<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
UNIFIRST CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MASSACHUSETTS 04-2103460
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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68 JONSPIN ROAD
WILMINGTON, MASSACHUSETTS 01887
(978) 658-8888
(Address and Telephone Number of Principal Executive Offices)
------------------------
RONALD D. CROATTI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
UNIFIRST CORPORATION
68 JONSPIN ROAD
WILMINGTON, MASSACHUSETTS 01887
(978) 658-8888
(Name, Address and Telephone Number, Including Area Code, of Agent for Service)
------------------------
copies to:
<TABLE>
<S> <C>
RAYMOND C. ZEMLIN, P.C. LARRY A. BARDEN, ESQ.
GOODWIN, PROCTER & HOAR LLP SIDLEY & AUSTIN
EXCHANGE PLACE ONE FIRST NATIONAL PLAZA
BOSTON, MA 02109 CHICAGO, IL 60603
(617) 570-1000 (312) 853-7000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
========================================================================================================
NUMBER OF SHARES PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES BEING TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock.................... 2,300,000 $25.6875 $59,081,250 $17,429.00
========================================================================================================
</TABLE>
(1) Includes 300,000 shares to be offered upon exercise of the Underwriters'
over-allotment option.
(2) Estimated solely for purposes of computing the registration fee pursuant to
Rule 457(c) under the Securities Act of 1933 on the basis of the average of
the high and low prices of the Common Stock on the New York Stock Exchange
on February 6, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998
PROSPECTUS
2,000,000 SHARES
[UNIFIRST LOGO]
COMMON STOCK
All of the 2,000,000 shares of Common Stock of UniFirst Corporation (the
"Company") offered hereby (the "Offering") are being sold by the Selling
Stockholder. See "Principal and Selling Stockholders." The Company will not
receive any of the proceeds from the sale of the shares offered hereby.
The Common Stock is listed on the New York Stock Exchange under the symbol
"UNF." On February 11, 1998, the closing price of the Common Stock as reported
on the New York Stock Exchange was $25.813 per share. See "Price Range of Common
Stock and Dividend Policy."
All of the shares offered hereby by the Selling Stockholder are shares of
Class B Common Stock, which will automatically convert into shares of Common
Stock upon their sale in the Offering. The holders of Common Stock are entitled
to one vote per share while the holders of Class B Common Stock are entitled to
ten votes per share. The holders of Common Stock are also entitled to cash
dividends equal to 125% of any cash dividends paid on shares of Class B Common
Stock. See "Description of Capital Stock."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON STOCK
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) STOCKHOLDER(2)
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<S> <C> <C> <C>
Per Share......................... $ $ $
Total(3).......................... $ $ $
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</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify William
Blair & Company, L.L.C., as Underwriter, against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses payable by the Company and the Selling Stockholder
estimated at $350,000. The Company and the Selling Stockholder have agreed
that all expenses of this Offering will be shared equally between them.
(3) The Selling Stockholder has granted to William Blair & Company, L.L.C., as
Underwriter, a 30-day option to purchase up to 300,000 additional shares of
Common Stock, solely to cover over-allotments, if any. See "Underwriting."
If all such shares are purchased, the total Price to Public, Underwriting
Discount and Proceeds to Selling Stockholder will be $ , $ and
$ , respectively.
The Common Stock is offered by William Blair & Company, L.L.C. when, as and
if delivered to and accepted by it and subject to its right to reject orders in
whole or in part. It is expected that delivery of certificates for the shares of
Common Stock will be made on or about , 1998.
WILLIAM BLAIR & COMPANY
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
[Map of United States and Canada indicating Company locations.]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING STABILIZATION BIDS, SHORT-COVERING TRANSACTIONS OR THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
2
<PAGE> 4
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the consolidated
financial statements and notes thereto incorporated by reference into this
Prospectus and the detailed information appearing elsewhere herein. Except as
otherwise noted, all information in this Prospectus assumes the Underwriters'
over-allotment option is not exercised. See "Underwriting."
THE COMPANY
The Company is one of the largest providers of workplace uniforms and
protective clothing in the United States. The Company rents, manufactures and
sells a wide range of uniforms and protective clothing, including shirts, pants,
jackets, coveralls, jumpsuits, lab coats, smocks and aprons, and also rents
industrial wiping products, floormats and other non-garment items, to a variety
of manufacturers, retailers and service companies. The Company serves businesses
of all sizes in numerous industry categories. Typical customers include
automobile service centers and dealers, delivery services, food and general
merchandise retailers, food processors and service operations, light
manufacturers, maintenance facilities, restaurants, service companies, soft and
durable goods wholesalers, transportation companies, and others who require
employee clothing for image, identification, protection or utility purposes.
Among the largest customers of the Company's conventional uniform rental
business are divisions, units, regional operations or franchised agencies of
such major organizations as General Electric Company, Honda (Canada), The
Coca-Cola Company, Speedy Muffler King, Wal-Mart Stores, Inc. and E.I. du Pont
de Nemours and Company. At certain specialized facilities, the Company also
decontaminates and cleans work clothes that may have been exposed to radioactive
materials and services special cleanroom protective wear. Typical customers for
these specialized services include government agencies, research and development
laboratories, high technology companies and utilities operating nuclear
reactors. In fiscal 1997, the Company generated $419 million in revenue, of
which approximately 68% was from the rental of uniforms and protective clothing,
22% was from the rental of non-garment items, 7% was from garment
decontamination services, and 3% was from the direct sale of garments and
related items.
The Company's principal services include providing customers with uniforms
and other non-garment items, picking up soiled uniforms or other items on a
periodic basis (usually weekly), and delivering at the same time cleaned and
processed items. The Company offers uniforms in a wide variety of styles,
colors, sizes, fabrics and with personalized emblems selected by the customer.
The Company's centralized services, specialized equipment and economies of scale
generally allow the Company to be more cost effective in providing garment
services than customers could be themselves, particularly those customers with
high employee turnover rates. During fiscal 1997, the Company manufactured
approximately 55% of the garments it placed in service. Because the Company
designs and manufactures a majority of its own uniforms and protective clothes,
it can produce custom garment programs for its larger customers, offer a diverse
range of such designs within its standard line of garments, and better control
the quality, price and speed at which it produces such garments.
According to industry data compiled by the Uniform and Textile Service
Association, approximately 46 million of the 128 million people in the United
States civilian workforce at the beginning of 1997 wore some form of specialized
work clothing. Of this total, approximately 15.4 million people worked for
companies that purchased such clothing for their employees and another 6.5
million people wore uniforms rented by their employers from uniform service
companies. The Uniform and Textile Service Association estimates that uniform
rental services alone generated approximately $4.8 billion and $5.3 billion in
revenue during 1996 and 1997, respectively, and that this industry has grown at
a compound annual rate of approximately 7.2% since 1983. The Company believes
that the uniform industry's overall growth has resulted from increasing numbers
of companies choosing to outfit their employees in uniforms in order to foster
greater company identity, enhance their corporate image and improve employee
safety, productivity and morale. The Company also believes that growth in the
rental segment of the industry in particular will continue as businesses that
might otherwise purchase uniforms realize the greater control, simplified
administration, and improved economics that uniform rental services programs
offer.
