NCI BUILDING SYSTEMS, INC.
COMMON STOCK
($0.01 Par Value)
UNDERWRITING AGREEMENT
____________, 1998
UNDERWRITING AGREEMENT
____________, 1998
Warburg Dillon Read LLC
535 Madison Avenue
New York, New York 10022
J.C. Bradford & Co.
330 Commerce Street
Nashville, Tennessee 37201
Wheat First Union
Riverfront Plaza
Richmond, Virginia 23219
Dain Rauscher Wessels
(a division of Dain Rauscher Incorporated)
2711 North Haskell Avenue
Suite 2400
Dallas, Texas 75204-2936
as Managing Underwriters
Dear Sirs:
NCI Building Systems, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell and the persons named in Schedule B (the "Selling
Shareholders") propose to sell to the underwriters named in Schedule A (the
"Underwriters") an aggregate of 3,800,000 shares (the "Firm Shares") of
Common Stock, par value $ 0.01 per share (the "Common Stock"), of the
Company, of which 3,500,000 shares are to be issued and sold by the Company
and an aggregate of 300,000 shares are to be sold by the Selling Shareholders
in the respective amounts set forth opposite their names in Schedule B. In
addition, solely for the purpose of covering overallotments, the Company
[and the Selling Shareholders] propose[s] to issue and sell, at the
Underwriters' option, up to 570,000 additional shares of the Common Stock
(the "Additional Shares") [of which _________ shares may be issued and sold by
the Company and an aggregate of ____________ shares may be sold by the Selling
Shareholders
in the respective amounts set forth opposite their names in Schedule B]. The
Additional Shares and the Firm Shares are collectively referred to as the
"Shares". The Shares are described in the Prospectus which is referred to
below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3, including a prospectus,
relating to the Shares, which incorporates by reference documents that the
Company has filed in accordance with the provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(collectively, the "Exchange Act"). The Company has furnished to you, for
use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses and all documents incorporated by reference therein
(collectively, the "Preliminary Prospectus") relating to the Shares. Except
where the context otherwise requires, the registration statement as in effect
at the time of execution of this Agreement or, if the registration statement
is not yet effective, as amended when it becomes effective, including all
documents filed as a part thereof or incorporated by reference therein, and
including any registration statement filed pursuant to Rule 462(b) under the
Act increasing the size of the offering registered under the Act and any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the Act and deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A
under the Act, is herein called the "Registration Statement", and the
prospectus, including all documents incorporated therein by reference, in the
form filed by the Company with the Commission pursuant to Rule 424(b) under
the Act or, if no such filing is required, in the form of final prospectus
included in the Registration Statement at the time it became effective, is
herein called the "Prospectus".
The Company, the Selling Shareholders and the Underwriters agree as
follows:
1. SALE AND PURCHASE. On the basis of the representations and
warranties and the other terms and conditions herein set forth, the Company
and each Selling Shareholder, severally and not jointly, agrees to sell to
the respective Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and each Selling Shareholder the
respective number of Firm Shares (subject to such adjustment as you may
determine to avoid fractional shares) which bears the same
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proportion to the number of Firm Shares to be sold by the Company or by that
Selling Shareholder, as the case may be, as the number of Firm Shares set
forth opposite the name of such Underwriter on Schedule A bears to the total
number of Firm Shares to be sold by the Company and the Selling Shareholders,
in each case at a purchase price of $____ per Share. You may release the
Firm Shares for public sale promptly after this Agreement becomes effective.
You may from time to time increase or decrease the public offering price
after the initial public offering to such extent as you may determine.
In addition, on the basis of the representations and warranties and the
other terms and conditions herein set forth, the Company [and each Selling
Shareholder, severally and not jointly,] hereby grants to the several
Underwriters an option to purchase, and the Underwriters shall have the right
to purchase, severally and not jointly, from the Company all or a portion of
the Additional Shares as may be necessary to cover overallotments made in
connection with the offering of the Firm Shares, at the same purchase price
per share to be paid by the several Underwriters to the Company and the
Selling Shareholders for the Firm Shares. This option may be exercised in
whole or in part from time to time on or before the thirtieth day following
the date hereof, by written notice to the Company. Any such notice shall set
forth the aggregate number of Additional Shares as to which the option is
being exercised, and the date and time when the Additional Shares are to be
delivered (any such date and time being herein referred to as an "additional
time of purchase"); PROVIDED, HOWEVER, that no additional time of purchase
shall occur earlier than the time of purchase (as defined below) nor earlier
than the second business day * after the date on which the option shall have
been exercised nor later than the eighth business day after the date on which
the option shall have been exercised. The number of Additional Shares to be
sold to each Underwriter at an additional time of purchase shall be the
number which bears the same proportion to the aggregate number of Additional
Shares being purchased at such additional time of purchase as the number of
Firm Shares set forth opposite the name of such Underwriter on Schedule A
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional shares).
- -------------------------
* As used herein, "business day" shall mean a day on which the New York
Stock Exchange is open for trading.
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2. PAYMENT AND DELIVERY. Payment of the purchase price for the Firm
Shares shall be made to the Company and to the Attorney-in-fact referred to
in Section 4(d) on behalf of the Selling Shareholders by certified or
official bank checks, in immediately available funds, at the office of
Warburg Dillon Read LLC in New York City, against delivery of the
certificates for the Firm Shares to you for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 9:30 A.M., New York
City time, on ____________, 1998 (unless another time shall be agreed to by
you, the Company and the Selling Shareholders or unless postponed in
accordance with the provisions of Section 10). The time at which such
payment and delivery are actually made is called the "time of purchase".
