Draft of July 13, 1998
8,000,000 Shares
Enfinity Corporation
Common Stock
Underwriting Agreement
dated _____________, 1998
TABLE OF CONTENTS
Page
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Section 1. Representations and Warranties of the Company. . . . . . 2
Compliance with Registration Requirements . . . . . . . 2
Offering Materials Furnished to Underwriters. . . . . . 3
Distribution of Offering Material By the Company. . . . 3
The Underwriting Agreement. . . . . . . . . . . . . . . 3
Authorization of the Common Shares. . . . . . . . . . . 3
No Applicable Registration or Other Similar Rights. . . 4
No Material Adverse Change. . . . . . . . . . . . . . . 4
Independent Accountants . . . . . . . . . . . . . . . . 4
Preparation of the Financial Statements . . . . . . . . 5
Incorporation and Good Standing of the Company, the
Acquisition Subsidiaries and the Founding
Companies. . . . . . . . . . . . . . . . . . . . . . . 5
Capitalization and Other Capital Stock Matters. . . . . 6
Stock Exchange Listing. . . . . . . . . . . . . . . . . 7
Non-Contravention of Existing Instruments; No
Further Authorizations or Approvals Required . . . . . 7
No Material Actions or Proceedings. . . . . . . . . . . 7
Intellectual Property Rights. . . . . . . . . . . . . . 8
All Necessary Permits, etc. . . . . . . . . . . . . . . 8
Title to Properties . . . . . . . . . . . . . . . . . . 8
Tax Law Compliance. . . . . . . . . . . . . . . . . . . 9
Company Not an "Investment Company" . . . . . . . . . . 9
Insurance . . . . . . . . . . . . . . . . . . . . . . . 9
No Price Stabilization or Manipulation. . . . . . . . . 9
Related Party Transactions. . . . . . . . . . . . . . . 9
No Unlawful Contributions or Other Payments . . . . . . 10
Accounting Systems. . . . . . . . . . . . . . . . . . . 10
Compliance with Environmental Laws. . . . . . . . . . . 10
ERISA Compliance. . . . . . . . . . . . . . . . . . . . 11
Agreement and Plan of Organization. . . . . . . . . . . 11
Representations in each Agreement and Plan of
Organization . . . . . . . . . . . . . . . . . . . . . 12
Lock-Up Agreements. . . . . . . . . . . . . . . . . . . 12
Subchapter S Status . . . . . . . . . . . . . . . . . . 12
Section 2. Purchase, Sale and Delivery of the Common Shares . . . . 12
The Firm Common Shares. . . . . . . . . . . . . . . . . 12
The First Closing Date. . . . . . . . . . . . . . . . . 13
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Page
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The Optional Common Shares; the Second
Closing Date . . . . . . . . . . . . . . . . . . . . . 13
Public Offering of the Common Shares. . . . . . . . . . 14
Payment for the Common Shares . . . . . . . . . . . . . 14
Delivery of the Common Shares . . . . . . . . . . . . . 14
Delivery of Prospectus to the Underwriters. . . . . . . 15
Section 3. Additional Covenants of the Company. . . . . . . . . . . 15
Representatives' Review of Proposed Amendments and
Supplements. . . . . . . . . . . . . . . . . . . . . . 15
Securities Act Compliance . . . . . . . . . . . . . . . 15
Amendments and Supplements to the Prospectus and
Other Securities Act Matters. . . . . . . . . . . . . . 15
Copies of any Amendments and Supplements to the
Prospectus. . . . . . . . . . . . . . . . . . . . . . . 16
Blue Sky Compliance . . . . . . . . . . . . . . . . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . 16
Transfer Agent. . . . . . . . . . . . . . . . . . . . . 16
Earnings Statement. . . . . . . . . . . . . . . . . . . 16
Periodic Reporting Obligations. . . . . . . . . . . . . 16
Agreement Not To Offer or Sell Additional Securities. . 17
No Waiver of Founding Company Stockholder Lock-up . . . 17
Future Reports to the Representatives . . . . . . . . . 17
Satisfaction of Founding Company Merger Conditions. . . 18
Section 4. Payment of Expenses. . . . . . . . . . . . . . . . . . . 18
Section 5. Conditions of the Obligations of the Underwriters. . . . 19
Accountants' Comfort Letter . . . . . . . . . . . . . . 19
Compliance with Registration Requirements; No Stop
Order; No Objection from NASD. . . . . . . . . . . . . 19
No Material Adverse Change. . . . . . . . . . . . . . . 20
Opinion of Counsel for the Company. . . . . . . . . . . 20
Opinion of Counsel for the Underwriters . . . . . . . . 20
Officers' Certificate . . . . . . . . . . . . . . . . . 20
Bring-down Comfort Letter . . . . . . . . . . . . . . . 21
Founding Company Merger Closings. . . . . . . . . . . . 21
Lock-Up Agreement from Certain Stockholders of the
Company .. . . . . . . . . . . . . . . . . . . . . . . 22
Additional Documents. . . . . . . . . . . . . . . . . . 22
Section 6. Reimbursement of Underwriters' Expenses. . . . . . . . . 23
Section 7. Effectiveness of this Agreement. . . . . . . . . . . . . 23
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Page
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Section 8. Indemnification. . . . . . . . . . . . . . . . . . . . . 23
Indemnification of the Underwriters . . . . . . . . . . 23
Indemnification of the Company, its Directors and
Officers . . . . . . . . . . . . . . . . . . . . . . . 24
Notifications and Other Indemnification Procedures. . . 25
Settlements. . . . . . . . . . . . . . . . . . . . . . 26
Section 9. Contribution . . . . . . . . . . . . . . . . . . . . . . 26
Section 10. Default of One or More of the Several Underwriters . . . 28
Section 11. Termination of this Agreement. . . . . . . . . . . . . . 29
Section 12. Representations and Indemnities to Survive Delivery. . . 29
Section 13. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 14. Successors . . . . . . . . . . . . . . . . . . . . . . . 30
Section 15. Partial Unenforceability . . . . . . . . . . . . . . . . 30
Section 16. Governing Law Provisions . . . . . . . . . . . . . . . . 30
Consent to Jurisdiction . . . . . . . . . . . . . . . . 31
Section 17. General Provisions . . . . . . . . . . . . . . . . . . . 31
iii
Underwriting Agreement
, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXXX BROTHERS, INC.