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3
<PAGE> 5
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From fiscal 1995 to fiscal 1997, the Company's revenues grew at a compound
annual rate of 8.6% from $355 million to $419 million. During the same period,
earnings per share grew at a compound annual rate of 17.7% from $1.01 per share
to $1.40 per share. The Company achieved this higher rate of earnings per share
growth through the realization of operating efficiencies and cost controls that
enabled the Company to increase its operating margins from 9.7% in fiscal 1995
to 11.2% in fiscal 1997.
The Company seeks to enhance its position as one of the nation's leading
providers of uniforms and protective clothing by building on its core business
strengths, which include the following:
- Maintain Client and Geographic Diversification and Multi-Year Client
Relationships. The Company currently services over 100,000 customer
locations in 45 states, Canada and Europe from 125 service facilities
and distribution centers. During each of the past five years, no single
customer accounted for more than 1% of the Company's revenues. The
Company typically serves its customers pursuant to written service
contracts that range in duration from three to five years.
- Provide Superior Customer Service. The Company serves its customers
through approximately 925 route salespersons, who generally interact on
a weekly basis with their accounts, and more than 500 service support
people, who are charged with expeditiously handling customer
requirements regarding the outfitting of new customer employees, garment
repair and replacement, billing inquiries and other matters.
- Invest in Advanced Systems and Facilities. The Company's investments in
systems and facilities have enhanced the Company's customer service,
sales, marketing, inventory control and finance functions and enable the
Company to effectively manage its geographically dispersed operations.
In addition, by the end of fiscal 1998, the Company expects to complete
construction of its 310,000 square foot Owensboro, Kentucky distribution
center, which the Company believes will be one of the largest and most
advanced garment distribution facilities in the industry. The Company
expects that this new facility will enable it to streamline its
distribution and inventory control systems and provide it with the
operational capacity to expand its direct sales business.
The Company intends to continue to grow its business by focusing on the
following strategies:
- Pursue Internal Growth Initiatives. The Company plans to achieve
internal growth through new market start-ups, the expansion of sales
routes, targeted marketing efforts, increasing penetration of existing
customer accounts, and increasing direct sales. The Company also plans
to expand its recently established national account sales organization.
- Leverage the Customer Base. The Company intends to continue to leverage
its excellent service relationship with its uniform rental customers by
offering such customers non-garment items, such as industrial wiping
products, floormats and mops, and related services, as well as by
promoting direct purchases of uniforms and accessories.
- Expand Through Acquisitions. The Company seeks to acquire uniform
service businesses that have established customer bases, excellent
service reputations, and the size and quality of operations necessary to
serve as the Company's base for expansion in a new market or that can
help grow its operations in an existing market. Since the beginning of
fiscal 1993, the Company has acquired numerous businesses, including 11
which had annual revenues of more than $1.0 million at the time of
purchase.
- Develop Existing and New Niche Businesses. The Company intends to
develop additional niche businesses to complement its specialized
garment business, including its nuclear decontamination and clean-room
garment services.
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4
<PAGE> 6
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THE OFFERING
<TABLE>
<S> <C>
Shares Offered by the Selling Stockholder....................................... 2,000,000
Shares Outstanding Immediately After the Offering............................... 20,510,608(1)
New York Stock Exchange Symbol.................................................. UNF
</TABLE>
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(1) Consists of 9,903,864 shares of Common Stock and 10,606,744 shares of Class
B Common Stock. See "Description of Capital Stock." Excludes 150,000 shares
available for future grant under the Company's stock incentive plan.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED AUGUST(1) NOVEMBER(1)
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1996 1997
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues.................. $287,728 $318,039 $355,041 $391,794 $419,093 $103,976 $112,402
Income from operations.... 30,745 32,457 34,531 40,915 47,001 12,789 14,372
Net income................ 17,689 18,871 20,634 24,662 28,723 7,855 8,826
Net income per share...... $ 0.86 $ 0.92 $ 1.01 $ 1.20 $ 1.40 $ 0.38 $ 0.43
Weighted average number of
shares outstanding...... 20,453 20,506 20,511 20,511 20,511 20,511 20,511
BALANCE SHEET DATA (AT PERIOD END)
Working capital........... $ 19,241 $ 27,957 $ 31,501 $ 38,650 $ 37,614 $ 38,886 $ 40,086
Total assets.............. 219,064 250,160 272,691 302,378 339,626 311,469 353,781
Total debt................ 32,231 41,602 36,376 39,365 40,837 34,991 42,704
Total shareholders'
equity.................. 132,723 149,472 168,596 191,109 217,192 198,494 225,150
</TABLE>
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(1) The Company's fiscal year ends on the last Saturday in August, and the
Company's first fiscal quarter ends on the last Saturday in November.
The Company was incorporated in Massachusetts in 1950, as a successor to
certain businesses formed in 1936. The Company's principal executive office is
located at 68 Jonspin Road, Wilmington, Massachusetts 01887-1086, and its
telephone number is (978) 658-8888. The address of the Company's World Wide Web
site is http://www.unifirst.com. The Company's website is not and shall not be
deemed to be a part of this Prospectus.
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5
<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus, potential
purchasers should consider carefully the following factors in evaluating the
Company, its business and the shares of Common Stock offered hereby:
COMPETITION
The uniform rental and sales industry is highly competitive and there are
other firms in the industry that are larger and have greater financial resources
than the Company. The Company's leading competitors include ARAMARK Corporation,
Cintas Corporation, G&K Services, Inc. and Unitog Company. In addition to its
traditional rental competitors, the Company may increasingly compete in the
future with businesses that focus on selling uniforms and other related items.
The principal methods of competition in the industry are quality of service and
price. To the extent existing or future competitors seek to gain or retain
market share by reducing prices, the Company may be required to lower its
prices, thereby adversely impacting operating results. The Company's competitors
also generally compete with the Company for acquisition candidates, which has
the effect of increasing the price for acquisitions and reducing the number of
available acquisition candidates. See "Business -- Competition."
GENERAL ECONOMIC CONDITIONS
The Company's business may be adversely affected by national or regional
economic slowdowns or by certain industry specific slowdowns. In particular,
further declines in the nuclear energy industry may adversely effect the
Company's garment decontamination business. In addition, it has been publicly
reported that the government may increase the minimum hourly wage. Such an
increase could cause the Company to raise the pay of its more than 4,500 hourly
workers, and such increased costs, if not passed through to its customers, could
adversely affect the results of operations of the Company. The Company's
operating results may also be adversely affected by events or conditions in a
particular area, such as adverse weather and other factors. In addition, the
Company's operating results may be adversely affected by increases in interest
rates that may lead to a decline in economic activity, while simultaneously
resulting in higher interest expense to the Company under its credit facility.
SEASONALITY AND QUARTERLY FLUCTUATIONS
Historically, the Company's revenues and operating results have varied from
quarter to quarter and are expected to continue to fluctuate in the future.
These fluctuations have been due to a number of factors, including: general
economic conditions in the Company's markets; the timing of acquisitions and of
commencing start-up operations and related costs; the effectiveness of
integrating acquired businesses and start-up operations; the timing of nuclear
plant outages; capital expenditures; seasonal rental and purchasing patterns of
the Company's customers; and price changes in response to competitive factors.
