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DRAFT
October 29, 1997
DENALI INCORPORATED
COMMON STOCK (PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
__________, 1997
Xxxxxx Xxxxxx & Company, Inc.
Xxxxxxxx Xxxxxx Refsnes, Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Denali Incorporated, a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
2,100,000 shares (the "Primary Shares") of common stock, par value $.01 per
share ("Stock"), of the Company and, at the option of the Underwriters, up to
315,000 additional shares of Stock (the "Optional Shares"). The Primary Shares
and the Optional Shares herein collectively referred to as the "Shares."
1. The Company represents and warrants to, and
agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1
(File No. 333-36857) as amended by Amendment No. 1 filed on
November 4, 1997 (the "Initial Registration Statement") in
respect of the Shares has been filed with the Securities and
Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and,
excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in
such form; no other document with respect to the Initial
Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of
the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Securities Act of
1933, as amended (the "Act"), is hereinafter called a
"Preliminary Prospectus;" the various parts of the Initial
Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement including all exhibits
thereto and including the information contained in the form of
final prospectus
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filed with the Commission pursuant to Rule 424(b) under the
Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the
registration statement at the time it was declared effective
or such part of the Rule 462(b) Registration Statement, if
any, became or hereafter becomes effective, each as amended at
the time such part of the registration statement became
effective, is hereinafter collectively called the
"Registration Statement;" and such final prospectus, in the
form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus");
(b) No order preventing or suspending
the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the
foregoing shall not apply to statements or omissions made in
reliance upon information furnished in writing to the Company
by the Underwriters expressly for use therein;
(c) The Registration Statement conforms,
and the Prospectus and any further amendments or supplements
to the Registration Statement or the Prospectus will conform,
in all material respects to the requirements of the Act and
the rules and regulations of the Commission thereunder; the
Registration Statement does not and will not, as of the
applicable effective date as to the Registration Statement and
any amendment thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and the Prospectus, as of the date of such
Prospectus, does not contain an 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;
(d) The historical and pro forma
financial statements, together with related schedules and
notes, set forth in the Prospectus, comply as to form in all
material respects with the requirements of the Act. The
historical consolidated financial statements of the Company
and its subsidiaries set forth in the Prospectus present
fairly (subject, in the case of unaudited interim financial
information, to normal year-end adjustments) the consolidated
financial position of the Company and its subsidiaries at the
respective dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries
for the respective periods indicated and in accordance with
generally accepted accounting principles consistently applied
throughout such periods, unless otherwise reflected in the
notes to such financial statements. The historical
consolidated balance sheet of the Company set forth in the
Prospectus fairly presents its financial position at _______,
1997. The pro forma financial statements of the Company set
forth in the Prospectus have been prepared on a basis
consistent with the historical statements of the Company,
except for the pro forma adjustments specified therein. The
other financial and statistical information and data included
in the Prospectus are, in all material respects, accurately
presented and prepared on
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a basis consistent with such historical and pro forma
financial statements and the books and records of the Company;
(e) The historical financial statements,
together with related notes, of Xxxxxx Containment Systems,
Inc. ("Xxxxxx"), Ershigs, Inc. ("Ershigs"), GL & V/La Valley
Construction, Inc. ("GL & V/La Valley") and SEFCO, Inc.