XXXXXXX XXXXX & ASSOCIATES, INC.
As Representatives of the several Underwriters
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introductory. Enfinity Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 8,000,000 shares (the "Firm
Common Shares") of its Common Stock, par value $.01 per share (the "Common
Stock"). In addition, the Company has granted to the Underwriters an option to
purchase up to an additional 1,200,000 shares (the "Optional Common Shares") of
Common Stock, as provided in Section 2. The Firm Common Shares and, if and to
the extent such option is exercised, the Optional Common Shares are collectively
called the "Common Shares". NationsBanc Xxxxxxxxxx Securities LLC ("NationsBanc
Montgomery"), Xxxxxx Brothers, Inc. and Xxxxxxx Xxxxx & Associates, Inc. have
agreed to act as representatives of the several Underwriters (in such capacity,
the "Representatives") in connection with the offering and sale of the Common
Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(File No. 333-52671), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933 and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), including any
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A or Rule 434 under the Securities Act, is called the "Registration
Statement". Any registration statement filed by the Company pursuant to Rule
462(b) under the Securities Act is called the "Rule 462(b) Registration
Statement", and from and after the date and time of filing of the Rule 462(b)
Registration Statement the term "Registration Statement" shall include the Rule
462(b) Registration Statement. Such prospectus, in the form first used by the
Underwriters to confirm sales of the Common
Shares, is called the "Prospectus"; provided, however, if the Company has, with
the consent of the Representatives, elected to rely upon Rule 434 under the
Securities Act, the term "Prospectus" shall mean the Company's prospectus
subject to completion (each, a "preliminary prospectus") dated ___________, 1998
(such preliminary prospectus is called the "Rule 434 preliminary prospectus"),
together with the applicable term sheet (the "Term Sheet") prepared and filed by
the Company with the Commission under Rules 434 and 424(b) under the Securities
Act and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or the Term Sheet, or any amendments or supplements
to any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
Simultaneously with the closing of the purchase of the Firm
Common Shares by the Underwriters, the Company will acquire all of the capital
stock and ownership interests of each of the Founding Companies (as hereinafter
defined) pursuant to separate merger transactions (collectively, the "Founding
Company Mergers"), the consideration for which will be a combination of cash and
shares of Common Stock as described in the Registration Statement.
The Company hereby confirms its agreements with the Underwriters
as follows:
Section 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to each
Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
to the Commission's satisfaction with all requests of the Commission for
additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Common Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the time it
became effective or will become effective and at all subsequent times, complied
and will comply in all material respects with the Securities
2
Act and did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus, as amended or
supplemented, as of its date and at all subsequent times, did not and will not
contain any untrue statement of a material fact or 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. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein. There are
no contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which have not been described
or filed as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to counsel to the Representatives one complete manually signed copy of
the Registration Statement and of each consent and certificate of experts filed
as a part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company
has not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Common Shares, any offering material in connection with the
offering and sale of the Common Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
3
(f) No Applicable Registration or Other Similar Rights. There are
no persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or otherwise
included in the offering contemplated by this Agreement, except for such rights
as have been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in
the Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company, its subsidiaries listed on Exhibit
21 to the Registration Statement (the "Acquisition Subsidiaries"), and Xxxxxx
Mechanical Systems, Inc. ("Xxxxxx"), Air Systems, Inc. ("Air Systems"), Hill
York Corporation and Hill York Service Corporation (collectively, "Hill York"),
Mechanical Services of Orlando, Inc. ("Mechanical Systems"), Aircond Corp. and
its subsidiary (collectively, "Aircond"), Energy Systems Industries, Inc. and
its subsidiaries (collectively, "Energy Systems"), New England Mechanical
Services, Inc. and its subsidiary (collectively, "NEMSI") and Xxx Company
("Xxx") (collectively, the "Founding Companies"), considered as one entity (any
such change is called a "Material Adverse Change"); (ii) the Company, the
Acquisition Subsidiaries and the Founding Companies, considered as one entity,
have not incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into any material
transaction or agreement not in the ordinary course of business; (iii) there has
been no adverse change with respect to the goodwill and other intangible assets
of the Company and the Founding Companies (collectively, the "Intangible
Assets") such that, had the Founding Company Mergers been consummated on the
date hereof, the Intangible Assets, net of accumulated amortization, would not
have a value at least equal to the value reflected in the pro forma combined
balance sheet of the Company contained in the Registration Statement and no part
of the Intangible Assets shown on such balance sheet are required to be written
down in conformity with generally accepted accounting principles applied on a
basis consistent with prior periods; and (iv) except as disclosed in the
Registration Statement, there has been no dividend or distribution of any kind
declared, paid or made by the Company or any Founding Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or repurchase or redemption by the Company, any of
its subsidiaries or any Founding Company of any class of capital stock.
(h) Independent Accountants. Price Waterhouse LLP, who have
audited certain financial statements as set forth under the heading "Experts"
and expressed their opinion with respect to such financial statements (which
term as used in this Agreement includes the related notes thereto) filed with
the Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants with respect
to the Company and each of the Founding Companies audited by them as required by
the Securities Act. Shilling &
4
Xxxxxx, Inc., who have audited certain financial statements as set forth under
the heading "Experts" and expressed their opinion with respect to such financial
statements (which term as used in this Agreement includes the related notes
thereto) filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent public or certified public
accountants with respect to Air Systems, as required by the Securities Act.
(i) Preparation of the Financial Statements. The separate
financial statements of the Company and each of the Founding Companies, in each
case together with related notes filed with the Commission as a part of the
Registration Statement and included in the Prospectus present fairly the
financial position, results of operations and cash flows of the Company and each
of such Founding Companies and of the Company, respectively, at the dates
specified and for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto, and all adjustments necessary for a fair
presentation of results for such period have been made. Except for the pro forma
financial statements discussed below, no other financial statements are required
to be included in the Registration Statement. No supporting schedules are
required to be included in the Registration Statement. The financial data set
forth in the Prospectus under the captions "Prospectus Summary -- Summary Pro
Forma Combined Financial Data" and "--Summary Individual Founding Company
Financial Data," "Capitalization" and "Selected Financial Data" fairly present
the information set forth therein on a basis consistent with that of the audited
and pro forma financial statements contained in the Registration Statement and
the books and records of the Company and the Founding Companies, as applicable.