Certificates for the Firm Shares shall be delivered to you in definitive form
in such names and in such denominations as you shall specify on the second
business day preceding the time of purchase. For the purpose of expediting
the checking of the certificates for the Firm Shares by you, the Company and
the Selling Shareholders agree to make such certificates available to you for
such purpose at least one full business day preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for the Additional Shares
shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding the
additional time of purchase. For the purpose of expediting the checking of
the certificates for the Additional Shares by you, the Company and the
Selling Shareholders agree to make such certificates available to you for
such purpose at least one full business day preceding the additional time of
purchase.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS. The Company and each of the Selling Shareholders, jointly and
severally, represent and warrant to each of the Underwriters that:
(a) Each Preliminary Prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act; when the Registration Statement becomes or became
effective and at all times subsequent thereto up to the time of purchase
and the additional time of purchase, the Registration Statement and the
Prospectus, and any supplements or amendments thereto, complied and will
comply in all material
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respects with the provisions of the Act; and the Registration Statement at
all such times did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
the Prospectus at all such times did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company and the Selling Shareholders make no
representation or warranty with respect to any statement contained in the
Registration Statement or the Prospectus in reliance upon and in conformity
with information concerning the Underwriters and furnished in writing by or
on behalf of any Underwriter through you to the Company expressly for use
in the Registration Statement or the Prospectus and set forth in the
section of the Registration Statement and the Prospectus entitled
"Underwriting"; the documents incorporated by reference in the Prospectus,
at the time they were filed with the Commission, complied in all material
respects with the requirements of the Exchange Act, and do 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 light of the circumstances under which they were made, not misleading.
(b) As of the date of this Agreement, the Company has an authorized
capitalization as set forth under the column entitled "April 30, 1998
Actual" in the section of the Registration Statement and the Prospectus
entitled "Capitalization" and, as of the time of purchase, the
capitalization of the Company will be as set forth under the column
entitled "April 30, 1998 As Adjusted" in the section of the Registration
Statement and the Prospectus entitled "Capitalization"; all of the issued
and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and are
free of statutory and contractual preemptive rights.
(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
full power and authority to (i) own its properties and conduct its business
as described in the Registration Statement and the Prospectus and
(ii) execute and deliver this Agreement and to issue, sell and deliver the
Shares as herein contemplated.
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(d) Except as described in the Prospectus with respect to Doublecote,
L.L.C., Metallic de Mexico, S.A. de C.V., Building Systems de Mexico, S.A.
de C.V. and Midwest Metal Coating, L.L.C., all of the issued and
outstanding shares of capital stock of each of the subsidiaries of the
Company (the "Subsidiaries") are owned directly by the Company; all of such
shares have been duly authorized and validly issued and are fully paid and
nonassessable and, except as described in the Prospectus, are owned free
and clear of any pledge, lien, encumbrance, security interest or other
claim; there are no outstanding rights, subscriptions, warrants, calls,
preemptive rights, options or other agreements of any kind with respect to
the capital stock of any of the Subsidiaries.
(e) Each of the corporate Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, with full corporate power and
authority to own its respective properties and to conduct its respective
businesses. Each of the limited partnership Subsidiaries has been duly
organized and is validly existing as a limited partnership in good standing
(or the equivalent thereto) under the laws of its respective jurisdiction
of organization, with full limited partnership power and authority to own
its respective properties and to conduct its respective businesses.
(f) Each of the Company and each of the Subsidiaries is duly
qualified or licensed by and is in good standing (or the equivalent
thereto) in each jurisdiction in which it owns or leases property or
conducts its business and in each other jurisdiction in which the failure,
individually or in the aggregate, to be so qualified or licensed could have
a material adverse effect on the properties, assets, operations, business,
business prospects or condition (financial or other) of the Company and the
Subsidiaries taken as a whole; each of the Company and each of the
Subsidiaries is in compliance in all material respects with the laws,
orders, rules, regulations and directives issued or administered by each
such jurisdiction.
(g) Neither the Company nor any of the Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time or both would constitute a breach of, or default under), its charter
or bylaws, or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture,
lease,
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mortgage, deed of trust, bank loan or credit agreement, material supply
agreement or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which any of them may be bound or
affected. The execution, delivery and performance of this Agreement,
the issuance and sale of the Shares, the application of the net proceeds
thereof as described in the Prospectus and the consummation of the
transactions contemplated hereby will not conflict with, or result in
any breach of or constitute a default under (nor constitute any event
which with notice, lapse of time or both would constitute a breach of,
or default under), the charter bylaws or other organizational document
of the Company or any of the Subsidiaries or under any provision of any
license, indenture, lease, mortgage, deed of trust, bank loan or credit
agreement, material supply agreement or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which any
of them or their properties may be bound or affected, or under any
federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the Subsidiaries.
(h) The Firm Shares and the Additional Shares, when issued and
delivered to and paid for by the Underwriters as contemplated hereby,
will be duly authorized and validly issued and fully paid and
nonassessable, free and clear of any pledge, lien, encumbrance, security
interest, preemptive right or other claim.
(i) This Agreement has been duly authorized, executed and
delivered by the Company.
(j) The capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus; and the certificates
for the Shares are in due and proper form and the holders of the Shares
after making payment therefor will not be subject to personal liability
by reason of being such holders.
(k) No approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares as contemplated hereby, other
than registration of the Shares under the Act, clearance of the offering
of the Shares with the National Association of Securities Dealers, Inc.
(the
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"NASD") and any necessary qualification under the securities or blue sky
laws of the various jurisdictions in which the Shares are being offered
by the Underwriters.
(l) Each person who has the right, contractual or otherwise, to
cause the Company to register pursuant to the Act any securities of the
Company in consequence of the issue and sale of the Shares to the
Underwriters hereunder either included such securities in the
Registration Statement or duly waived such right and each person who has
the right, contractual or otherwise, to cause the Company to issue to it
any securities of the Company in consequence of the issue and sale of
the Shares to the Underwriters hereunder has duly waived such right.
(m) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Company and the Subsidiaries are included or
incorporated by reference in the Registration Statement and the
Prospectus, are independent public accountants with respect to the
Company as required by the Act and the applicable published rules and
regulations thereunder.
(n) All legal or governmental proceedings, contracts or documents
of a character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration
Statement have been so described or filed as required.
(o) There is no action, suit or proceeding pending or threatened
against the Company or any of the Subsidiaries or any of their
properties, at law or in equity, or before or by any federal, state,
local or foreign governmental or regulatory commission, board, body,
authority or agency that could result in a judgment, decree or order
having a material adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other) of the
Company and the Subsidiaries taken as a whole.