("SEFCO") (collectively, the "Acquired Companies"), set forth
in the Prospectus present fairly (subject, in the case of
unaudited interim financial information, to normal year-end
adjustments) the financial position of the Acquired Companies
at the respective dates indicated and the results of
operations and cash flows of the Acquired Companies for the
respective periods indicated and in accordance with generally
accepted accounting principles consistently applied throughout
such periods, unless otherwise reflected in the notes to such
financial statements. The historical balance sheet of Xxxxxx
set forth in the Prospectus fairly presents its financial
position at December 31, 1994. The historical balance sheet
of Ershigs fairly presents its financial position at December
31, 1996. The historical balance sheet of GL & V/La Valley
set forth in the Prospectus fairly presents its financial
position at August 16, 1997. The historical balance sheet of
SEFCO set forth in the Prospectus fairly presents its
financial position at December 31, 1996;
(f) The Company maintains a system of
internal accounting control sufficient to provide reasonable
assurance that (i) transactions are executed in accordance
with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences;
(g) Neither the Company nor any of its
subsidiaries has sustained since the date of the latest
audited financial statements included in the Prospectus any
loss or interference with its business material to the Company
and its subsidiaries considered as one enterprise from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in
the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change,
in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries considered as one enterprise,
otherwise than as set forth or contemplated in the Prospectus;
(h) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and
conduct its business as described in the Prospectus,
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and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties or conducts any business except where the failure
so to qualify or to be in good standing would not have a
material adverse effect on the business affairs, business
prospects, assets, financial position or results of operations
of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"); and each direct or
indirect subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation or has
been formed and is validly existing as a limited partnership,
as the case may be;
(i) The Company has authorized capital
stock as set forth in the Prospectus, and all of the issued
shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the
description of capital stock contained in the Prospectus; and
all of the issued shares of capital stock of, or partnership
or other equity ownership interest in, each subsidiary of the
Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims except as disclosed in the
Prospectus;
(j) The Shares to be issued and sold by
the Company to the Underwriters hereunder have been duly and
validly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and validly
issued and fully paid and non-assessable and will conform to
the description of the Stock contained in the Prospectus;
(k) The issue and sale of the Shares to
be sold by the Company and the compliance by the Company with
all of the provisions of this Agreement and the consummation
of the transactions herein contemplated will not conflict with
or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate
of Incorporation or By-laws of the Company or any applicable
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties;
and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration of the
Shares under the Act and under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Shares by
the Underwriters;
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(l) Neither the Company nor any of its
subsidiaries is in violation of its Certificate of
Incorporation or By-laws or other organizational documents or
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it
or any of its properties may be bound except to the extent it
would not result in a Material Adverse Effect;
(m) The statements set forth in the
Prospectus under the caption "Description of Capital Stock,"
insofar as they purport to constitute a summary of the terms
of the capital stock of the Company are accurate and complete
in all material respects;
(n) Except as described in the
Prospectus, the Company and its subsidiaries have good and
indefeasible title to all real property and good and
marketable title to all material properties and assets
described in the Prospectus as owned by the Company or its
subsidiaries and valid, subsisting and enforceable leases for
all of the properties and assets, real or personal, described
in the Prospectus as leased by them, in each case free and
clear of any security interests, mortgages, pledges, liens,
encumbrances or charges of any kind, other than those
described in the Prospectus;
(o) Other than as set forth in the
Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or to the best of the Company's knowledge of which any
property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(p) The Company is not and, after giving
effect to the offering and sale of the Shares, will not be, an
"investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment
Company Act");
(q) Ernst & Young LLP, who have
certified certain financial statements of the Company and its
subsidiaries, are independent public accountants as required
by the Act and the rules and regulations of the Commission
thereunder;
(r) The Company (i) is in compliance
with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
waste, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required
of it under applicable Environmental Laws to conduct its
business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except for
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses
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or approvals that would not, singularly or in the aggregate,
have a Material Adverse Effect. There has been no storage,
disposal, generation, transportation, handling or treatment of
hazardous substances or solid wastes by the Company (or to the
knowledge of the Company, any of its predecessors in interest)
at, upon or from any of the property now or previously owned
or leased by the Company in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit
that would require remedial action by the Company under any
applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action
which would not result in, or which would not be reasonably
likely to result in, singularly or in the aggregate with all
such violations and remedial actions, a Material Adverse
Effect; there has been no spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of
any solid wastes or hazardous substances due to or caused by
the Company, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would
not result in or would not be reasonably likely to result in,
singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings or
releases, a Material Adverse Effect; and the terms "hazardous
substances" and "solid wastes" shall have the meanings
specified in any applicable local, state or federal law or
regulation with respect to environmental protection;
(s) There are no persons with
registration or similar rights to require registration of any
securities of the Company under the Act because of the filing
of the Registration Statement or the sale of the Shares by the
Company to the Underwriters; and
(t) This Agreement has been duly
authorized, executed and delivered by the Company.
2. Subject to the terms and conditions herein
set forth, (a) the Company hereto agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at a purchase price per share of $____, the number of Primary
Shares (to be adjusted by you so as to eliminate fractional shares) determined
by multiplying the aggregate number of Shares to be sold by the Company by a
fraction, the numerator of which is the aggregate number of Primary Shares to
be purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the aggregate
number of Primary Shares to be purchased by all of the Underwriters from the
Company hereunder and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Shares as provided below, the
Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at the purchase price per share set forth in clause (a) of this Section 2, that
portion of the number of Optional Shares as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
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The Company hereby grants to the Underwriters the one-time right to
purchase at their election up to 315,000 Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
over-allotments in the sale of the Primary Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to
the Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of
such notice.