The pro forma combined financial statements of the Company and the Founding
Companies together with the related notes thereto included under the captions
"Prospectus Summary--Summary Pro Forma Combined Financial Data," "Selected
Financial Data," "Capitalization" and "Enfinity Corporation Unaudited Pro Forma
Combined Financial Statements" and elsewhere in the Prospectus and in the
Registration Statement present fairly the information contained therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly presented on
the pro forma 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.
(j) Incorporation and Good Standing of the Company, the
Acquisition Subsidiaries and the Founding Companies. Each of the Company, the
Acquisition Subsidiaries and the Founding Companies has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and, in the case of the Company, to enter into and perform its
obligations under this Agreement. Each of the Company, the Acquisition
Subsidiaries and the Founding Companies is duly
5
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 for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change. All of the issued and outstanding capital stock of each
Acquisition Subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim. As of the First
Closing Date (as hereinafter defined), after giving effect to the Founding
Company Mergers, all of the outstanding shares of the capital stock of each of
the Founding Companies and any subsidiary of any of the Founding Companies will
be owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim; and no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital stock or
ownership interests in any of the Founding Companies are outstanding. As of the
date hereof, the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed on
Exhibit 21 to the Registration Statement. Except as described in the
Registration Statement and the Prospectus, the Company is not party to any
agreement or understanding, written or oral, regarding the acquisition of, or of
an interest in, any corporation, firm, partnership, joint venture, association
or other entity.
(k) Capitalization and Other Capital Stock Matters. The
authorized, issued and outstanding capital stock of the Company is as set forth
in the Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in the
Prospectus). The Common Stock (including the Common Shares) conforms in all
material respects to the description thereof contained in the Prospectus. All of
the issued and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with federal and state securities laws. None of the outstanding
shares of Common Stock were issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase securities
of the Company. Upon completion of the Founding Company Mergers in the manner
described in the Registration Statement, the shares of Common Stock of the
Company to be issued in the Founding Company Mergers will be duly authorized,
validly issued and fully paid and non-assessable. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those described in the Prospectus. Except as may be
restricted by relevant state law with respect to the need for sufficient
surplus, none of the Acquisition Subsidiaries or the Founding Companies is
currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on its capital stock, or from
transferring any of the property or assets of any such Acquisition Subsidiary or
6
Founding Company to the Company. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(l) Stock Exchange Listing. The Common Shares have been approved
for listing on the New York Stock Exchange, subject only to official notice of
issuance.
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. None of the Company, any of the
Acquisition Subsidiaries or any of the Founding Companies is in violation of its
charter or by-laws or is in default (or, with the giving of notice or lapse of
time, would be in default) ("Default") under any indenture, mortgage, loan or
credit agreement, note, contract, franchise, lease or other instrument to which
the Company, any Acquisition Subsidiary or any Founding Company 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, any Acquisition Subsidiary or any Founding Company is subject
(each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement and each
Agreement and Plan of Organization (as defined below) and consummation of the
transactions contemplated hereby and thereby and by the Prospectus (i) have been
duly authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company, any
Acquisition Subsidiary or any Founding Company, (ii) will not conflict with or
constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company, any Acquisition Subsidiary or any Founding Company pursuant to, or
require the consent of any other party to, any Existing Instrument, except for
such conflicts, breaches, Defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change and except
for such consents as have been or will, prior to the First Closing Date, be
obtained or, if not obtained, will not, individually or in the aggregate, result
in a Material Adverse Change; and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company, any Acquisition Subsidiary or any Founding Company. No consent,
approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency, is required for
the Company's execution, delivery and performance of this Agreement or any
Agreement and Plan of Organization and consummation of the transactions
contemplated hereby or thereby and by the Prospectus, except such as are
required under the Securities Act, applicable state securities or blue sky laws
and by the National Association of Securities Dealers, Inc. (the "NASD").
(n) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's
7
knowledge, threatened (i) against or affecting the Company, any
Acquisition Subsidiary or any Founding Company, (ii) which has as the subject
thereof any officer or director of, or property owned or leased by, the Company,
any Acquisition Subsidiary or any Founding Company or (iii) relating to
environmental, discrimination, building code or related matters, where in any
such case (A) there is a reasonable possibility that such action, suit or
proceeding might be determined adversely to the Company or such Acquisition
Subsidiary or such Founding Company and (B) any such action, suit or proceeding,
if so determined adversely, would reasonably be expected to result in a Material
Adverse Change or adversely affect the consummation of the transactions
contemplated by this Agreement. No material labor dispute with the employees of
the Company or any Founding Company exists or, to the best of the Company's
knowledge, is threatened or imminent.
(o) Intellectual Property Rights. The Company, its subsidiaries
and the Founding Companies own or possess sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and other similar
rights (collectively, "Intellectual Property Rights") necessary to conduct their
businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Except as disclosed in the Registration Statement and the Prospectus, neither
the Company nor any of the Founding Companies has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change.
(p) All Necessary Permits, etc. The Company, each Acquisition
Subsidiary and each Founding Company possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and none of the Company, any of the Acquisition Subsidiaries or any
of the Founding Companies has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(q) Title to Properties. The Company, each Acquisition Subsidiary
and each Founding Company has good and marketable title to all the properties
and assets reflected as owned in the financial statements referred to in Section
1(i) above (or elsewhere in the Prospectus), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be
made of such property by the Company, such Acquisition Subsidiary or such
Founding Company. The real property, improvements, equipment and personal
property held under lease by the Company, any Acquisition Subsidiary or any
Founding Company are held under valid and enforceable leases, with such
exceptions as do not materially interfere with the use made or proposed to be
made of such real property, improvements, equipment or
8
personal property by the Company, such Acquisition Subsidiary or such Founding
Company.
(r) Tax Law Compliance. The Company, each of the Acquisition
Subsidiaries and each of the Founding Companies have filed all necessary
federal, state and foreign income and franchise tax returns and have paid all
taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them, other than with
respect to any payments being contested in good faith, all of which have been
disclosed in writing to the Representatives. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 1(i) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company,
any Acquisition Subsidiary or any Founding Company has not been finally
determined.
(s) Company Not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and after receipt
of payment for the Common Shares will not be, an "investment company" or a
company "controlled" by or "under common control with" an "investment company"
within the meaning of Investment Company Act.