(p) The audited and unaudited financial statements included in the
Registration Statement and the Prospectus present fairly the
consolidated financial condition of the Company and the Subsidiaries as
of the dates indicated and the consolidated results of operations and
cash flows of the Company and the Subsidiaries for the periods
specified; such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a
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consistent basis during the periods involved. The pro forma financial
statements contained in the Registration Statement and Prospectus have
been prepared on a basis consistent with the financial statements
referred to above and, except for the pro forma adjustments specified
therein, include all material adjustments to the historical financial
data required by Rule 11-02 of Regulation S-X to reflect the MBCI
Acquisition and the Offering (as defined in the Prospectus), and give
effect to assumptions made on a reasonable basis and present fairly the
historical and proposed transactions contemplated by the Prospectus and
this Agreement.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as
may be otherwise stated in the Registration Statement or the Prospectus,
there has not been: (A) any material adverse change in the properties,
assets, operations, business, business prospects or condition (financial
or other), present or prospective, of the Company and the Subsidiaries
taken as a whole; (B) any transaction, that is material to the Company
and the Subsidiaries taken as a whole, contemplated or entered into by
the Company or any of the Subsidiaries; or (C) any obligation,
contingent or otherwise, directly or indirectly incurred by the Company
or any of the Subsidiaries that is material to the Company and the
Subsidiaries taken as a whole.
(r) The Company has obtained the agreement of the shareholders
listed on Schedule C not to sell, contract to sell, grant any option to
sell, transfer or otherwise dispose of, directly or indirectly, any
shares of Common Stock, or securities convertible into or exchangeable
for Common Stock or warrants or other rights to purchase Common Stock
for a period of 90 days from the date of the Prospectus without the
prior written consent of Warburg Dillon Read LLC.
(s) Neither the Company nor any of the Subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), nor any federal or state law relating to discrimination in the
hiring, promotion or pay of employees nor any applicable federal or
state wages and hours laws, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
9
thereunder, which in each case might result in any material adverse
effect on the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company and the
Subsidiaries taken as a whole.
(t) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including without limitation under any
applicable Environmental Laws, as are necessary to own, lease and
operate its respective properties and to conduct its business; the
Company and each of the Subsidiaries has fulfilled and performed all of
its material obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit; and, except
as described in the Prospectus, such permits contain no restrictions
that are materially burdensome to the Company or any of the Subsidiaries.
(u) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and the Subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including without limitation any capital or operating
expenditure required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company reasonably has
concluded that such associated costs and liabilities, singly or in the
aggregate, would not have a material adverse effect on the properties,
assets, operations, business, business prospects or condition (financial
or other) of the Company and the Subsidiaries taken as a whole.
(v) Neither the Company nor any of the Subsidiaries, nor any
employee of the Company or any of the Subsidiaries, has made any payment
of funds of the Company or any of the Subsidiaries prohibited by law,
and no funds of the Company or any of the Subsidiaries have been set
aside to be used for any payment prohibited by law.
(w) The Company and the Subsidiaries have filed all federal or
state income or franchise tax returns required to be filed and have paid
all taxes shown
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thereon as due, and there is no material tax deficiency which has been
or might be asserted against the Company or any of the Subsidiaries; all
material tax liabilities are adequately provided for on the books of the
Company and the Subsidiaries.
(x) The Company has not incurred any liability for any finder's
fees or similar payments in connection with the transactions herein
contemplated.
(y) The Company and the Subsidiaries have good title to all
properties and assets owned or leased by them, in each case free and
clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and defects (except such as are described or referred to in
the Prospectus and the financial statements and the notes thereto
contained therein or such as do not interfere with the use made and
proposed to be made of such property by the Company and the
Subsidiaries).
(z) Neither the Company nor any of the Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or is subject to regulation under such Act.
4. FURTHER REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder, severally and not jointly, further represents and
warrants to each Underwriter that:
(a) Such Selling Shareholder is and at the time of delivery of the
Shares to be sold by such Selling Shareholder will be the lawful owner
of the number of Shares or securities convertible into or warrants
exercisable for the number of Shares to be sold by such Selling
Shareholder pursuant to this Agreement and, at the time of delivery
thereof, will have valid and marketable title to such Shares, and upon
delivery of and payment for such Shares the Underwriters will acquire
valid and marketable title to such Shares free and clear of any claim,
lien, encumbrance, security interest, community property right,
restriction on transfer or other defect in title, assuming each of the
Underwriters has purchased the Shares purchased by it in good faith and
without notice of any adverse claim.
(b) Such Selling Shareholder has and at the time of delivery of
such Shares will have full legal right, power and capacity, and any
approval required by law to sell, assign, transfer and deliver such
Shares in the manner provided in this Agreement.
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(c) This Agreement has been duly authorized, executed and
delivered by such Selling Shareholder. The Power of Attorney executed
by the Selling Shareholders (the "Power of Attorney") and the Custody
Agreement among the Selling Shareholders and Harris Trust and Savings
Bank (the "Custody Agreement") have been duly executed and delivered by
such Selling Shareholder and are legal, valid and binding agreements of
such Selling Shareholder, enforceable in accordance with their terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity.
(d) Such Selling Shareholder has duly and irrevocably authorized
the Attorney-in-Fact (as defined in the Power of Attorney), on behalf of
such Selling Shareholder, to execute and deliver this Agreement and any
other document necessary or desirable in connection with the
transactions contemplated hereby and to deliver the Shares to be sold by
such Selling Shareholder and receive payment therefor pursuant hereto.
(e) The sale of the Shares by such Selling Shareholder pursuant
hereto is not prompted by any material adverse information concerning
the Company; and all information furnished in writing by or on behalf of
such Selling Shareholder specifically for use in the Registration
Statement and the Prospectus, and any supplement or amendment thereto,
is and will be when the Registration Statement became effective and at
all times subsequent thereto up to the time of purchase [AND THE
ADDITIONAL TIME OF PURCHASE], true and correct and complete and at all
such times did not and will not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(f) The consummation of the transactions contemplated hereby and
by the Power of Attorney and by the Custody Agreement and the
fulfillment of the terms hereof and thereof will not constitute a breach
or violation of or default under any trust, indenture, agreement or
other instrument to which any such Selling Shareholder is a party or by
which any such Selling Shareholder is bound.