3. Upon the authorization by you of the release
of the Primary Shares, the several Underwriters propose to offer the Primary
Shares for sale upon the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as Xxxxxx Xxxxxx & Company, Inc., ("Xxxxxx
Xxxxxx") may request upon at least forty-eight hours' prior notice to the
Company, shall be delivered by or on behalf of the Company to Xxxxxx Xxxxxx for
the account of such Underwriter, against payment therefor in immediately
available funds. The Company will cause the certificates representing the
Shares to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto at
the office of Xxxxxx Xxxxxx, 00 X. Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Primary Shares, 8:30 a.m., Central Standard Time, on
________, 1997 or such other time and date as Xxxxxx Xxxxxx and the Company may
agree in writing, and with respect to the Option Shares, 8:30 a.m., Central
Standard Time, on the date specified by Xxxxxx Xxxxxx in the written notice
given by Xxxxxx Xxxxxx of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Xxxxxx Xxxxxx, the Company may agree
upon in writing. Such time and date for delivery of the Primary Shares is
herein called the "First Time of Delivery," such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery," and each such time and date for delivery is herein
called a "Time of Delivery."
(b) The documents to be delivered at
each Time of Delivery by or on behalf of the parties hereto
pursuant to Section 7 hereof, including the cross receipt for
the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(i) hereof will be delivered
at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000 (the "Closing Location"), and the
Shares will be delivered at the Designated Office, all at Time
of Delivery. A meeting will be held at the Closing Location
at 2:00 p.m., Central Standard Time, on the Business Day next
preceding Time of Delivery, at which meeting the final drafts
of the documents to be delivered pursuant to the preceding
sentence will be available for review by the parties hereto.
For the purposes of this Section 4, "Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday that
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is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to
close.
5. The Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form
approved by you and to file such Prospectus pursuant to Rule
424(b) under the Act not later than the Commission's close of
business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the
Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which reasonably shall be
disapproved by you promptly after reasonable notice thereof;
to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission
of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take
such action as you may reasonably request to cooperate with
the Underwriters to qualify the Shares for offering and sale
under the securities laws of such jurisdictions as you may
request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a
foreign corporation or as a dealer in securities, to file a
general consent to service of process in any jurisdiction or
to subject itself to taxation in any jurisdiction in which it
is not otherwise so subject;
(c) On the Business Day next succeeding
the date of this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in such
quantities as you may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue
of the Prospectus in connection with the offering or sale of
the Shares and if at such time any events shall have occurred
as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to
each
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Underwriter and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance,
and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at
any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as
many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) If the Company elects to rely upon
Rule 462(b), the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b)
by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either
pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(3a) under the
Act;
(e) To make generally available to its
security holders as soon as practicable, but in any event not
later than eighteen months after the effective date of the
Registration Statement (as defined in Rule 158(c) under the
Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the
Company, Rule 158);
(f) During the period beginning from the
date hereof and continuing to and including the date 180 days
after the date of the Prospectus, not to, directly or
indirectly, offer, sell, offer to sell, contract to sell,
grant any option to purchase, or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or
other disposition) of, except as provided hereunder, any
securities of the Company that are substantially similar to
the Shares, including but not limited to any securities that
are convertible into or exercisable or exchangeable for, or
that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to
employee stock option plans existing on the date of this
Agreement), without the prior written consent of Xxxxxx
Xxxxxx;
(g) To furnish to its stockholders as
soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial
information of the Company and its subsidiaries for such
quarter in reasonable detail;
(h) During a period of five years from
the effective date of the Registration Statement, to furnish
to you copies of all reports or other communications
(financial or other) furnished generally to stockholders, and
to deliver to you (i) as soon as they are available,
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copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange
on which any class of securities of the Company is listed and
(ii) such additional information concerning the business and
financial condition of the Company as you may from time to
time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished to
its stockholders generally or to the Commission);
(i) To use the net proceeds received by
it from the sale of the Shares pursuant to this Agreement in
the manner specified in the Prospectus under the caption "Use
of Proceeds;"
(j) To use all reasonable efforts to
list for quotation the Shares on the National Association of
Securities Dealers Automated Quotations National Market
("NASDAQ"); and
(k) To file with the Commission such
reports on Form SR as may be required by Rule 463 under the
Act.