(t) Insurance. Each of the Company and its subsidiaries and the
Founding Companies maintains insurance in such amounts and with such deductibles
and covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal
property owned or leased by the Company and its subsidiaries and the Founding
Companies against theft, damage, destruction, acts of vandalism and earthquakes.
The Company has no reason to believe that it or any subsidiary or any Founding
Company will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse Change.
Neither the Company nor any Founding Company has been denied any insurance
coverage which it has sought or for which it has applied.
(u) No Price Stabilization or Manipulation. Neither the Company,
nor to the Company's best knowledge, any of its affiliates or any of the
Founding Companies or any of their affiliates has taken or will take, directly
or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Common Shares.
(v) Related Party Transactions. There are no business
relationships or related-party transactions involving the Company, any
subsidiary, any
9
Founding Company or any other person required to be described in the Prospectus
which have not been described as required.
(w) No Unlawful Contributions or Other Payments. None of the
Company, any of the Acquisition Subsidiaries, any of the Founding Companies or,
to the best of the Company's knowledge, any employee or agent of any such
entity, has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any law or
of the character required to be disclosed in the Prospectus.
(x) Accounting Systems. The Company and each of the Founding
Companies maintain a system of accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles as applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(y) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i) none
of the Company, any of the Acquisition Subsidiaries or any of the Founding
Companies is in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or 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 emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, "Materials of Environmental Concern"), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern (collectively,
"Environmental Laws"), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations required for
the operation of the business of the Company, the Acquisition Subsidiaries or
the Founding Companies under applicable Environmental Laws, or noncompliance
with the terms and conditions thereof, nor has the Company, any Acquisition
Subsidiary or any Founding Company received any written communication, whether
from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company, any Acquisition Subsidiary or any Founding Company is
in violation of any Environmental Law; (ii) there is no claim, action or cause
of action filed with a court or governmental authority, no investigation with
respect to which the Company, any Acquisition Subsidiary or any Founding Company
has received written notice, and no written notice received by the Company from
any person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages, property
damages, personal
10
injuries, attorneys' fees or penalties arising out of, based on or resulting
from the presence, or release into the environment, of any location owned,
leased or operated by the Company, any Acquisition Subsidiary or any Founding
Company, now or in the past (collectively, "Environmental Claims"), pending or,
to the best of the Company's knowledge, threatened against the Company, any
Acquisition Subsidiary or any Founding Company or any person or entity whose
liability for any Environmental Claim the Company, any Acquisition Subsidiary or
any Founding Company has retained or assumed either contractually or by
operation of law; and (iii) to the best of the Company's knowledge, there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that reasonably
could result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company, any Acquisition Subsidiary or
any Founding Company or against any person or entity whose liability for any
such Environmental Claim the Company, any Acquisition Subsidiary or any Founding
Company has retained or assumed either contractually or by operation of law.
(z) ERISA Compliance. The Company and each of the Founding
Companies and any "employee benefit plan" (as defined under the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company, any Founding Company or their "ERISA Affiliates" (as
defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a Founding Company, any member
of any group of organizations described in Section 414(b),(c),(m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such Founding
Company is a member. No "reportable event" (as defined under ERISA) has occurred
or is reasonably expected to occur with respect to any "employee benefit plan"
established or maintained by the Company, any Founding Company or any of their
ERISA Affiliates. No "employee benefit plan" established or maintained by the
Company, any Founding Company or any of their ERISA Affiliates, if such
"employee benefit plan" were terminated, would have any "amount of unfunded
benefit liabilities" (as defined under ERISA). Neither the Company, any Founding
Company nor any of their ERISA Affiliates has incurred or reasonably expects to
incur any liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "employee benefit plan" or (ii) Section 412, 4971, 4975
or 4980B of the Code. Each "employee benefit plan" established or maintained by
the Company, any Founding Company or any of their ERISA Affiliates that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or failure to act, which would cause the
loss of such qualification.
(aa) Agreement and Plan of Organization. The Company has entered into
the agreements (each, an "Agreement and Plan of Organization"), set forth as
Exhibits 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8 and 2.9 to the Registration
Statement, pursuant to which the Company will become the record and beneficial
owner of all of
11
the outstanding capital stock of and ownership interests in each of the Founding
Companies by means of a merger of an Acquisition Subsidiary with and into each
of the Founding Companies. Each Agreement and Plan of Organization is in full
force and effect, has been duly and validly authorized, executed and delivered
by the parties thereto, constitutes a valid and binding agreement of the parties
thereto, and is enforceable against the parties thereto in accordance with its
terms and none of the parties thereto is in default in any respect thereunder. A
complete and correct copy of each Agreement and Plan of Organization (including
exhibits and schedules) has been delivered to the Representatives and the
Company will promptly inform the Representatives of any changes therein made
subsequent hereto and prior to the Closing Date.
(ab) Representations in each Agreement and Plan of Organization. The
representations and warranties made in each Agreement and Plan of Organization
by the Company and by each Founding Company and/or its stockholders are true and
correct in all material respects, except for such changes permitted or
contemplated by such Agreement and Plan of Organization.
(ac) Lock-Up Agreements. The Company has obtained from each of the
stockholders of each of the Founding Companies such stockholder's agreement not
to, directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
dispose of any shares of Common Stock, options or warrants to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
shares of Common Stock received in the Founding Company Mergers other than in
accordance with the transfer restrictions provided for in Section 15.1 of each
Agreement and Plan of Organization.
(a) Subchapter S Status. For all periods from its election under
Subchapter S of the Code, until the Closing Date, each of the Founding Companies
that so elected was qualified as an S Corporation pursuant to an election
validly made under Subchapter S of the Code (which election has not been and
will not be revoked or terminated for any such period) and the Company has not
been and will not be subject to federal corporate taxes for such periods. Any
Subchapter S election has been or will be duly terminated prior to or as of the
Closing Date.
Any certificate signed by an officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
Section 2. Purchase, Sale and Delivery of the Common Shares.
The Firm Common Shares. The Company agrees to issue and sell to the
several Underwriters the Firm Common Shares upon the terms herein set forth. On
12
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Company the
respective number of Firm Common Shares set forth opposite their names on
Schedule A. The purchase price per Firm Common Share to be paid by the several
Underwriters to the Company shall be $___ per share.
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of NationsBanc Montgomery, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as may be agreed to by the Company and the
Representatives) at 6:00 a.m. San Francisco time, on ____________, 1998 or such
other time and date not later than 10:30 a.m. San Francisco time, on
____________, 1998 as the Representatives shall designate by notice to the
Company (the time and date of such closing are called the "First Closing Date").