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5. CERTAIN COVENANTS OF THE COMPANY. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect as long as required for the
distribution of the Shares, provided that the Company shall not be
required to qualify as a foreign corporation or to consent to the
service of process under the laws of any such state (except service of
process with respect to the offering and sale of the Shares); promptly
to advise you of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its best efforts to obtain the withdrawal of
any order of suspension at the earliest practicable moment;
(b) to make available to you in New York City, as soon as
practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendment or supplement
thereto after the effective date of the Registration Statement) as the
Underwriters may request for the purposes contemplated by the Act;
(c) to advise you promptly and if requested by you to confirm such
advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes
effective and (ii) when the Prospectus is filed with the Commission
pursuant to Rule 424(b) under the Act, if required under the Act (which
the Company agrees to file in a timely manner under such Rule);
(d) to advise you promptly, confirming such advice in writing, of
any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for or
the entry of a stop order suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement
the Registration
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Statement or the Prospectus, including by filing any document that would
be incorporated therein by reference, and to file no such amendment or
supplement to which you shall object in writing;
(e) to furnish to you and, upon request to each of the other
Underwriters, for a period of five years from the date of this Agreement
(i) copies of all reports or other communications that the Company shall
send to its shareholders or from time to time shall publish or publicly
disseminate and (ii) copies of all annual, quarterly and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other
similar form as may be designated by the Commission, and any other
document filed by the Company pursuant to Section 12, 13, 14 or 15(d) of
the Exchange Act;
(f) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a prospectus
relating to the Shares is required to be delivered under the Act that,
in the reasonable judgment of the Company, would require the making of
any change in the Prospectus then being used, or in the information
incorporated therein by reference, so that the Prospectus, as then
supplemented, would not include an untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they are made,
not misleading and, during such time, promptly to prepare and furnish,
at the Company's expense, to the Underwriters such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change in such quantities as requested by the Underwriters, and to
furnish to you a copy of such proposed amendment or supplement before
filing any such amendment or supplement with the Commission;
(g) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which need not be
audited and which will satisfy the provisions of Section 11(a) of the
Act including, at the option of the Company, Rule 158) covering a period
of 12 months beginning after the effective date of the Registration
Statement but ending not later than 15 months after the date of the
Registration Statement, as soon as is reasonably practicable after the
termination of such 12-month period;
(h) to furnish to you five signed copies of the Registration
Statement, as initially filed with the
14
Commission, and of all amendments thereto (including all exhibits thereto
and documents incorporated by reference therein) and sufficient conformed
copies of the foregoing (other than exhibits) for distribution of a copy
to each of the other Underwriters;
(i) to furnish to you as early as practicable prior to the time of
purchase and the additional time of purchase, as the case may be, but
not later than two business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements, if any,
of the Company and the Subsidiaries that have been read by the Company's
independent certified public accountants as stated in their letter to be
furnished pursuant to Section 8(b);
(j) to apply the net proceeds from the sale of the Shares sold by
the Company in the manner set forth under the caption "Use of Proceeds"
in the Registration Statement and the Prospectus;
(k) to use its best efforts to cause the Shares to be approved for
listing on the New York Stock Exchange;
(l) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement otherwise becomes effective or is
terminated, to pay all expenses, fees and taxes (other than (x) any
transfer taxes and (y) fees and disbursements of your counsel except as
set forth under Section 5 and clauses (iv) and (vi) below) in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus and any amendment or supplement
thereto, and the printing and furnishing of copies of each thereof to
you and to dealers (including costs of mailing and shipment), (ii) the
issuance, sale and delivery of the Shares, (iii) the word processing or
printing of this Agreement and any dealer agreements, and the
reproduction or printing and furnishing of copies of each thereof to you
and to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws as
aforesaid (including legal fees and filing fees and other disbursements
of your counsel) and the printing and furnishing of copies of any blue
sky surveys to you and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for listing on the
New York Stock Exchange and any registration thereof under the Exchange
Act, (vi) any filing for review of the public offering of the Shares
15
by the NASD and (viii) the performance of the Company's and the Selling
Shareholders' other obligations hereunder;
(m) not to sell, contract to sell, grant any option to sell,
transfer or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into or exchangeable for Common
Stock or warrants or other rights to purchase Common Stock or permit the
registration under the Act of any shares of Common Stock, except for the
registration of the Shares and the sales to you pursuant to this
Agreement for a period commencing on the date hereof and continuing for
90 days after the date of the Prospectus, without the prior written
consent of Warburg Dillon Read LLC; and
(n) to refrain from investing the proceeds from the sale of the
Shares in a manner to cause the Company or any of the Subsidiaries to
become an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
6. CERTAIN COVENANTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder agrees with each Underwriter that such Selling Shareholder will
not sell, contract to sell, grant any option to sell, transfer or otherwise
dispose of, directly or indirectly, any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other rights
to purchase Common Stock, except for the sales to you pursuant to this
Agreement, for a period commencing on the date hereof and continuing for 90
days after the date of the Prospectus, without the prior written consent of
Warburg Dillon Read LLC.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Firm Shares or the
Additional Shares are not delivered for any reason, other than the failure of
the Underwriters to purchase the Firm Shares or the Additional Shares as
provided herein (unless such failure is permitted under the provisions of
Section 8 or Section 9(b) of this Agreement), the Company will reimburse the
Underwriters for all of their out-of-pocket expenses, including the fees and
disbursements of their counsel.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders on the date hereof and at the time of purchase (and the several
obligations of the Underwriters at any
16
additional time of purchase are subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders on the date hereof and at the time of purchase and at such
additional time of purchase, as the case may be), the performance by each of
the Company and the Selling Shareholders of their obligations hereunder and
to the following conditions:
(a) The Company shall furnish to you at the time of purchase and
at such additional time of purchase, as the case may be, an opinion of
Gardere & Wynne, L.L.P., counsel for the Company and the Selling