In addition, the Company's operating results historically have been seasonally
lower during the second and fourth fiscal quarters than during the other
quarters of the fiscal year. The Company incurs various costs in integrating or
establishing newly acquired businesses or start-up operations, and the
profitability of a new location is generally expected to be lower in the initial
period of its operation than in subsequent periods. Start-up operations in
particular lack the support of an existing customer base and require a
significantly longer period to develop sales opportunities and meet targeted
operating results. These factors, among others, make it likely that in some
future quarter the Company's results of operations may be below the expectations
of securities analysts and investors, which could have a material adverse effect
on the market price of the Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Seasonality and
Selected Quarterly Operating Results."
MANAGEMENT OF GROWTH; NEW DISTRIBUTION FACILITY
The successful implementation of the Company's growth strategy will require
the Company to increase its work force, the scope of its operating and financial
systems and the geographic area of its operations. The Company believes this
growth will increase the operating complexity of the Company and the level of
responsibility for both existing and new management personnel. See "Business --
Business Strategy."
6
<PAGE> 8
Managing and sustaining the Company's growth and expansion will require
substantial enhancements to the Company's operational and financial systems and
controls, as well as additional administrative, operational and financial
resources. There can be no assurance that the Company will be able to manage its
expanding operations successfully or that it will be able to maintain or
accelerate its growth, and any failure to do so could have a material adverse
effect on the Company's results of operations.
The Company is in the process of constructing a new 310,000 square foot
distribution center in Owensboro, Kentucky, which the Company expects to
complete in late fiscal 1998. The Company has expended approximately $25.0
million to date on this facility and estimates that it will expend an additional
$1.8 million to complete the facility. During a transition period following its
completion, certain of the operations at this new facility will duplicate
operations at other Company locations resulting in increased operating costs. To
the extent actual expenditures or duplicate operating costs exceed estimates, it
could have a material adverse effect on the Company's results of operations.
Certain software and information systems that have not been previously used by
the Company will be utilized at the new facility. In addition, in connection
with operating the new facility, the Company will be required to hire new
personnel. There can be no assurance that the operations of this facility will
proceed on schedule or that the operational and financial performance of the new
facility will meet the Company's expectations. If the Company is not successful
in these regards, it could have a material adverse effect on the Company's
results of operations. Following a transition period, the Company intends to
consolidate its two existing distribution facilities into the Owensboro
distribution facility. As a result, substantially all of the Company's
distribution and direct sales operations will be conducted from this facility.
Destruction of all or part of the Owensboro facility or a disruption in its
operations would have a material adverse effect on the Company's results of
operations.
ENVIRONMENTAL REGULATION
The Company and its operations are subject to various federal, state and
local laws and regulations governing, among other things, the generation,
handling, storage, transportation, treatment and disposal of hazardous wastes
and other substances. In particular, industrial laundries use and must dispose
of detergent waste water and other residues. In the past, the Company has
settled, or contributed to the settlement of, actions or claims brought against
the Company relating to the disposal of hazardous materials and there can be no
assurance that the Company will not have to expend material amounts to remediate
the consequences of any such disposal in the future. Further, under
environmental laws, an owner or lessee of real estate may be liable for the
costs of removal or remediation of certain hazardous or toxic substances located
on or in or emanating from such property, as well as related costs of
investigation and property damage. Such laws often impose liability without
regard to whether the owner or lessee knew of or was responsible for the
presence of such hazardous or toxic substances. There can be no assurance that
acquired or leased locations have been operated in compliance with environmental
laws and regulations or that future uses or conditions will not result in the
imposition of liability upon the Company under such laws or expose the Company
to third-party actions such as tort suits.
In addition, the federal Environmental Protection Agency has recently
proposed a federal environmental regulatory framework applicable to industrial
laundry operations that would replace local regulations. Scheduled to take
effect in 1999, these regulations, if implemented as proposed, would require the
Company to expend substantial amounts on compliance, thereby increasing the
Company's operating costs and capital expenditures. To the extent such costs and
expenses could not be offset through price increases, the Company's results of
operations could be adversely affected.
The Company's nuclear garment decontamination facilities are licensed by
the Nuclear Regulatory Commission, or in certain cases by the applicable state
agency, and are subject to regulation by federal, state and local authorities.
In recent years, there has been increased scrutiny and, in certain cases,
regulation of nuclear facilities and related services that have resulted in the
suspension of operations at certain nuclear facilities served by the Company or
disruptions of the Company's ability to service such facilities. There can be no
assurance that such increased scrutiny will not lead to the shut-down of such
facilities or otherwise cause material disruptions in the Company's garment
decontamination business.
7
<PAGE> 9
ACQUISITIONS
Since the beginning of fiscal 1993, the Company has acquired numerous
businesses, including 11 which had annual revenues of more than $1.0 million at
the time of purchase. Moreover, a principal component of the Company's growth
strategy is to actively pursue additional acquisition opportunities. In order to
achieve anticipated benefits from these acquisitions, the Company must
successfully integrate any acquired businesses with its existing operations, and
no assurance can be given that the Company will be successful in this regard. In
addition, attractive acquisitions are difficult to identify and complete for a
number of reasons, including competition among prospective buyers. There can be
no assurance that the Company will be able to complete future acquisitions. In
order to finance such acquisitions, it may be necessary for the Company to
obtain additional funds either through public or private financings, including
bank and other secured and unsecured borrowings and the issuance of debt or
equity securities. There can be no assurance that future issuances of securities
in connection with acquisitions will not be dilutive to the Company's
stockholders.
DEPENDENCE ON THIRD PARTIES
The Company utilizes United Parcel Service and other common carriers to
ship a large portion of its products. Following completion of the Company's new
Owensboro, Kentucky distribution facility, the Company's reliance on United
Parcel Service and other common carriers is expected to increase significantly.
Strikes or other service interruptions affecting such carriers could impair the
Company's ability to deliver products on a timely and cost-effective basis. In
addition, because the Company typically bears the cost of shipment to its
customers, any increase in shipping rates could adversely affect the Company's
operating results. The Company manufactured approximately 55% of all garments
which it placed in service in fiscal 1997. The balance of garments used in the
Company's programs are purchased from a variety of industry suppliers. The
Company currently acquires the raw materials with which it produces its garments
from a limited number of suppliers. If the Company were to experience difficulty
obtaining any of its raw materials from such suppliers and was unable to obtain
new materials or supplies from other industry suppliers, it could adversely
affect the Company's results of operations. See "Business -- Manufacturing and
Sourcing."
VOLATILITY OF STOCK PRICE
The Common Stock's market price has experienced and can be expected to
continue to experience significant volatility. Such volatility may be caused by
fluctuations in the Company's operating results, changes in earnings estimated
by investment analysts, the number of shares of Common Stock traded each day,
the degree of success the Company achieves in implementing its business and
growth strategies, changes in business or regulatory conditions affecting the
Company, its customers or its competitors, and other factors. In addition, the
New York Stock Exchange historically has experienced extreme price and volume
fluctuations that often have been unrelated to, or disproportionate to, the
operating performance of its listed companies. These fluctuations, as well as
general economic, political and market conditions, may adversely affect the
market price of the Common Stock. There can be no assurance that the market
price of the Common Stock will not decline below the price at which shares of
Common Stock are offered hereby.