The Company hereby acknowledges that circumstances under which the
Representatives may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Representatives to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the provisions
of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to an aggregate of 1,200,000 Optional Common Shares from the
Company at the purchase price per share to be paid by the Underwriters for the
Firm Common Shares. The option granted hereunder is for use by the Underwriters
solely in covering any over-allotments in connection with the sale and
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Common
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Optional Common Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Optional Common Shares to be purchased as
the number of Firm Common Shares set forth on Schedule A opposite the
13
name of such Underwriter bears to the total number of Firm Common Shares. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
Public Offering of the Common Shares. The Representatives hereby
advise the Company that the Underwriters intend to offer for sale to the public
upon the terms described in the Prospectus, their respective portions of the
Common Shares as soon after this Agreement has been executed and the
Registration Statement has been declared effective as the Representatives, in
their sole judgment, have determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares shall be
made at the First Closing Date (and, if applicable, at the Second Closing Date)
by wire transfer of immediately available funds to the order of the Company.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have agreed
to purchase. NationsBanc Xxxxxxxxxx, individually and not as a Representative of
the Underwriters, may (but shall not be obligated to) make payment for any
Common Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
Delivery of the Common Shares. The Company shall deliver, or cause to
be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered, to the Representatives for the accounts of
the several Underwriters, certificates for the Optional Common Shares the
Underwriters have agreed to purchase at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
14
Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date the Common Shares are released by
the Underwriters for sale to the public, the Company shall deliver or cause to
be delivered copies of the Prospectus in such quantities and at such places as
the Representatives shall reasonably request.
Section 3. Additional Covenants of the Company. The Company further
covenants and agrees with each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and
Supplements. During such period beginning on the date hereof and ending on the
later of the First Closing Date or such date as of which, as in the opinion of
counsel for the Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) under the
Securities Act) or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this Agreement,
the Company shall promptly advise the Representatives in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment or
supplement to any preliminary prospectus or the Prospectus, (iii) of the time
and date that any post-effective amendment to the Registration Statement becomes
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of any order preventing or suspending the use of any
preliminary prospectus or the Prospectus, or of any proceedings to remove,
suspend or terminate from listing or quotation the Common Stock from any
securities exchange upon which it is listed for trading or included or
designated for quotation, or of the threatening or initiation of any proceedings
for any of such purposes. If the Commission shall enter any such stop order at
any time, the Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees that it
shall comply with the provisions of Rules 424(b), 430A and 434, as applicable,
under the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) were received in a timely
manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Representatives or counsel for the
Underwriters it is otherwise necessary to amend
15
or supplement the Prospectus to comply with law, the Company agrees to promptly
prepare (subject to Section 3(a) hereof), file with the Commission and furnish
at its own expense to the Underwriters and to dealers, amendments or supplements
to the Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus.
The Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto as the Representatives may reasonably request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of) the
blue sky or state securities laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Common Shares. The Company shall not be required to
qualify as a foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign corporation. The
Company will advise the Representatives promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Common
Shares for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain,
at its expense, a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering a period of at least
twelve months beginning after the effective date of the Registration Statement
that satisfies the provisions of Section 11(a) of the Securities Act.
(i) Periodic Reporting Obligations. During the Prospectus
Delivery Period, the Company shall file, on a timely basis, with the Commission
and, if required, the New York Stock Exchange, all reports and documents
required to be filed under the Exchange Act. Additionally, the Company shall
include in its filings
16
with the Commission all disclosures as may be required under Rule 463 under the
Securities Act as such rule may be amended from time to time.
(j) Agreement Not To Offer or Sell Additional Securities. During
the period of 180 days following the date of the Prospectus, the Company will
not, without the prior written consent of NationsBanc Xxxxxxxxxx (which consent
may be withheld at the sole discretion of NationsBanc Xxxxxxxxxx), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge, transfer
or establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the
Securities Act in respect of, any shares of Common Stock, options or warrants to
acquire shares of Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Common Shares); provided, however, that the
Company may issue shares of its Common Stock or options to purchase its Common
Stock, or shares of Common Stock upon exercise of options, pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the
Prospectus and may issue shares of Common Stock in connection with the
acquisition of additional companies in the energy and indoor environmental
systems and services industry, but only if the holders of such shares, options,
or shares issued upon exercise of such options, agree in writing not to sell,
offer, dispose of or otherwise transfer any such shares or options during such
180-day period without the prior written consent of the Company and provided,
further, the Company will not give its consent to any such sale, offer or
disposition during such 180-day period without the prior written consent of
NationsBanc Xxxxxxxxxx (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx).
(k) No Waiver of Founding Company Stockholder Lock-up. The
Company will not (i) waive the provisions of Section 15.1 of any Agreement and
Plan of Organization during the period of 180 days following the date of the
Prospectus without the prior written consent of NationsBanc Xxxxxxxxxx (which
consent may be withheld at the sole discretion of NationsBanc Xxxxxxxxxx), or
(ii) accelerate or otherwise reduce the vesting period of any options issued by
the Company to employees and/or former optionholders of Air Systems.
(l) Future Reports to the Representatives. During the period of
five years after the date of this Agreement the Company will furnish to the
Representatives (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance sheet of the
Company as of the close of such fiscal year and statements of income,
stockholders' equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public or certified public accountants;
(ii) as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other report filed by the Company with the Commission, the
NASD or any securities exchange; and (iii) as soon as available, copies
17
of any report or communication of the Company mailed generally to holders of its
capital stock.
(m) Satisfaction of Founding Company Merger Conditions. The
Company will: (i) use its best efforts to satisfy all conditions to consummation
of the Founding Company Mergers as set forth in each Agreement and Plan of
Organization with respect thereto; (ii) use its best efforts to cause each other
party to each such Agreement and Plan of Organization to satisfy all conditions
to the consummation of the Founding Company Mergers; and (iii) promptly notify
the Representatives of the occurrence of any event which may result in the
non-consummation of any of the Founding Company Mergers on the First Closing
Date.
The Representatives, on behalf of the several Underwriters, may, in
their sole discretion, waive in writing the performance by the Company of any
one or more of the foregoing covenants or extend the time for their performance.
