCLUDED IN THE REGISTRATION STATEMENT](18)
__________________________________
(17) This language is intended to encompass all other financial/numerical
information appearing in the Registration Statement for which
comfort may be given, including (but not limited to) amounts appearing
in the Registration Statement narrative and other summary financial
data appearing in tabular form (e.g. the capitalization table).
(18) Accountants' services with respect to a financial forecast may be in
one of three forms: an examination of the forecast, a compilation of
the forecast or the application of agreed-upon Procedures to the
forecast. If the accountant is to perform an examination of
the forecast included in the Registration Statement, delivery of the
related report should be treated separately in Section 5(f) as follows
(remember to change subsequent letters accordingly):
(f) At the time that this Agreement is executed by
the Company, you shall have received from ___________________
a report, dated such date, in form and substance satisfactory
to you, together with signed or reproduced copies of such
report for each of the other Underwriters, stating that, in
their opinion, the forecasted financial statements for the
[relevant period or periods] included in the Registration
Statement are presented in conformity with guidelines for
presentation of a forecast established by the AICPA, and that
the underlying assumptions provide a reasonable basis for
management s forecast.
If the accountant is to perform a compilation of the forecasted
financial statements included in the Registration Statement, delivery
of the related report should be treated separately in Section 5(f) as
follows:
(f) At the time that this Agreement is executed by
the Company, you shall have received from _________________
a report, dated such date, in form and substance satisfactory
to you, together with signed or reproduced copies of such
report for each of the other Underwriters, stating that they
have compiled the forecasted financial statements for the
[relevant period or periods] included in the Registration
Statement in accordance with the guidelines established by
the AICPA.
Finally, if the accountant is to perform agreed-upon procedures on a
forecast included in the Registration Statement, SAS No. 72 requires
that the accountant first prepare acompilation report with respect to
the forecast and attach that report to the comfort letter. The
accountant may then report on specific procedures performed and
findings obtained.
Annex A-6
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 9/18/97 |
| | 9/16/97 | | 1 |
| | 8/29/97 | | 7 | | | | | S-1/A |
| List all Filings |
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