DEPENDENCE ON SENIOR MANAGEMENT; ABILITY TO ATTRACT AND RETAIN QUALITY PERSONNEL
The Company's success is largely dependent on the skills, experience and
efforts of its senior management and certain other key personnel. See
"Management." If, for any reason, one or more senior executives or key personnel
were not to remain active in the Company, the Company's results of operations
could be adversely affected. The Company's future success also depends upon its
ability to attract and retain qualified managers and technical and marketing
personnel, as well as sufficient numbers of hourly workers. There is competition
in the market for the services of such qualified personnel and hourly workers
and the Company's failure to attract and retain such personnel or workers could
adversely affect the Company's results of operations.
8
<PAGE> 10
CONTROL BY EXISTING STOCKHOLDERS
Following the sale of the shares offered hereby, Mr. Aldo Croatti, the
Selling Stockholder, will own 8,199,060 shares of Class B Common Stock, which
will represent approximately 40.0% of the aggregate number of outstanding shares
of Common Stock and Class B Common Stock, and approximately 70.7% of the
combined voting power of the outstanding shares of Common Stock and Class B
Common Stock. In addition, following such sale, other members of the Selling
Stockholder's family will beneficially own in the aggregate 677,778 shares of
Common Stock and 2,406,404 shares of Class B Common Stock, which will represent
approximately 15.0% of the aggregate number of outstanding shares of Common
Stock and Class B Common Stock, and approximately 21.3% of the combined voting
power of the outstanding shares of Common Stock and Class B Common Stock.
Holders of the Class B Common Stock are entitled to 10 votes per share, while
holders of the Common Stock are entitled to one vote per share. As a result, the
Selling Stockholder, acting individually or with other family members, could
effectively control most matters requiring approval by the stockholders of the
Company, including the election of a majority of the directors. This voting
control, together with certain provisions of the Company's By-laws and Restated
Articles of Organization, could have the effect of delaying, deferring or
preventing a change in control of the Company. See "Description of Capital
Stock."
INFORMATION SYSTEMS; YEAR 2000
The Company has made a substantial investment in its information systems
and intends to spend significant amounts on its information systems in the
future. In particular, the Company is currently evaluating the programming code
in its existing computer and software systems as the millennium ("Year 2000")
approaches. The issue with respect to Year 2000 is whether systems will properly
recognize date sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous data or
cause complete system failures. The Company believes that its account management
software system, which it recently developed, and the software systems being
installed at its Owensboro, Kentucky facility are Year 2000 compliant. However,
the Company is evaluating its other systems and expects that it may need to
upgrade or replace certain of them, including its general ledger, accounts
payable and payroll interface software systems, to handle the rollover into the
Year 2000. The Company has not yet quantified the anticipated costs of
addressing Year 2000 issues. There can be no assurance that the Year 2000
problem will not have a material adverse effect on the results of operations of
the Company.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Forward looking statements contained in this Prospectus are subject to the
safe harbor created by the Private Securities Litigation Reform Act of 1995 and
are highly dependent upon a variety of important factors that could cause actual
results to differ materially from those reflected in such forward looking
statements. The factors include those indicated in "Risk Factors" above, as well
as the risks and uncertainties relating to the Company's possible change in its
amortization policy for its garments and the timing of the completion of, and
commencement of operations at, its new Owensboro, Kentucky distribution
facility. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview." The Company's results of operations could
also be affected by its ability to control manufacturing and operating costs.
When used in this document and documents referenced herein, the words "intend,"
"anticipate," "believe," "estimate," and "expect" and similar expressions as
they relate to the Company are included to identify such forward looking
statements.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock offered hereby. See "Principal and Selling Stockholders."
9
<PAGE> 11
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is listed on the New York Stock Exchange under the symbol
"UNF." The following table sets forth, for the fiscal quarters indicated, the
high and low closing prices of the Common Stock as reported on the New York
Stock Exchange and the dividends paid on the Common Stock and Class B Common
Stock during such periods:
<TABLE>
<CAPTION>
DIVIDENDS PER
SHARE
PRICE PER SHARE ---------------
--------------------- CLASS B
HIGH LOW COMMON COMMON
------- ------- ------- ------
<S> <C> <C> <C> <C>
Fiscal Year Ended August 1996
First Quarter.................................. $15.625 $13.500 $0.020 $0.025
Second Quarter................................. 19.125 15.125 0.020 0.025
Third Quarter.................................. 25.250 17.875 0.024 0.030
Fourth Quarter................................. 23.000 19.250 0.024 0.030
Fiscal Year Ended August 1997
First Quarter.................................. $21.750 $18.250 $0.024 $0.030
Second Quarter................................. 23.000 20.125 0.024 0.030
Third Quarter.................................. 21.125 18.750 0.024 0.030
Fourth Quarter................................. 25.500 18.875 0.024 0.030
Fiscal Year Ending August 1998
First Quarter.................................. $25.813 $22.250 $0.024 $0.030
Second Quarter (through February 11, 1998)..... 28.063 24.563
</TABLE>
On February 11, 1998, the closing price of the Common Stock as reported on
the New York Stock Exchange was $25.813 per share. As of February 9, 1998, there
were approximately 163 holders of record of the Common Stock and 19 holders of
record of the Class B Common Stock. The Company believes that the number of
beneficial owners of the Common Stock is substantially greater than the number
of record holders because a large portion of the Common Stock is held of record
in broker "street names."
The Company has paid regular quarterly dividends since 1983 and intends to
continue such policy subject to, among other factors, its earnings, financial
condition and capital requirements. No dividends will be payable unless declared
by the Board of Directors and then only to the extent funds are legally
available for the payment of such dividends. In the event that the Board pays a
dividend, the Common Stock must receive a dividend equal to no less than 125% of
any dividend paid on the Class B Common Stock. See "Description of Capital
Stock." On January 13, 1998, the Board of Directors of the Company declared a
quarterly dividend of $.03 and $.024 per share on the Common Stock and Class B
Common Stock, respectively, payable on April 1, 1998 to stockholders of record
on March 11, 1998.