Section 4. Payment of Expenses. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
under this Agreement and in connection with the transactions contemplated hereby
and in connection with the Founding Company Mergers, including without
limitation (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Common Shares to the Underwriters, (iv) all fees and expenses of the
Company's counsel, independent public or certified pubic accountants and other
advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the blue sky laws, and, if requested by the Representatives, preparing and
printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriters of such qualifications, registrations and exemptions,
(vii) the filing fees incident to, and the reasonable fees and expenses of
counsel for the Underwriters in connection with, the NASD's review and approval
of the Underwriters' participation in the offering and distribution of the
Common Shares (which legal fees, together with the legal fees of Underwriters'
Counsel described in Section 4(vi), shall not exceed $7,500), (viii) the fees
and expenses associated with including the Common Shares on the New York Stock
Exchange, and (ix) all other fees, costs and expenses referred to in Item 14 of
Part II of the Registration Statement. Except as provided in this Section 4,
Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their own
expenses, including the fees and disbursements of their counsel.
18
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the First Closing Date
as though then made and, with respect to the Optional Common Shares, as of the
Second Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Representatives shall have received from Price Waterhouse LLP, independent
public or certified public accountants for the Company, and each of the Founding
Companies other than Air Systems, and from Shilling & Xxxxxx, Inc., independent
or certified public accountants for Air Systems, a letter dated the date hereof
addressed to the Underwriters, in form and substance satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Prospectus (and the
Representative shall have received an additional __ conformed copies of such
accountants' letters for each of the several Underwriters). The specified date
referred to therein for the carrying out of procedures shall be no more than
five days prior to the date of this Agreement.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the Optional
Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed
a post-effective amendment to the Registration Statement containing
the information required by such Rule 430A, and such post-effective
amendment shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment to the Registration Statement, shall be
in
19
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the
date of this Agreement and prior to the First Closing Date and, with respect to
the Optional Common Shares, the Second Closing Date, in the judgment of the
Representatives there shall not have occurred any Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received the
favorable opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the Company, dated
as of such Closing Date, the form of which is attached as Exhibit A (and the
Representatives shall have received an additional __ conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representatives shall have received
the favorable opinion of Xxxxxxxxx & Xxxxxxxx L.L.P., counsel for the
Underwriters, dated as of such Closing Date, with respect to such matters as are
customarily contained in such opinion (and the Representatives shall have
received an additional __ conformed copies of such counsel's legal opinion for
each of the several Underwriters).
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate of the Company executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and the Chief Financial Officer or
Chief Accounting Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsections (b)(ii) and (c) of this Section 5, and further
to the effect that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any Material
Adverse Change;
(ii) the representations, warranties and covenants of the Company
set forth in Section 1 of this Agreement are true and correct with
the same force and effect as though expressly made on and as of such
Closing Date; and
(iii) the Company has, in all material respects, complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
20
(g) Bring-down Comfort Letter. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received from Price
Waterhouse LLP, independent public or certified public accountants for the
Company, and each of the Founding Companies other than Air Systems, and from
Shilling & Xxxxxx, Inc., independent or certified public accountants for Air
Systems, a letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than five days prior to the First Closing Date or Second
Closing Date, as the case may be (and the Representatives shall have received an
additional __ conformed copies of such accountants' letter for each of the
several Underwriters).
(h) Founding Company Merger Closings. With respect to the Founding
Company Mergers:
(i) Each condition to the obligations of the Company set forth in
Section 9 of each Agreement and Plan of Organization shall have been
satisfied, without waiver or modification, except as may be approved
by the Representatives.
(ii) Each certificate delivered to the Company pursuant to each
Agreement and Plan of Organization shall have also been delivered to
the Representatives.
(iii) Counsel for each of the Founding Companies shall have
furnished to the Representatives a letter, in form and substance
satisfactory to the Representatives, to the effect that they are
entitled to rely on the opinion of such counsel delivered to the
Company pursuant to each Agreement and Plan of Organization as if
such opinion were addressed to them or each such opinion shall be
addressed directly to the Representatives.
(iv) On the First Closing Date, the Representatives shall have
received opinions, in form and substance satisfactory to the
Representatives, from counsel for the Company or counsel for each of
the Founding Companies, to the effect that each of the Founding
Company Mergers pursuant to each Agreement and Plan of Organization
has become effective and that such Agreement and Plan of Organization
has been duly authorized by the Company and the respective Founding
Companies and their respective stockholders, and the compliance in
all material respects of the same with applicable law.
21
(v) Each Agreement and Plan of Organization shall be in full
force and effect and none of the parties thereto shall be in default
thereunder. The Representatives shall have received assurances
reasonably satisfactory to them that all documents required to be
filed in the respective states in order to effectuate the
consummation of each Founding Company Merger shall have been approved
for filing by the appropriate authorities in each state and that all
of such Founding Company Merger documents shall be filed
substantially concurrently with the consummation of the transactions
pursuant to this Agreement.
(vi) The execution and the delivery of each Agreement and Plan of
Organization and the consummation of the transactions contemplated
thereby shall have been approved by all regulatory authorities whose
approvals are required by law and any waiting period with respect to
any of the Founding Company Mergers as may be required under the
Xxxx-Xxxxx-Xxxxxx Xxxxxxxxx and Improvements Act of 1976, as amended,
shall have expired or terminated.
(i) Lock-Up Agreement from Certain Stockholders of the Company. On
the date hereof, the Company shall have furnished to the Representatives an
agreement in the form of Exhibit B hereto from each director, officer and
certain beneficial owners of Common Stock (as defined and determined according
to Rule 13d-3 under the Exchange Act, except that a 180 day period shall be used
rather than the sixty day period set forth therein), as set forth on Exhibit C
hereto and such agreement shall be in full force and effect on each of the First
Closing Date and the Second Closing Date.
(j) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Common Shares as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Common Shares, at any time prior
to the Second Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
Section 6. Reimbursement of Underwriters' Expenses. If this Agreement
is terminated by the Representatives pursuant to Section 5, or clause (i), (v)
or (vi) of Section 11, or if the sale to the Underwriters of the Common Shares
on the First Closing Date is not consummated because of any refusal, inability
or failure on
22
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representatives and the
other Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to reasonable fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.