Shareholders, addressed to the Underwriters and dated the time of
purchase or such additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in form
satisfactory to Gibson, Dunn & Crutcher LLP, counsel for the
Underwriters, stating 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 full corporate power and authority (A) to own its
properties and conduct its business as described in the
Registration Statement and the Prospectus and (B) to execute and
deliver this Agreement and to issue, sell and deliver the Shares as
herein contemplated;
(ii) each of the Subsidiaries has been duly incorporated (or, in
the case of limited partnership Subsidiaries, duly organized) and
is validly existing as a corporation or limited partnership, as the
case may be, in good standing (or equivalent thereto) under the
laws of the state in which such Subsidiary is incorporated, with
full corporate power and authority (or, in the case of limited
partnership Subsidiaries, full limited partnership power and
authority) to own its properties and to conduct its business as
described in the Registration Statement and the Prospectus;
(iii) each of the Company and each of the Subsidiaries is duly
qualified or licensed to do business by and is in good standing as
a foreign corporation, or foreign limited partnership, as the case
may be, in each jurisdiction in which it conducts business or owns
property and in which the failure, individually or in the
aggregate, to be so licensed or qualified could have a material
adverse effect on the properties, assets,
17
operations, business, business prospects or condition (financial or
other) of the Company and the Subsidiaries taken as a whole;
(iv) all of the issued and outstanding shares of capital stock
(including partnership interests) of each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable
and, except as set forth in the Prospectus, are owned, directly or
indirectly, by the Company free and clear of any pledge, lien,
encumbrance, security interest, preemptive right or other claim,
and there are no rights, warrants, options or other agreements to
acquire or instruments convertible into or exchangeable for any
shares of capital stock or other equity interest of any Subsidiary,
except as set forth in the Prospectus;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) (a) the Shares, when delivered to and paid for by the
Underwriters, will be duly authorized, validly issued, fully paid
and nonassessable, and will be free of any pledge, lien,
encumbrance, claim or preemptive right; and (b) the certificates for
the Shares are in due and proper form and the holders of the Shares
will not be subject to personal liability by reason of being such
holders;
(vii) (a) the Company has an authorized capitalization as set
forth under the heading "Capitalization" in the Registration
Statement and the Prospectus, and (b) the outstanding shares of
capital stock of the Company have been duly authorized and validly
issued and are fully paid, nonassessable and free of statutory and
contractual preemptive rights;
(viii) the capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
(ix) the Registration Statement and the Prospectus (except as
to the financial statements and schedules contained or incorporated
by reference therein as to which such counsel need express no
opinion) comply as to form in all
18
material respects with the requirements of the Act;
(x) the Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened under
the Act;
(xi) no approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency is required
in connection with the issuance or sale of the Shares as
contemplated hereby other than registration of the Shares under the
Act (except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky laws
of the various jurisdictions in which the Shares are being offered
by the Underwriters);
(xii) the execution, delivery and performance of this Agreement
by the Company, the issuance and sale of the Shares, the
application of the net proceeds thereof as described in the
Prospectus and the consummation by the Company of the transactions
contemplated hereby do not and will not conflict with, or result in
any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time or both would constitute a
breach of or default under), the charter or bylaws of the Company
or any of the Subsidiaries, or any provision of any license,
indenture, lease, mortgage, deed of trust, bank loan or credit
agreement or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries or their properties are bound or affected, or
under any federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to the Company or any
of the Subsidiaries;
(xiii) to the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in breach of or in default
under (nor has any event occurred which with notice, lapse of time
or both would constitute a breach of or default under) any license,
indenture, lease, mortgage, deed of trust, bank loan or credit
agreement or any other agreement or instrument to which the Company
or any of the Subsidiaries is a party or
19
by which the Company or any of the Subsidiaries or their properties
are bound or affected or under any law, regulation or rule or any
decree, judgment or order applicable to the Company or any of the
Subsidiaries, except for such matters as could not, individually or
in the aggregate, have a material adverse effect on the properties,
assets, operations, business, business prospects or condition
(financial or other) of the Company and the Subsidiaries taken as a
whole;
(xiv) to the best of such counsel's knowledge, after due inquiry,
neither the Company nor any of the Subsidiaries has violated any
Environmental Laws, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the
rules and regulations promulgated thereunder, which in each case
might result in any material adverse effect on the properties,
assets, operations, business, business prospects or condition
(financial or other) of the Company and the Subsidiaries taken as a
whole;
(xv) the Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including without limitation
under any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business in the manner described in the Prospectus; to the best of
such counsel's knowledge, after due inquiry, the Company and each
of the Subsidiaries has fulfilled and performed all of its material
obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit, subject
in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, such
permits contain no restrictions that are materially burdensome to
the Company or any of the Subsidiaries;
(xvi) all contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be
20
filed as an exhibit to the Registration Statement have been so
described or filed;
(xvii) except as described in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings of which
such counsel has knowledge pending or threatened against the
Company or any of the Subsidiaries, or any of their respective
properties, at law or in equity, or before or by any federal,
state, local or foreign governmental or regulatory commission,
board, body, authority or agency that individually or in the
aggregate could result in a judgment, decree or order having a
material adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other) of
the Company and the Subsidiaries taken as a whole;
(xviii) the documents incorporated by reference in the
Registration Statement and Prospectus, when they were filed (or, if
an amendment with respect to any such document was filed, when such
amendment was filed), complied as to form in all material respects
with the Exchange Act (except as to the financial statements and
schedules and other financial and statistical data contained or
incorporated by reference therein, as to which such counsel need
express no opinion);
(xix) to the best of such counsel's knowledge, each person who
has the right, contractual or otherwise, to cause the Company to
register pursuant to the Act any securities of the Company in
consequence of the issue and sale of the Shares to the Underwriters
hereunder either included such securities in the Registration
Statement or duly waived such right and each person who has the
right, contractual or otherwise, to cause the Company to issue to
it any securities of the Company in consequence of the issue and