10
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data for the
Company. The selected data presented below for, and as of the end of, each of
the fiscal years in the five-year period ended August 30, 1997, are derived from
the Company's consolidated financial statements, which consolidated financial
statements have been audited by Arthur Andersen LLP, independent public
accountants. The selected data presented below for, and as of the end of, the
quarterly periods ended November 30, 1996 and November 29, 1997, are derived
from the Company's unaudited consolidated financial statements which have been
prepared on the same basis as the audited consolidated financial statements,
and, in the opinion of management, reflect all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the financial
position of the Company at such dates and its results of operations for such
periods. The results of operations for any interim period are not necessarily
indicative of the results to be expected for an entire fiscal year or any other
interim period. This information should be read in conjunction with the
consolidated financial statements and notes thereto incorporated by reference
into this Prospectus and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing elsewhere herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED AUGUST(1) NOVEMBER(1)
-------------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues..................... $287,728 $318,039 $355,041 $391,794 $419,093 $103,976 $112,402
Costs and expenses:
Operating costs.......... 173,772 196,511 222,205 240,672 256,896 62,120 66,325
Selling and
administrative
expenses............... 66,757 71,159 79,111 89,393 91,810 23,520 25,397
Depreciation and
amortization........... 16,454 17,912 19,194 20,814 23,386 5,547 6,308
-------- -------- -------- -------- -------- -------- --------
256,983 285,582 320,510 350,879 372,092 91,187 98,030
-------- -------- -------- -------- -------- -------- --------
Income from operations....... 30,745 32,457 34,531 40,915 47,001 12,789 14,372
Interest expense (income):
Interest expense......... 2,889 2,726 2,963 2,659 2,351 585 651
Interest income.......... (220) (213) (176) (261) (233) (70) (70)
-------- -------- -------- -------- -------- -------- --------
2,669 2,513 2,787 2,398 2,118 515 581
-------- -------- -------- -------- -------- -------- --------
Income before income taxes... 28,076 29,944 31,744 38,517 44,883 12,274 13,791
Provision for income taxes... 10,387 11,073 11,110 13,855 16,160 4,419 4,965
-------- -------- -------- -------- -------- -------- --------
Net income................... $ 17,689 $ 18,871 $ 20,634 $ 24,662 $ 28,723 $ 7,855 $ 8,826
======== ======== ======== ======== ======== ======== ========
Net income per share......... $ 0.86 $ 0.92 $ 1.01 $ 1.20 $ 1.40 $ 0.38 $ 0.43
Weighted average number of
shares outstanding......... 20,453 20,506 20,511 20,511 20,511 20,511 20,511
BALANCE SHEET DATA (AT PERIOD END)
Working capital.............. $ 19,241 $ 27,957 $ 31,501 $ 38,650 $ 37,614 $ 38,886 $ 40,086
Total assets................. 219,064 250,160 272,691 302,378 339,626 311,469 353,781
Total debt................... 32,231 41,602 36,376 39,365 40,837 34,991 42,704
Total shareholders' equity... 132,723 149,472 168,596 191,109 217,192 198,494 225,150
</TABLE>
- ---------------
(1) The Company's fiscal year ends on the last Saturday in August, and the
Company's first fiscal quarter ends on the last Saturday in November.
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was founded in 1936 and currently services over 100,000
customer locations in 45 states, Canada and Europe from 125 service locations
and distribution centers. The Company has historically grown through a
combination of internal growth at its existing locations, new location start-ups
and acquisitions. The Company has financed its new location start-ups and
acquisitions principally with internally generated cash flow and unsecured
borrowings. Since the beginning of fiscal 1993, the Company has acquired
numerous businesses, including 11 which had annual revenues of more than $1.0
million at the time of purchase. The Company focuses on increasing revenues and
profitability across its locations through investments in sales force personnel
and training, information systems, facilities and equipment designed to improve
asset utilization, and targeted marketing efforts. From fiscal 1995 to fiscal
1997, the Company's revenues grew at a compound annual rate of 8.6%, from $355
million to $419 million. During the same period, earnings per share grew at a
compound annual rate of 17.7%, from $1.01 per share to $1.40 per share. The
Company achieved this higher rate of earnings per share growth through the
realization of operating efficiencies and cost controls that enabled the Company
to increase its operating margins from 9.7% in fiscal 1995 to 11.2% in fiscal
1997.
The Company's principal business is the rental and servicing of workplace
uniforms and protective clothing and non-garment items, such as industrial
wiping products, floormats and mops. The Company typically serves its customers
pursuant to written service contracts that range in duration from three to five
years. For fiscal 1995, 1996 and 1997, the Company's garment rental operations
produced approximately 67%, 67% and 68%, respectively, of its revenues, and the
rental of non-garment items accounted for 22%, 23% and 22% of revenue in each of
those years. At certain specialized facilities, the Company also decontaminates
and cleans work clothes which may have been exposed to radioactive materials and
services special cleanroom protective wear. The Company's specialized garment
services business produced approximately 8%, 7% and 7% of its revenues for
fiscal 1995, 1996 and 1997, respectively. In addition, the Company sells a full
range of garments and other items directly to customers. These sales accounted
for 3% of the Company's revenues in each of fiscal 1995, 1996 and 1997. The
Company's policy is to recognize revenues when the actual services are provided
to customers. Customers are generally invoiced on a weekly basis.
The Company is in the process of constructing a new 310,000 square foot
distribution center in Owensboro, Kentucky which the Company intends to complete
in late fiscal 1998. The Company has expended approximately $25.0 million to
date on this facility, including approximately $6.2 million on information
systems hardware and software, and estimates that it will expend an additional
$1.8 million, including approximately $1.0 million on information systems
hardware and software, to complete the facility. During a transition period
following its completion, certain of the operations at this new facility will
duplicate operations at other Company locations resulting in increased operating
costs. Following this transition period, the Company intends to consolidate its
two existing distribution facilities into the Owensboro distribution facility.
Following such consolidation, substantially all of the Company's distribution
and direct sales operations will be conducted from this facility. See "Risk
Factors -- Management of Growth; New Distribution Facility."
The Company intends to invest approximately $4.5 million during the
remainder of fiscal 1998 on information systems hardware and software to upgrade
certain of its Company-wide systems. The Company's systems expenditures will
increase the Company's depreciation expense as compared to prior years.
The Company is currently considering implementing in its fiscal 1998 fourth
quarter an increased amortization period for most garments placed in service
from 12 months to 15 months, which is more consistent with their respective
useful life. The Company believes that most of the Company's principal
publicly-held competitors amortize their garments over an average of 15 to 18
months.
12
<PAGE> 14
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of revenues represented by each line item in the Company's consolidated
statements of income together with the percentage change in such items compared
to the same period in the prior fiscal year. There can be no assurance that the
indicated trends in revenue growth or operating results will continue in the
future.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
------------------------------------- PERCENTAGE INCREASE (DECREASE)
THREE --------------------------------------
FISCAL YEAR ENDED MONTHS ENDED THREE
AUGUST(1) NOVEMBER(1) MONTHS ENDED
--------------------- ------------- 1996 VS 1997 VS NOVEMBER(1)
1995 1996 1997 1996 1997 1995 1996 1997 VS 1996
----- ----- ----- ----- ----- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................... 100.0% 100.0% 100.0% 100.0% 100.0% 10.4% 7.0% 8.1%
Costs and expenses:
Operating costs........ 62.6 61.5 61.3 59.8 59.0 8.3 6.7 6.8
Selling and
administrative
expenses............. 22.3 22.8 21.9 22.6 22.6 13.0 2.7 8.0
Depreciation and
amortization......... 5.4 5.3 5.6 5.3 5.6 8.4 12.4 13.7
----- ----- ----- ----- -----
Income from operations...... 9.7 10.4 11.2 12.3 12.8 18.5 14.9 12.4
Net interest expense........ 0.8 0.6 0.5 0.5 0.5 (14.0) (11.7) 12.8
----- ----- ----- ----- -----
Income before income
taxes..................... 8.9 9.8 10.7 11.8 12.3 21.3 16.5 12.4
Provision for income
taxes..................... 3.1 3.5 3.8 4.2 4.4 24.7 16.6 12.4
----- ----- ----- ----- -----
Net income.................. 5.8% 6.3% 6.9% 7.6% 7.9% 19.5% 16.5% 12.4%
===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) The Company's fiscal year ends on the last Saturday in August, and the
Company's first fiscal quarter ends on the last Saturday in November.