Section 7. Effectiveness of this Agreement.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Section 4 hereof, (b) any
Underwriter to the Company, or (c) any party hereto to any other party except
that the provisions of Section 8 and Section 9 shall at all times be effective
and shall survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
loss, claim, damage, liability or expense, as incurred, to which such
Underwriter or such controlling person may become subject, under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the Securities Act, 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 (ii) upon
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the 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; or (iii) in whole or
in part upon any inaccuracy in the representations
23
and warranties of the Company contained herein; or (iv) in whole or in part upon
any failure of the Company to perform its obligations hereunder or under law; or
(v) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Common Stock
or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon any matter covered by clause (i) or (ii) above, provided that the
Company shall not be liable under this clause (v) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct; and to reimburse each Underwriter
and each such controlling person for any and all expenses (including the
reasonable fees and disbursements of counsel chosen by NationsBanc Xxxxxxxxxx)
as such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the foregoing indemnity agreement shall not apply to any loss,
claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by the Representatives expressly
for use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further, that
with respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person asserting
any loss, claim, damage, liability or expense purchased Common Shares, or any
person controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Common Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or expense. The
indemnity agreement set forth in this Section 8(a) shall be in addition to any
liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each person named as a prospective director
in the Registration Statement, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 the Exchange Act,
against any loss, claim, damage, liability or expense, as incurred, to which the
Company, or any such director, officer, prospective director or controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such loss, claim, damage,
24
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or arises
out of or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, 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 the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer, prospective director or controlling person for any and
all expense (including the reasonable fees and expenses of counsel chosen by the
Company) as such expenses are reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The Company hereby acknowledges that the only
information that the Underwriters have furnished to the Company expressly for
use in the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) are the statements set forth (A) as the
last paragraph on the inside front cover page of the Prospectus concerning
stabilization and other transactions by the Underwriters and (B) in the table
after the first paragraph and in the second, sixth and seventh paragraphs under
the caption "Underwriting" in the Prospectus; and the Underwriters confirm that
such statements are correct. The indemnity agreement set forth in this Section
8(b) shall be in addition to any liabilities that each Underwriter may otherwise
have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those
25
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of such indemnifying party's election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (NationsBanc Xxxxxxxxxx in the case of Section 8(b) and Section 9),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
Section 9. Contribution.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the
26
relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, from the offering of the Common Shares pursuant
to this Agreement or (ii) if the allocation provided by clause (i) above 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 the Underwriters, on the other hand,
in connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities 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
Common Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Common
Shares 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 front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering price of the Common Shares
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 or any
such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 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 in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Common Shares
underwritten by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to
27
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule A. For
purposes of this Section 9, each officer and employee of an Underwriter and each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange 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, each person named
as prospective director in the Registration Statement and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
Section 10. Default of One or More of the Several Underwriters. If,
on the First Closing Date or the Second Closing Date, as the case may be, any
one or more of the several Underwriters shall fail or refuse to purchase Common
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
bear to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination. In
any such case either the Representative or the Company shall have the right to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 11. Termination of this Agreement. Prior to the First Closing
Date this Agreement may be terminated by the Representative by notice given
28
to the Company if at any time (i) trading in or quotation of any of the
Company's securities shall have been suspended or limited by the Commission or
by the New York Stock Exchange, (ii) trading in or quotation of securities
generally on either the Nasdaq Stock Market or the New York Stock Exchange shall
have been suspended or limited, or minimum or maximum prices shall have been
generally established on any of such stock exchanges by the Commission or the
NASD and such suspension or limitation of trading is in effect at the time of
termination; (iii) a general banking moratorium shall have been declared by
any of federal, New York, Delaware or California authorities; (iv) there shall
have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in United States or international
political, financial or economic conditions, as in the judgment of the
Representatives is material and adverse and makes it impracticable to market
the Common Shares in the manner and on the terms described in the Prospectus
or to enforce contracts for the sale of securities; (v) in the judgment of the
Representatives there shall have occurred any Material Adverse Change; or (vi)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Representatives may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 11 shall be without
liability on the part of (a) the Company to any Underwriter, except that the
Company shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter
to the Company, or (c) any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and
shall survive such termination.
Section 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Common Shares sold hereunder and any termination of this Agreement.
Section 13. Notices. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
29
Attention: Xx. Xxxxxxx X. Xxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Enfinity Corporation
000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 14. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers,
directors, prospective directors and controlling persons referred to in Section
8 and Section 9, and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
Section 15. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 16. Governing Law Provisions. (a) THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City and County of San Francisco or the
courts of the State of California
30
in each case located in the City and County of San Francisco (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "Related Judgment"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
Section 17. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
31
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
ENFINITY CORPORATION
By:_________________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in San Francisco, California as of the date
first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXXX BROTHERS, INC.
XXXXXXX XXXXX & ASSOCIATES, INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: NATIONSBANC XXXXXXXXXX SECURITIES LLC
By:_________________________________
Name:
Title:
32
SCHEDULE A
Number of
Firm Common
Shares to be
Underwriters Purchased
NationsBanc Xxxxxxxxxx Securities LLC . . . . . . . . . . . . .
Xxxxxx Brothers, Inc. . . . . . . . . . . . . . . . . . . . . .
Xxxxxxx Xxxxx & Associates, Inc. . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,000,000
==========
EXHIBIT A
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(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
Underwriting Agreement. The Company and each of the Acquisition
Subsidiaries has all necessary authorizations, approvals, consents,
licenses, certificates and permits of and from all federal and state
governmental or regulatory bodies or officials, to conduct all the
activities conducted by it, to own or lease all the assets owned or leased
by it and to conduct its businesses, all as described in the Registration
Statement and the Prospectus, and no such authorization, approval, consent,
order, license, certificate or permit contains a materially burdensome
restriction other than as disclosed in the Registration Statement and the
Prospectus.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction set forth in
a schedule to such opinion.
(iv) Each of the Acquisition Subsidiaries 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 to conduct its business and, to
the best knowledge of such counsel, is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction set forth in a schedule to such opinion.
(v) All of the issued and outstanding capital stock of each
Acquisition Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or, to the best knowledge of such counsel, any
pending or threatened claim.