sale of the Shares to the Underwriters hereunder has duly waived
such right;
(xx) the statements in the Registration Statement and the
Prospectus under the captions "Business -- Regulatory Matters" and
"Risk Factors -- Shares Eligible For Future Sale" and in the
Company's Registration Statement on Form 8-A dated July 20, 1998
under the caption "Description of Capital Stock," insofar as they
are descriptions of laws, regulations and rules, of legal and
21
governmental proceedings or of contracts, agreements, leases and
other legal documents, or refer to statements of law or legal
conclusions, have been reviewed by such counsel and are accurate in
all material respects;
(xxi) neither the Company nor any of the Subsidiaries is an
"investment company" or a person "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended;
(xxii) this Agreement, the Power of Attorney and the Custody
Agreement have been duly executed and delivered by each of the
Selling Shareholders; the Power of Attorney and the Custody
Agreement are legal, valid and binding agreements of each of the
Selling Shareholders enforceable in accordance with their
respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and general
principles of equity;
(xxiii) each of the Selling Shareholders has full legal right and
power, and has obtained any authorization or approval required by
law (other than those imposed by the Act and the securities or blue
sky laws of certain jurisdictions), to sell, assign, transfer and
deliver the Shares to be sold by such Selling Shareholder in the
manner provided in this Agreement;
(xxiv) delivery of certificates for the Shares to be sold by the
Selling Shareholders pursuant hereto will pass title thereto to the
Underwriters severally, free and clear of any claim, lien,
encumbrance, security interest, community property right,
restriction on transfer or other defect in title assuming that the
several Underwriters are good faith purchasers and without notice
of any adverse claim;
(xxv) to the best of such counsel's knowledge, the consummation
of the transactions contemplated hereby and by the Power of
Attorney and the Custody Agreement and the fulfillment of the terms
hereof and thereof will not constitute a breach or violation of or
default under any trust, indenture, agreement or other instrument
to which any of the Selling Shareholders is a party or by which any
of the Selling Shareholders is bound;
22
(xxvi) the Attorney-in-Fact has been duly authorized by each
Selling Shareholder to execute and deliver on behalf of each
Selling Shareholder this Agreement and any other document necessary
or desirable in connection with the transactions contemplated
hereby and to deliver the Shares to be sold by the Selling
Shareholders and receive payment therefor pursuant hereto;
(xxvii) no approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency is required
in connection with the sale of the Shares to be sold by the Selling
Shareholders as contemplated hereby other than registration of the
Shares under the Act (except such counsel need express no opinion
as to any necessary qualification under the state securities or
blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriters); and
(xxviii) nothing has come to the attention of such counsel that
causes them to believe that the Registration Statement or any
amendment thereto at the time such Registration Statement or
amendment became effective contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus or any supplement thereto at the
date of such Prospectus or such supplement, and at all times up to
and including the time of purchase 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, in
light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and schedules
included in the Registration Statement or Prospectus).
(b) You shall have received from Ernst & Young LLP letters dated,
respectively, the date of this Agreement and the time of purchase and
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in
form and substance satisfactory to you.
23
(c) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, opinions from Gibson,
Dunn & Crutcher LLP in form and substance satisfactory to you.
(d) No amendment or supplement to the Registration Statement or the
Prospectus, including documents deemed to be incorporated by reference
therein, shall be filed prior to the time the Registration Statement
becomes effective to which you shall have objected in writing.
(e) The Registration Statement shall become effective at or before
5:00 P.M., New York City time, on the date of this Agreement and, if
Rule 430A under the Act is used, the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) under the Act at or before
5:00 P.M., New York City time, on the second full business day after the
date of this Agreement; PROVIDED, HOWEVER, that the Company, the Selling
Shareholders and you and any group of Underwriters, including you, who have
agreed hereunder to purchase in the aggregate at least 50% of the Firm
Shares from time to time may agree in writing or by telephone, confirmed in
writing, on a later date.
(f) Prior to the time of purchase or the additional time of purchase,
as the case may be: (i) no stop order with respect to the effectiveness of
the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications
thereof, if any, shall not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and (iii) the Prospectus and
all amendments or supplements thereto, or modifications thereof, if any,
shall 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 light of the circumstances under which they were
made, not misleading.
(g) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, there has
not been: (i) any material and adverse change, present or prospective, in
the properties, assets, operations, business, business prospects or
condition (financial or other) of the Company and the Subsidiaries taken as
a
24
whole, other than as described in the Registration Statement and the
Prospectus; (ii) any transaction that is material to the Company and the
Subsidiaries taken as a whole contemplated or entered into by the
Company or any of the Subsidiaries, other than as described in the
Registration Statement and the Prospectus; or (iii) any obligation,
contingent or otherwise, directly or indirectly, incurred by the Company
or any of the Subsidiaries that is material to the Company and the
Subsidiaries taken as a whole, other than as described in the
Registration Statement and the Prospectus.
(h) The Company, at the time of purchase or additional time of
purchase, as the case may be, will deliver to you a certificate of two of
its executive officers to the effect that the representations and
warranties of the Company as set forth in this Agreement are true and
correct as of each such date and the conditions set forth in Section 8(f)
and Section 8(g) have been met.
(i) You shall have received a signed letter, dated the date of this
Agreement, from each of the shareholders listed in Schedule C to the effect
that such persons shall not sell, contract to sell, grant any option to
sell, transfer or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable for Common
Stock or warrants or other rights to purchase Common Stock for a period of
90 days from the date of the Prospectus without the prior written consent
of Warburg Dillon Read LLC.
(j) The Company and the Selling Shareholders shall have furnished to
you such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement or the
Prospectus as of the time of purchase and the additional time of purchase,
as the case may be, as you reasonably may request.
(k) The Company and the Selling Shareholders shall have performed
such of their respective obligations under this Agreement as are to be
performed by the terms hereof at or before the time of purchase and at or
before the additional time of purchase, as the case may be.
(l) The Shares shall have been approved for listing on the New York
Stock Exchange.
25
(m) The Attorney-in-Fact, at the time of purchase or additional time
of purchase, as the case may be, shall have delivered to you a certificate
to the effect that the Attorney-in-Fact is not aware that any of the
representations and warranties of the Selling Shareholders as set forth in
this Agreement are not true and correct as of such date.