FISCAL QUARTER ENDED NOVEMBER 29, 1997 COMPARED WITH FISCAL QUARTER ENDED
NOVEMBER 30, 1996
Revenues. Fiscal 1998 first quarter revenues increased $8.4 million or
8.1% over the fiscal 1997 first quarter. This increase can be attributed to
growth from existing operations (6.1%), acquisitions (1.0%) and price increases
(1.0%). Growth from existing operations was primarily from the conventional
uniform rental business and to a lesser extent from the Company's nuclear
garment services business. The Company completed three acquisitions (two in
Massachusetts in February and August 1997 and one in Vancouver, British Columbia
in April 1997) that contributed to the increase in its revenues for the first
quarter of fiscal 1998.
Operating Costs. Operating costs increased to $66.3 million for the first
quarter of fiscal 1998 as compared with $62.1 million for the same period of
fiscal 1997 as a result of costs associated with increased revenues, but
declined to 59.0% from 59.8% as a percentage of revenues for these periods. The
improvement in operating costs as a percentage of revenues was due primarily to
the Company's ongoing focus on controlling costs.
Selling and Administrative Expenses. The Company's selling and
administrative expenses increased to $25.4 million for the first quarter of
fiscal 1998 as compared with $23.5 million for the same period in fiscal 1997
primarily due to increased sales personnel and other costs to support the
Company's increased revenues. The Company's selling and administrative expenses
as a percentage of revenues remained stable at 22.6% for both periods.
Depreciation and Amortization. The Company's depreciation and amortization
expense increased to $6.3 million, or 5.6% of revenues, for the first quarter of
fiscal 1998 as compared with $5.5 million, or 5.3% of revenues, for the same
period in fiscal 1997. This increase was due primarily to increased capital
expenditures for new facility openings and renovations.
13
<PAGE> 15
Net Interest Expense. Net interest expense was $581,000 in the first
quarter fiscal of 1998 as compared to $515,000 in the same period of fiscal
1997. The increase is attributable primarily to higher debt levels in fiscal
1998. Net interest expense was 0.5% of revenues for each period.
Income Taxes. The Company's effective income tax rate was 36.0% in both
periods.
FISCAL YEAR ENDED AUGUST 30, 1997 COMPARED WITH FISCAL YEAR ENDED AUGUST 31,
1996
Revenues. In 1997 revenues increased 7.0% to $419.1 million as compared
with $391.8 million for 1996. This increase can be attributed to growth from
existing operations (5.5%), acquisitions (2.4%) and price increases (1.0%),
offset by one week less of revenue in 1997 (1.9%). Growth from existing
operations was primarily from the conventional rental business. The increase in
revenues attributable to acquisitions primarily resulted from three 1996
acquisitions made in California, Michigan and Oklahoma.
Operating Costs. Operating costs increased to $256.9 million for 1997 as
compared with $240.7 million for 1996 as a result of costs associated with
increased revenues. The Company's operating costs as a percentage of revenues
decreased slightly to 61.3% in 1997 from 61.5% in 1996.
Selling and Administrative Expenses. The Company's selling and
administrative expenses increased to $91.8 million for 1997 as compared with
$89.4 million in 1996, but declined to 21.9% of revenues in 1997 from 22.8% of
revenues in 1996. The increase in selling and administrative expense was
primarily attributable to commissions and other costs associated with increased
staffing levels to support the expansion of the Company's business throughout
the period. The decrease in selling and administrative expense as a percentage
of the revenues was primarily due to reduced professional services and
consulting fees.
Depreciation and Amortization. The Company's depreciation and amortization
expense increased to $23.4 million, or 5.6% of revenues, for 1997 as compared
with $20.8 million, or 5.3% of revenues, for 1996. This increase in depreciation
and amortization expense as a percentage of revenues was due primarily to
increased capital expenditures to expand and update Company facilities in 1997.
Net Interest Expense. Net interest expense declined to $2.1 million, or
0.5% of revenues, in 1997 as compared to $2.4 million, or 0.6% of revenues, in
1996. The decrease is attributable to lower interest rates.
Income Taxes. The Company's effective income tax rate was 36.0% in both
1997 and 1996.
FISCAL YEAR ENDED AUGUST 31, 1996 COMPARED WITH FISCAL YEAR ENDED AUGUST 26,
1995
Revenues. In 1996 revenues increased 10.4% to $391.8 million as compared
with $355.0 million for 1995. This increase can be attributed to growth from
existing operations (5.8%), an extra week of revenue (1.9%), acquisitions (1.7%)
and price increases (1.0%). Growth from existing operations was primarily from
the conventional rental business. The increase in revenues from acquisitions
primarily resulted from two 1995 acquisitions in Tennessee and Calgary, Alberta.
Operating Costs. Operating costs increased to $240.7 million for 1996 as
compared with $222.2 million for 1995 as a result of costs associated with
increased revenues, but declined to 61.5% from 62.6% as a percentage of revenues
for these periods. The decline in operating costs as a percentage of revenues
was due primarily to improved uniform merchandise utilization. Offsetting the
merchandise improvement were lower comparative contributions from the nuclear
garment services business.
Selling and Administrative Expenses. The Company's selling and
administrative expenses increased to $89.4 million, or 22.8% of revenues, for
1996 as compared with $79.1 million, or 22.3% of revenues, for 1995. The
increase in selling and administrative expense was primarily attributable to
commissions and other costs associated with increased staffing levels to support
expansion of the Company's business throughout the period and increased
professional services and consulting fees.
Depreciation and Amortization. The Company's depreciation and amortization
expense increased to $20.8 million for 1996 as compared with $19.2 million for
1995, but declined slightly as a percentage of
14
<PAGE> 16
revenues to 5.3% for 1996 from 5.4% for 1995. The increase in depreciation and
amortization expense was primarily due to increased capital expenditures to
expand and update Company facilities.
Net Interest Expense. Net interest expense declined to $2.4 million, or
0.6% of revenues, in 1996, as compared to $2.8 million, or 0.8% of revenues, in
1995. The decline is attributable to lower average debt levels and lower
interest rates during 1996.
Income Taxes. The Company's effective income tax rate was 36.0% in 1996
and 35.0% in 1995. The increase is due primarily to reduced benefits from a
corporate-owned life insurance program and higher state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Shareholders' equity at November 29, 1997 was $225.2 million, or 84.1% of
total capitalization.
Net cash provided by operating activities was $55.8 million in fiscal 1997
and totaled $139.8 million for the three years ended August 30, 1997. These cash
flows were used primarily to fund $99.0 million in capital expenditures to
expand and update Company facilities, including construction of new facilities
in Owensboro, Kentucky; Atlanta, Georgia; Pompano Beach, Florida; Corpus
Christi, Texas; Ontario, California; and Coevorden, The Netherlands.