6. The Company covenants and agrees with the
several Underwriters that (a) the Company will pay or cause to be paid, the
following: (i) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the Act
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus
and amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the blue sky survey;
(iv) all fees and expenses in connection with listing the Shares for quotation
on NASDAQ; (v) the filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the
sale of the Shares; (vi) the cost of preparing stock certificates; (vii) the
cost and charges of any transfer agent or registrar and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
that except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees
of their counsel, stock transfer taxes on resale of any of the Shares by them,
and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters
hereunder, as to the Shares to be delivered at each Time of Delivery, shall be
subject, in their discretion, to the condition that all representations and
warranties of the Company herein are, at and as of such Time of Delivery, true
and correct, the
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condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules
and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m., Washington, D.C. time, on the
date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) Xxxxxx & Xxxxxx L.L.P., counsel for
the Underwriters, shall have furnished to you such opinion or
opinions, dated such Time of Delivery, with respect to matters
as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Xxxxxxxxx & Grundy, L.L.P., counsel
for the Company, shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly
incorporated and is validly existing as a
corporation in good standing under the laws
of the State of Delaware, with corporate
power and authority to own its properties and
conduct its business as described in the
Prospectus;
(ii) The Company has authorized
capital stock as set forth in the Prospectus
under the caption "Description of Capital
Stock" (except for subsequent issuances, if
any, pursuant to this Agreement [or pursuant
to reservations, agreements, employee benefit
plans or the exercise of convertible
securities or options referred to in the
Prospectus]); all of the issued and
outstanding shares of capital stock of the
Company (including the Shares being delivered
at such Time of Delivery) have been duly
authorized and validly issued and are fully
paid and non-assessable; and the Shares
conform, as to legal matters, in all material
respects to the description of the Shares
contained in the Prospectus under the caption
"Description of Capital Stock;"
(iii) The Company has been duly
qualified as a foreign corporation to
transact business and is in good standing
under the laws of each other jurisdiction in
which such qualification is required, except
where the failure so to qualify or to be in
good standing would not have a Material
Adverse Effect;
(iv) Each direct or indirect
subsidiary of the Company has been duly
incorporated and is validly existing as a
corporation in good standing under the laws
of its
- 11 -
12
jurisdiction of incorporation or is duly
formed and validly existing as a limited
partnership, as the case may be, and all of
the issued shares of capital stock of, or
partnership or other equity ownership
interest in, each such subsidiary have been
duly and validly authorized and issued, are
fully paid and non-assessable, and to such
counsel's knowledge after due inquiry are
owned directly or indirectly by the Company),
free and clear of all liens, encumbrances,
equities or claims;
(v) To such counsel's knowledge
after due inquiry, there is no legal or
governmental proceeding which is required to
be disclosed in the Prospectus and is not
disclosed;
(vi) This Agreement has been duly
authorized, executed and delivered by the
Company;
(vii) The issue and sale of the
Shares being delivered at such Time of
Delivery to be sold by the Company and the
compliance by the Company with all of the
provisions of this Agreement and the
consummation of the transactions herein
contemplated will not conflict with or result
in a breach or violation of any of the terms
or provisions of, or constitute a default
under, any indenture, mortgage, deed of
trust, loan or credit agreement or other
agreement or instrument known to such counsel
to which the Company or any of its
subsidiaries is a party or by which the
Company or any of its subsidiaries is bound
or to which any of the property or assets of
the Company or any of its subsidiaries is
subject, nor will such action result in any
violation of the provisions of the
Certificate of Incorporation or By-laws of
the Company or any applicable statute or any
order, rule or regulation known to such
counsel after due inquiry of any court or
governmental agency or body having
jurisdiction over the Company or any of its
subsidiaries or any of their material
properties;
(viii) No consent, approval,
authorization or order of any court or
governmental agency is required to be
obtained by the Company for the issue and
sale of the Shares by the Company to the
Underwriters or the consummation by the
Company of the transactions contemplated by
this Agreement, except the registration under
the Act of the Shares, and such consents,
approvals, authorizations, registrations or
qualifications as may be required under state
securities or blue sky laws in connection
with the purchase and distribution of the
Shares by the Underwriters;
(ix) To the extent summarized
therein, all contracts and agreements
summarized in the Registration Statement and
the Prospectus are fairly summarized therein,
conform in all material respects to the
descriptions thereof contained therein, and,
to the extent such contracts or agreements or
any other material agreements are required
under the Act, or the rules and regulations
thereunder, to be filed, as exhibits to the
Registration Statement, they are so filed;
and such counsel does not know of any
contracts or other documents required to be
summarized or disclosed in the