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(vi) The Company's authorized, issued and outstanding capital stock is
as set forth under the heading "Capitalization" in the Prospectus. The
authorized capital stock of the Company (including the Common Stock)
conforms as to legal matters to the description thereof set forth in the
Prospectus. All of the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and, to the
best knowledge of such counsel, have been issued in compliance in all
material respects with the registration requirements of federal securities
laws. The form of certificate used to evidence the Common Stock is in due
and proper form, complies with all applicable requirements of the charter
and by-laws of the Company and the General Corporation Law of the State of
Delaware. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
and exercised thereunder set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(vii) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to
subscribe for or purchase securities of the Company arising (a) by
operation of the charter or by-laws of the Company or the General
Corporation Law of the State of Delaware or (b) any contract known to such
counsel to which the Company is a party.
(viii) The Underwriting Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to
indemnification and contribution thereunder may be limited by applicable
law and public policy considerations and except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(ix) The Common Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the consideration
set forth therein, will be validly issued, fully paid and nonassessable.
The shares of Common Stock to be issued in connection with the Founding
Company Mergers have been duly authorized for issuance and, when issued and
delivered by the Company in connection with the Founding Company Mergers,
will be validly issued, fully paid and nonassessable.
(x) Each of the Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the
Commission under the Securities Act. To the best knowledge of such counsel,
no stop order suspending the effectiveness of either of the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been
issued under the Securities Act
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and no proceedings for such purpose have been instituted or are pending or
are contemplated or threatened by the Commission. Any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period
required by such Rule 424(b).
(xi) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus and each amendment or supplement to
the Registration Statement and the Prospectus, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules and other financial or accounting data included
therein or in exhibits to the Registration Statement, as to which no
opinion need be rendered) comply as to form in all material respects with
the applicable requirements of the Securities Act.
(xii) The Company has been advised by the New York Stock Exchange that
the Common Shares have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
(xiii) The statements (a) in the Prospectus under the captions "Risk
Factors--Anti-Takeover Effect of Certain Charter and By-Law Provisions,"
"Management--Executive Compensation; Employment Agreements;
Covenants-Not-to-Compete," "--1998 Long-Term Incentive Plan," "Certain
Transactions," "Description of Capital Stock" and "Shares Eligible for
Future Sale" and (b) in Item 14 and Item 15 of the Registration Statement,
insofar as such statements constitute matters of law, summaries of legal
matters, the Company's charter or by-law provisions, documents or legal
proceedings, or legal conclusions, have been reviewed by such counsel and
fairly present and summarize, in all material respects, the matters
referred to therein.
(xiv) To the best knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xv) To the best knowledge of such counsel, there are no contracts or
other agreements 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 as exhibits thereto; and the
descriptions thereof and references thereto in the Registration Statement
and Prospectus are accurate in all material respects.
(xvi) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, which has not been obtained is required for the Company's
execution, delivery and performance of the Underwriting Agreement and of
each Agreement and
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Plan of Organization and consummation of the transactions contemplated
thereby and by the Prospectus, except as required under the Securities Act
and the securities or blue sky laws of any jurisdiction, and by the NASD.
(xvii) The execution and delivery of the Underwriting Agreement and of
each Agreement and Plan of Organization by the Company and the performance
by the Company of its obligations thereunder (other than performance by the
Company of its obligations under the indemnification section of the
Underwriting Agreement, as to which no opinion need be rendered) (a) have
been duly authorized by all necessary corporate action on the part of the
Company; (b) will not result in any violation of the provisions of the
charter or by-laws of the Company or any Acquisition Subsidiary; (c) will
not constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, to the best
knowledge of such counsel, any other material Existing Instrument; and (d)
to the best knowledge of such counsel, will not result in any violation of
(i) any law or administrative regulation normally applicable to
transactions of the sort contemplated by the Underwriting Agreement and
each Agreement and Plan of Organization or (ii) administrative or court
decree known to such counsel to which the Company is a party or by which it
or its properties are expressly bound.
(xviii) The Company is not, and after receipt of payment for the
Common Shares will not be, an "investment company" or a company
"controlled" by or "under common control with" an " investment company"
within the meaning of Investment Company Act.
(xix) Except as disclosed in the Prospectus under the caption "Shares
Eligible for Future Sale," to the best knowledge of such counsel, there are
no persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or
included in the offering contemplated by the Underwriting Agreement, except
for such rights as have been duly waived.
(xx) To the best knowledge of such counsel, neither the Company nor
any of the Acquisition Subsidiaries is (a) in violation of its charter or
by-laws or any law, administrative regulation or administrative or court
decree applicable to the Company or (b) in Default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any material Existing Instrument, except in each such case for such
violations or Defaults as would not, individually or in the aggregate,
result in a Material Adverse Change.
(xxi) Each Agreement and Plan of Organization has been duly and
validly authorized, executed and delivered by the Company, is the valid and
binding agreement of the Company and is enforceable against the Company in
accordance with its terms except as such enforcement may be subject to (a)
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bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting or relating to enforcement of creditors' rights generally and (b)
general equitable principles, and none of the parties thereto is in default
in any respect thereunder. To the best knowledge of such counsel, none of
the parties thereto is in default in any respect under any Agreement
and Plan of Organization. After giving effect to the Founding Company
Mergers, all of the outstanding shares of the capital stock of each of the
Founding Companies will be owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim and, to the
best knowledge of such counsel, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership interests
in any of the Founding Companies are outstanding.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants
for the Company and with representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above), and any supplements or amendments thereto, on the basis
of the foregoing (relying as to materiality in part on the representations
of officers of the Company and the Founding Companies contained in
certificates of such officers), nothing has come to their attention which
would lead them to believe that either the Registration Statement or any
amendments thereto, at the time the Registration Statement or such
amendments 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, as of its date or at the First Closing Date or the Second
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no belief as to the financial statements or schedules or other
financial or accounting data derived therefrom, included in the
Registration Statement or the Prospectus or any amendments or supplements
thereto).
In rendering such opinion, such counsel may provide that its opinion
is limited to matters governed by the laws of New York and the General
Corporation Law of the State of Delaware, and the federal law of the United
States. In rendering such opinion, such counsel may rely
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(A) as to matters involving the Founding Companies, on the opinions of counsel
to each of the Founding Companies, provided that in lieu of such reliance,
Xxxxxx, Xxxxx & Xxxxxxx LLP may provide separate opinions of such counsel so
long as such opinions are addressed to the Underwriters and provided further
that, in each case, Xxxxxx, Xxxxx & Xxxxxxx LLP shall state that they believe
that they and the Underwriters are justified in relying on such other counsel
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company, the transfer agent and public officials,
copies of which have been provided to the Representatives.
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