(n) On or prior to the date hereof, the New York Stock Exchange shall
have approved the Underwriters' participation in the distribution of the
Shares to be sold by the Selling Shareholders.
9. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective (i) if Rule 430A under
the Act is not used, when you shall have received notification of the
effectiveness of the Registration Statement, or (ii) if Rule 430A under the
Act is used, when the parties hereto have executed and delivered this
Agreement.
(b) The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares if, at any time prior to the time
of purchase or, with respect to the purchase of any Additional Shares, the
additional time of purchase, as the case may be, trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall
have been established on the New York Stock Exchange or if a banking
moratorium shall have been declared either by the United States or New York
State authorities, or if the United States shall have declared war in
accordance with its constitutional processes or there shall have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in your
judgment or in the judgment of such group of Underwriters, makes it
impracticable to market the Shares. If you or any group of Underwriters
elect to terminate this Agreement as provided in this Section 9(b), the
Company and each other Underwriter shall be notified promptly by letter or
telegram.
(c) If any Underwriter shall default in its obligation to take up
and pay for the Firm Shares to be purchased by it hereunder and if the number
of Firm Shares which all Underwriters so defaulting shall have agreed but
failed to take up and pay for does not exceed 10% of the
26
total number of Firm Shares, the non-defaulting Underwriters shall take up
and pay for (in addition to the aggregate principal amount of Firm Shares
they are obligated to purchase pursuant to Section 1) the number of Firm
Shares agreed to be purchased by all such defaulting Underwriters as
hereinafter provided. Such Shares shall be taken up and paid for by such
non-defaulting Underwriter or Underwriters in such amount or amounts as you
may designate with the consent of each Underwriter so designated or, in the
event no such designation is made, such Shares shall be taken up and paid for
by all non-defaulting Underwriters pro rata in proportion to the aggregate
number of Firm Shares set opposite the names of such non-defaulting
Underwriters in Schedule A.
(d) If any Underwriter shall default in its obligation to take up
and pay for the Firm Shares to be purchased by it hereunder and if the number
of Firm Shares which all Underwriters so defaulting shall have agreed but
failed to take up and pay for exceeds 10% of the total number of Firm Shares,
and arrangements satisfactory to you and the Company are not made within 48
hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter.
(e) Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting
Underwriters that it will not sell any Firm Shares hereunder unless all of
the Firm Shares are purchased by the Underwriters (or by substituted
underwriters selected by you with the approval of the Company or selected by
the Company with your approval pursuant to Section 9(d)). If a new
Underwriter or Underwriters are substituted for a defaulting Underwriter or
Underwriters in accordance with Section 9(d), the Company or you shall have
the right to postpone the time of purchase for a period not exceeding five
business days in order that any necessary change in the Registration
Statement and the Prospectus and other documents may be effected. The term
Underwriter as used in this Agreement shall refer to and include any
Underwriter substituted under this Section 9 with like effect as if such
substituted Underwriter had originally been named in Schedule A.
(f) If the purchase of the Shares by the Underwriters, as
contemplated by this Agreement, is not consummated for any reason permitted
under this Agreement or if such purchase is not consummated because the
Company shall be unable to comply with any of the terms of this Agreement,
the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5(l), 7 and 10), and the
Underwriters
27
shall be under no obligation or liability to the Company under this Agreement
(except to the extent provided in Section 10).
10. INDEMNITY BY THE COMPANY, THE SELLING SHAREHOLDERS AND THE
UNDERWRITERS.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify, defend and hold harmless each Underwriter,
each person that controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and each Underwriter's agents,
employees, officers and directors and the agents, employees, officers and
directors of any such controlling person (collectively, the "Underwriter
indemnified parties") from and against any and all losses, claims, damages,
judgments, liabilities and expenses (including the fees and expenses of
counsel and other expenses in connection with investigating, defending or
settling any such action or claim) which, jointly or severally, any
Underwriter indemnified party may incur as they are incurred (and regardless
of whether such Underwriter indemnified party is a party to the litigation,
if any) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement relating
to the Shares or the Prospectus or any Preliminary Prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
judgments, liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission or alleged untrue statement or omission based
upon and in conformity with information with respect to any Underwriter
furnished in writing by any Underwriter through you to the Company expressly
for use therein with reference to such Underwriter; PROVIDED, HOWEVER, that
no Selling Shareholder shall be liable under this Section 11 in an amount
exceeding the total price at which the Shares sold by such Selling
Shareholder were offered to the public. This indemnity agreement will be in
addition to any liability the Company or the Selling Shareholders otherwise
may have.