- 12 -
13
Prospectus or to be so filed as exhibits to
the Registration Statement, which have not
been so summarized or disclosed, or so filed;
(x) The Company is not an
"investment company" or an entity
"controlled" by an "investment company," as
such terms are defined in the Investment
Company Act;
(xi) To such counsel's knowledge
after due inquiry there are no persons with
registration or similar rights to have any
securities of the Company registered pursuant
to the Registration Statement; and
(xii) The Registration Statement
and each amendment or supplement thereto, as
of their respective effective dates and the
Prospectus as of its date, comply as to form
in all material respects with the
requirements of the Act and the rules and
regulations thereunder (it being understood
that such counsel need express no opinion as
to the financial statements and schedules or
other financial data in the Registration
Statement or the Prospectus); and nothing has
come to such counsel's attention that would
lead such counsel to believe that either the
Registration Statement or any amendment or
supplement thereto, at the time such
Registration Statement or amendment or
supplement became effective, or the
Prospectus or any amendment or supplement
thereto, as of its date and as of each Time
of Delivery, contains or contained any untrue
statement of a material fact or omitted or
omits to state a material fact required to be
stated therein or necessary to make the
statements therein, in light of the
circumstances under which they were made, not
misleading;
(d) On the date of the Prospectus at a
time prior to the execution of this Agreement, at 8:30 a.m.,
Central Standard Time, on the effective date of any
post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time
of Delivery, Ernst & Young LLP shall have furnished to you a
letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto;
(e) (i) Neither the Company nor any
of its subsidiaries shall have sustained since the date of the
latest audited financial statements included in the Prospectus
any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there
shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or
any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment
of the representatives of the Underwriters so material and
adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares
- 13 -
14
being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Prospectus;
(f) On or after the date hereof there
shall not have occurred any of the following: (i) a suspension
or material limitation in trading in securities generally on
the New York Stock Exchange or on NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking
activities declared by either federal or New York or Texas
state authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the
judgment of the representatives of the Underwriters makes it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated
in the Prospectus;
(g) The Shares at such Time of Delivery
shall have been approved for quotation on NASDAQ subject only
to official notice of issuance;
(h) The Company has obtained and
delivered to the Underwriters executed copies of an agreement
from each officer and director of the Company, substantially
to the effect set forth in Subsection 5(f) hereof in form and
substance satisfactory to you;
(i) The Company shall have furnished or
caused to be furnished to you at such Time of Delivery
certificates of officers of the Company on behalf of the
Company satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as
of such Time of Delivery, as to the performance by the Company
of all of their respective obligations hereunder to be
performed at or prior to such Time of Delivery, and as to such
other matters as you may reasonably request, the Company shall
have furnished or caused to be furnished certificates as to
the matters set forth in subsections (a) and (e) of this
Section and the Company shall have furnished or caused to be
furnished to you such other documents as you may reasonably
request.
8.
(a) The Company will indemnify and hold
harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter
may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or (ii) any untrue statement or alleged untrue
statement made by the Company in Section 1 of this Agreement
and will reimburse each Underwriter for any legal or other
- 14 -
15
expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to
the Company by any Underwriter through the representatives
expressly for use therein;
(b) Each Underwriter will indemnify and
hold harmless the Company against any losses, claims, damages
or liabilities to which the Company may become subject, under
the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to
the Company by such Underwriter through the representatives,
expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such action
or claim as such expenses are incurred;
(c) Promptly after receipt by an
indemnified party under subsections (a) or (b) above of notice
of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but
the omission so to notify the indemnifying party shall not
relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel
to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party,
in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or
- 15 -
16
contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or failure to act, by
or on behalf of any indemnified party;
(d) If the indemnification provided for
in this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party under subsections (a) or (b)
above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the
Company bears to the total underwriting discounts and
commissions received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company on the one
hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose)
or by any other method of allocation which does not take
account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any
- 16 -
17
person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several, in proportion to
their respective underwriting obligations, and not joint.