Additionally, $32.8 million was used for acquisitions during this three year
period. Net cash provided by operating activities was $13.4 million for the
three months ended November 29, 1997, which was primarily used to fund capital
expenditures of $12.8 million, and dividends of $540,000. The Company estimates
that its capital expenditures for fiscal 1998 will approximate $45 million,
consisting of $22 million for machinery and equipment, $10 million for new
software and systems, $8 million for building improvements, and $5 million for
vehicles.
The Company had $4.2 million in cash and $24.7 million available on its $60
million unsecured line of credit with two banks as of November 29, 1997. Under
the line of credit, the Company may borrow funds at variable interest rates
based on the LIBOR rate or the bank's money market rate, as selected by the
Company. The Company believes its generated cash from operations and the
Company's borrowing capacity will adequately cover its foreseeable capital
requirements.
15
<PAGE> 17
SEASONALITY AND SELECTED QUARTERLY OPERATING RESULTS
The following table sets forth certain information derived from the
Company's unaudited quarterly consolidated statements of income. The unaudited
quarterly information has been prepared on the same basis as the annual
financial information and, in management's opinion, reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the information for the periods presented. Historically, the
Company's revenues and operating results have varied from quarter to quarter and
are expected to continue to fluctuate in the future. These fluctuations have
been due to a number of factors, including: general economic conditions in the
Company's markets; the timing of acquisitions and of commencing start-up
operations and related costs; the effectiveness of integrating acquired
businesses and start-up operations; the timing of nuclear plant outages; capital
expenditures; seasonal rental and purchasing patterns of the Company's
customers; and price changes in response to competitive factors. In addition,
the Company's operating results historically have been lower during the second
and fourth fiscal quarters than during the other quarters of the fiscal year.
The operating results for any historical quarter are not necessarily indicative
of the results to be expected for an entire fiscal year or any other interim
periods. See "Risk Factors -- Seasonality and Quarterly Fluctuations."
<TABLE>
<CAPTION>
1998
QUARTER
1996 QUARTERS ENDED 1997 QUARTERS ENDED ENDED
---------------------------------------- ----------------------------------------- --------
NOV. 25, MAR. 2, JUNE 1, AUG. 31, NOV. 30, MAR. 1, MAY 31, AUG. 30, NOV. 29,
1995 1996 1996 1996 1996 1997 1997 1997 1997
-------- -------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues.................... $95,413 $100,825 $98,554 $ 97,002 $103,976 $102,064 $107,124 $105,929 $112,402
Costs and expenses:
Operating costs......... 57,577 63,604 59,339 60,152 62,120 64,218 65,905 64,653 66,325
Selling and
administrative
expenses.............. 21,754 23,907 22,868 20,864 23,520 23,033 23,123 22,134 25,397
Depreciation and
amortization.......... 4,905 5,093 5,340 5,476 5,547 5,645 5,969 6,225 6,308
------- -------- ------- ------- -------- -------- -------- -------- --------
84,236 92,604 87,547 86,492 91,187 92,896 94,997 93,012 98,030
------- -------- ------- ------- -------- -------- -------- -------- --------
Income from operations...... 11,177 8,221 11,007 10,510 12,789 9,168 12,127 12,917 14,372
Interest expense (income):
Interest expense........ 665 574 755 665 585 566 641 559 651
Interest income......... (66) (65) (61) (69) (70) (36) (49) (78) (70)
------- -------- ------- ------- -------- -------- -------- -------- --------
599 509 694 596 515 530 592 481 581
------- -------- ------- ------- -------- -------- -------- -------- --------
Income before income
taxes..................... 10,578 7,712 10,313 9,914 12,274 8,638 11,535 12,436 13,791
Provision for income
taxes..................... 3,808 2,776 3,713 3,558 4,419 3,109 4,153 4,479 4,965
------- -------- ------- ------- -------- -------- -------- -------- --------
Net income.................. $ 6,770 $ 4,936 $ 6,600 $ 6,356 $ 7,855 $ 5,529 $ 7,382 $ 7,957 $ 8,826
======= ======== ======= ======= ======== ======== ======== ======== ========
Net income per share........ $ 0.33 $ 0.24 $ 0.32 $ 0.31 $ 0.38 $ 0.27 $ 0.36 $ 0.39 $ 0.43
Weighted average number of
shares outstanding........ 20,511 20,511 20,511 20,511 20,511 20,511 20,511 20,511 20,511
</TABLE>
INFORMATION SYSTEMS; YEAR 2000
The Company has made a substantial investment in its information systems
and intends to spend significant amounts on its information systems in the
future. In particular, the Company is currently evaluating Year 2000 issues
concerning the ability of systems to properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause complete
system failures. The Company believes that its account management software
system, which it recently developed, and the software systems being installed at
its Owensboro, Kentucky facility are Year 2000 compliant. However, the Company
is evaluating its other systems and expects that it may need to upgrade or
replace certain of them, including its general ledger, accounts payable and
payroll interface software systems, to handle the rollover into the Year 2000.
The Company has not yet quantified the anticipated costs of addressing Year 2000
issues. There can be no assurance that the Year 2000 problem will not have a
material adverse effect on the results of operations of the Company.
16
<PAGE> 18
EFFECTS OF INFLATION
Inflation has had the effect of increasing the reported amounts of the
Company's revenues and costs. The Company uses the last-in, first-out (LIFO)
method to value a significant portion of inventories. This method tends to
reduce the amount of income due to inflation included in the Company's results
of operations. The Company believes that, through increases in its prices and
productivity improvements, it has been able to recover increases in costs and
expenses attributable to inflation.
17
<PAGE> 19
BUSINESS
GENERAL
The Company is one of the largest providers of workplace uniforms and
protective clothing in the United States. The Company rents, manufactures and
sells a wide range of uniforms and protective clothing, including shirts, pants,
jackets, coveralls, jumpsuits, lab coats, smocks and aprons, and also rents
industrial wiping products, floormats and other non-garment items, to a variety
of manufacturers, retailers and service companies. The Company serves businesses
of all sizes in numerous industry categories. Typical customers include
automobile service centers and dealers, delivery services, food and general
merchandise retailers, food processors and service operations, light
manufacturers, maintenance facilities, restaurants, service companies, soft and
durable goods wholesalers, transportation companies, and others who require
employee clothing for image, identification, protection or utility purposes.
Among the largest customers of the Company's conventional uniform rental
business are divisions, units, regional operations or franchised agencies of
such major organizations as General Electric Company, Honda (Canada), The
Coca-Cola Company, Speedy Muffler King, Wal-Mart Stores, Inc. and E.I. du Pont
de Nemours and Company. At certain specialized facilities, the Company also
decontaminates and cleans work clothes that may have been exposed to radioactive
materials and services special cleanroom protective wear. Typical customers for
these specialized services include government agencies, research and development
laboratories, high technology companies and utilities operating nuclear
reactors. In fiscal 1997, the Company generated $419 million in revenue, of
which approximately 68% was from the rental of uniforms and protective clothing,
22% was from the rental of non-garment items, 7% was from garment
decontamination services, and 3% was from the direct sale of garments.