(b) If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against
any Underwriter indemnified party, with respect to which indemnity may be
sought against the Company or a Selling Shareholder pursuant to this Section
10, such Underwriter indemnified party shall promptly notify the Company and
each Selling Shareholder in writing, and the Company and the Selling
Shareholders shall assume the defense thereof, including the employment of
28
counsel reasonably satisfactory to the Underwriter indemnified party and
payment of all fees and expenses; PROVIDED that the omission so to notify the
Company and the Selling Shareholders shall not relieve them from any
liability that they may have to any Underwriter indemnified party. An
Underwriter indemnified party shall have the right to employ separate counsel
in any such action or proceeding and to assume the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter
indemnified party unless (i) the employment of such counsel has been
authorized in writing by the Company or the Selling Shareholders, (ii) the
Company and the Selling Shareholders have failed promptly to assume the
defense and employ counsel satisfactory to the Underwriter indemnified party
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Underwriter indemnified party and the
Company or the Selling Shareholders and such Underwriter indemnified party
shall have reasonably concluded that there may be one or more legal defenses
available to it that are different from or additional to those available to
the Company and the Selling Shareholders (in which case the Company and the
Selling Shareholders shall not have the right to assume the defense of such
action on behalf of such Underwriter indemnified party), in any of which
events such fees and expenses shall be borne by the Company and the Selling
Shareholders and reimbursed as they are incurred. It is understood, however,
that the Company and the Selling Shareholders shall not, in connection with
any one such action or separate but substantially similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) at any time for all such
Underwriter indemnified parties, which firm shall be designated in writing by
Warburg Dillon Read LLC, and that all such fees and expenses shall be
reimbursed as they are incurred. The Company and the Selling Shareholders
shall not be liable for any settlement of any such action effected without
the written consent of the Company or the Selling Shareholders (which consent
shall not be unreasonably withheld or delayed), but if settled with the
written consent of the Company or the Selling Shareholders], or if there is a
final judgment with respect thereto, the Company and the Selling Shareholders
agree to indemnify and hold harmless each Underwriter indemnified party from
and against any loss or liability by reason of such settlement or judgment.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, and any person
29
that controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act (collectively, the "Company indemnified
parties") and each Selling Shareholder to the same extent as the foregoing
indemnity from the Company and the Selling Shareholders to the Underwriter
indemnified parties, but only with respect to information concerning such
Underwriter furnished in writing by or on behalf of such Underwriter through
you to the Company expressly for use with respect to such Underwriter in the
Registration Statement, any Preliminary Prospectus or the Prospectus. In
case any action shall be brought against any Company indemnified party or any
Selling Shareholder based on the Registration Statement, any Preliminary
Prospectus or the Prospectus and in respect of which indemnity may be sought
against any Underwriter pursuant to this Section 10(c), such Underwriter
shall have the rights and duties given to the Company and the Selling
Shareholders by Section 10(b) (except that if the Company and the Selling
Shareholders shall have assumed the defense thereof such Underwriter shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, PROVIDED that the fees and expenses of
such separate counsel shall be at the expense of such Underwriter), and the
Company indemnified parties and the Selling Shareholders shall have the
rights and duties given to the Underwriter indemnified parties by Section
10(b).
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless any Underwriter indemnified
party or any Company indemnified party or any Selling Shareholder, then the
party required to indemnify such indemnified party under this Section 10, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, judgments, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand
from the offering of the Shares, 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 and the Selling
Shareholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions 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 and
the Selling Shareholders on the one hand and the Underwriters on the other
hand shall be deemed to be in the same proportion as
30
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
Selling Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue
statement 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, by the Selling Shareholders or by the Underwriters, 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, judgments, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 10(d) were determined by pro rata allocation or by any other method
of allocation (even if the Underwriters were treated as one entity for such
purpose) that does not take account of the equitable considerations referred
to in this Section 10(d). Notwithstanding the provisions of this Section
10(d), no Underwriter indemnified party shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter indemnified party and distributed to the
public were offered to the public exceeds the amount of any damages which
such Underwriter indemnified party otherwise has been required to pay by
reason of such untrue statement 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 person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 10 are
several in proportion to their respective underwriting commitments and are
not joint.
The statements under the caption "Underwriting" in the Prospectus
(to the extent such statements relate to an Underwriter) constitute the only
information furnished to the Company in writing by such Underwriter expressly
for use in the Registration Statement, any Preliminary Prospectus or the
Prospectus.
31
(e) The indemnity and contribution agreements contained in this
Section 10 and the representations, warranties and covenants of the Company
and the Selling Shareholders contained in this Agreement shall remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter indemnified party or by or on behalf of any Company indemnified
party or any Selling Shareholder, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. Subject to the
provisions of Section 10(b) and Section 10(c), the Company, each Selling
Shareholder and each Underwriter agree promptly to notify the other of the
commencement of any litigation or proceeding against it in connection with
the issuance and sale of the Shares or in connection with the Registration
Statement or the Prospectus.
11. NOTICES. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if
to the Underwriters, shall be sufficient in all respects if delivered or sent
to Warburg Dillon Read LLC, 535 Madison Avenue, New York, New York 10022,
Attention: Syndicate Department; if to the Company, shall be sufficient in
all respects if delivered or sent to the Company at the offices of the
Company at 7301 Fairview, Houston, Texas, 77041, Attention: ____________; and
if to the Selling Shareholders, shall be sufficient in all respects, if
delivered or sent to ____________.
12. CONSTRUCTION. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE SECTION HEADINGS IN THIS
AGREEMENT HAVE BEEN INSERTED AS A MATTER OF CONVENIENCE OF REFERENCE AND ARE
NOT A PART OF THIS AGREEMENT.
13. PARTIES AT INTEREST. The Agreement herein set forth has been
and is made solely for the benefit of the Underwriters, the Company, the
Selling Shareholders, the Underwriter indemnified parties and the Company
indemnified parties, and their respective successors, assigns, executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters)
shall acquire or have any right under or by virtue of this Agreement.
14. COUNTERPARTS. This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
32
If the foregoing correctly sets forth the understanding among the
Company, the Selling Shareholders and the Underwriters, please so indicate in
the space provided below for such purpose, whereupon this letter and your
acceptance shall constitute a binding agreement among the Company, the
Selling Shareholders and the Underwriters, severally.
Very truly yours,
NCI BUILDING SYSTEMS, INC.
By:
-------------------------------------
Name:
Title:
THE SELLING SHAREHOLDERS NAMED
IN SCHEDULE B ATTACHED HERETO
By:
-------------------------------------
Attorney-in-fact
Accepted and agreed to as of
the date first above written,
on behalf of themselves,
J.C. Bradford & Co.,
Wheat First Union, Dain
Rauscher Wessels
and the other several
Underwriters named in
Schedule A
WARBURG DILLON READ LLC, as
Managing Underwriter
By:
-------------------------------------
Name:
Title:
33
SCHEDULE A
Number of
Underwriter Firm Shares
- ----------- -----------
Warburg Dillon Read LLC . . . . . . . . . . .
J.C. Bradford & Co. . . . . . . . . . . . . .
Wheat First Union . . . . . . . . . . . . . .
Dain Rauscher Wessels . . . . . . . . . . . .
----------
Total
----------
----------
SCHEDULE B
Number of Firm
Name Shares to be Sold
- ---- -----------------
SCHEDULE C
SHAREHOLDERS WHO HAVE EXECUTED LOCK-UP AGREEMENTS