(e) The obligations of the Company under
this Section 8 shall be in addition to any liability which the
Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 8 shall be in addition
to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named
in the Registration Statement as about to become a director of
the Company) and to each person, if any, who controls the
Company within the meaning of the Act.
9.
(a) If any Underwriter shall default in
its obligation to purchase the Shares that it has agreed to
purchase hereunder at Time of Delivery you may in your
discretion arrange for you or another party or other parties
to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter
you do not arrange for the purchase of such Shares, then the
Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In
the event that, within the respective prescribed periods, you
notify the Company that you have so arranged for the purchase
of such Shares, or the Company notifies you it has so arranged
for the purchase of such Shares, you or the Company shall have
the right to postpone Time of Delivery for a period of not
more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used
in this Agreement shall include any person substituted under
this Section with like effect as if such person had originally
been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any
arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by you and the Company as provided
in subsection (a) above, the aggregate number of such Shares
which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such
Time of Delivery, then the Company shall have the right to
require each non-defaulting Underwriter to purchase the number
of Shares which such Underwriter agreed to purchase hereunder
at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share
(based on the number of Shares which such Underwriter agreed
to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for
- 17 -
18
which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any
arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by you and the Company as provided
in subsection (a) above, the aggregate number of such Shares
which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such
Time of Delivery, or if the Company shall not exercise the
right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with
respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company,
except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity
and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability
for its default.
10. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any officer or director or controlling
person of the Company and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated
pursuant to Section 9 hereof, the Company shall not then be under any liability
to any Underwriter except as provided in Sections 6 and 8 hereof; but, if for
any other reason any Shares are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through you for
all out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on
behalf of each of the Underwriters, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by you jointly or by Xxxxxx Xxxxxx on behalf of you
as the representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the representatives in care of Xxxxxx
Xxxxxx & Company, Inc., 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000,
Attention: Xxxx Xxxxxx, telecopier number (000) 000-0000; and if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement, Attention:
Xxxxx Xxxxxxx, telecopier number (000) 000-0000;
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19
provided, however, that any notice to an Underwriter pursuant to Section 8(b)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire or
telex constituting such Questionnaire, which address will be supplied to the
Company by you on request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters and the Company and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors of the
Company and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this
Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE.
16. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the representatives of the
Underwriters plus one for each counsel and the Custodian, of any counterparts
hereof, and upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement among each of the Underwriters and the Company. It is understood
that your acceptance of this letter on behalf of each of the Underwriters is
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Company for examination, upon
request, but without warranty on your part as to the authority of the signers
thereof.
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20
Very truly yours,
DENALI INCORPORATED
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
Accepted as of the date hereof
Xxxxxx Xxxxxx & Company, Inc.
Xxxxxxxx Xxxxxx Refsnes, Inc.
By:
-----------------------------------
On behalf of each of the Underwriters
- 20 -
21
SCHEDULE I
Number of Optional
Total Number of Shares to be purchased
Primary Shares if Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ----------
Xxxxxx Xxxxxx & Company, Inc.
Xxxxxxxx Xxxxxx Refsnes, Inc.
TOTAL ======= =======
22
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries (including, but not limited to, Xxxxxx,
Ershigs and GL & V/La Valley) within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by them
and included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the Act
and the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial data, pro forma
financial information, financial forecasts and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon, copies
of which have been separately furnished to the representatives of the
Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of the
consolidated statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus as indicated in their
reports thereon, copies of which have been separately furnished to the
Representatives and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and accounting
matters regarding whether the consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published rules
and regulations, nothing came to their attention that caused them to believe
that the consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the Company
for the three most recent fiscal years included in the Prospectus agrees with
the corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such three fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them
- 1 -
23
to believe that this information does not conform in all material respects with
the disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of officials
of the Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) [the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
financial statements referred to in clause (A) and] any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma condensed consolidated
financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in
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the consolidated long-term debt of the Company and its subsidiaries,
or any decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by
the Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
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