INDUSTRY OVERVIEW
According to industry data compiled by the Uniform and Textile Service
Association, approximately 46 million of the 128 million people in the United
States civilian workforce at the beginning of 1997 wore some form of specialized
work clothing. Of this total, approximately 15.4 million people worked for
companies that purchased such clothing for their employees and another 6.5
million people wore uniforms rented by their employers from uniform rental
companies. The Uniform and Textile Service Association estimates that uniform
rental services alone generated approximately $4.8 billion and $5.3 billion in
revenue during 1996 and 1997, respectively, and that this industry has grown at
a compound annual rate of approximately 7.2% since 1983.
The Company believes that the uniform industry's overall growth has
resulted from increasing numbers of companies choosing to outfit their employees
in uniforms in order to foster greater company identity, enhance their corporate
image and improve employee safety, productivity and morale. The Company also
believes that growth in the rental segment of the industry in particular will
continue as businesses that might otherwise purchase uniforms realize the
greater control, simplified administration and improved economics that uniform
rental service programs offer. Additionally, the Company believes that the trend
in the United States toward a more service-oriented economy will increase the
overall demand for uniforms as businesses recognize the importance of appearance
and image for people in positions that interact with the public.
The Company believes that the top five companies in the uniform rental
segment of the industry currently generate over half of the industry's volume.
The remainder is divided among more than 600 smaller businesses, many of which
serve one or a limited number of markets or geographic service areas and
generate annual revenues of less than $1.0 million, and a small group of which
have revenues of up to approximately $200 million. The uniform rental industry
has experienced significant consolidation in recent years. The Company believes
that ownership succession issues, the ongoing cost of complying with
environmental regulations and the increase in the number of companies purchasing
services through national vendors rather than on a local or regional basis will
present well-capitalized firms, such as the Company, with significant
opportunities for consolidation and further expansion.
18
<PAGE> 20
BUSINESS STRATEGY
The Company seeks to enhance its position as one of the nation's leading
providers of uniforms and protective clothing by building on its core
competitive strengths, which include the following:
- Maintain Client and Geographic Diversification and Multi-Year Client
Relationships. The Company believes that the geographic reach of its
operations and the economic diversity of its client base not only allow
it to offer outstanding service to clients on a nationwide basis but also
to reduce the effects of regional economic downturns. The Company
currently serves more than 100,000 customer locations in 45 states,
Canada and Europe from 125 service facilities and distribution centers.
During each of the past five years, no single customer accounted for more
than 1% of the Company's revenues. The Company typically serves its
customers pursuant to written service contracts that range in duration
from three to five years.
- Provide Superior Customer Service. The Company seeks to distinguish
itself from its principal competitors through its superior customer
service. The Company serves its customers through approximately 925 route
salespersons, who generally interact on a weekly basis with their
accounts, and more than 500 service support people, who are charged with
expeditiously handling customer requirements regarding the outfitting of
new customer employees, garment repair and replacement, billing inquiries
and other matters. The Company's policy is to respond to all customer
inquiries and problems within 24 hours. In addition, the Company offers
its customers a range of garment service options, including full-service
rental programs in which garments are cleaned and maintained by the
Company, leasing programs in which garments are cleaned and maintained by
individual employees and direct sales of garments and related items.
Because the Company designs and manufactures its own uniforms and
protective clothing, it can produce custom garment programs for its
larger customers, offer a diverse range of such designs within its
standard line of garments, and better control the quality, price and
speed at which it produces such garments.
- Invest in Advanced Systems and Facilities. The Company's investments in
systems and facilities enhance the Company's customer service, sales,
marketing, inventory control and finance functions and enable the Company
to effectively manage its geographically dispersed operations. The
Company's proprietary management information systems are fully-networked
between the Company's branch locations and its corporate headquarters.
These systems provide Company personnel with access to information on the
status of customers' orders, customers' specific uniform needs and usage
patterns, inventory availability and shipping information. In addition,
by the end of fiscal 1998, the Company expects to complete construction
of its 310,000 square foot Owensboro, Kentucky distribution center, which
the Company believes will be one of the largest and most advanced garment
distribution facilities in the industry. The Company expects that this
new facility will enable it to streamline its distribution and inventory
control systems and provide it with the operational capacity to expand
its direct sales business. See "Risk Factors -- Management of Growth; New
Distribution Facility." The Company intends to continue to make
significant investments in its management information systems and
facilities in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Information Systems;
Year 2000."
The Company intends to continue to grow its business by focusing on the
following strategies:
- Pursue Internal Growth Initiatives. The Company plans to achieve
internal growth through new market start-ups, the expansion of sales
routes, targeted marketing efforts, increased sales to existing customers
and direct sales. The Company seeks to obtain new business by extending
its sales efforts into contiguous market areas that can be serviced from
an existing Company facility. Upon reaching threshold revenue levels in a
new market area, the Company may then opt to construct or lease a
customer service facility to support this developing business. In
addition, the Company has initiated operations, including constructing
new facilities, in market areas not yet serviced by existing facilities.
During fiscal 1997, the Company launched start-up operations in San
Francisco, California, New Orleans, Louisiana, Evansville, Indiana and
Savannah, Georgia, and since 1992 has opened 13 service facilities in new
or contiguous markets. The Company employs more than 300 trained sales
19
<PAGE> 21
representatives whose sole function is to market the Company's services
to potential customers and develop new accounts. The Company also
utilizes its route salespeople to maximize sales to existing customers,
such as by offering uniform rental customers the opportunity to purchase
non-garment items. In recent years, the Company has established a
national account sales organization to target larger customers with
nationwide operations for which the Company can serve as the primary
supplier of garment services and has increased its emphasis on its direct
sales of uniforms and specialized garments, both to its existing
customers and in its business development efforts. When completed, the
Company's 310,000 square foot Owensboro, Kentucky facility will not only
enhance the Company's ability to service national accounts but will have
space dedicated to its direct sales efforts that will enable the Company
to expand its presence in this segment.
- Leverage the Customer Base. The Company intends to continue leveraging
its excellent service relationship with its uniform rental customers by
offering such customers additional non-garment items, such as industrial
wiping products, floormats and mops, and related services. The Company
also offers such customers the opportunity to make direct purchases of
uniforms and accessories. The Company intends to evaluate possible new
product categories which, though not directly textile related, represent
product or service needs that customers currently purchase from other
sources but that could be readily made available by the Company.
- Expand Through Acquisitions. The Company seeks to acquire uniform
service businesses that have established customer bases, excellent
service reputations, and the size and quality of operations necessary to
serve as the Company's base for expansion in a new market or that can
help grow its operations in an existing market. Since the beginning of
fiscal 1993, the Company has acquired numerous businesses, including 11
which had annual revenues of more than $1.0 million at the time of
purchase. The uniform rental industry has experienced significant
consolidation in recent years. The Company believes that ownership
succession issues, the ongoing cost of complying with environmental
regulations and the increase in the number of companies purchasing
services through national vendors rather than on a local or regional
basis will present well-capitalized firms, such as the Company, with
significant opportunities for consolidation and further expansion.
- Develop Existing and New Niche Businesses. The Company intends to
develop additional niche businesses to complement its specialized garment
business, which today include its nuclear decontamination and clean-room
garment services. The Company's current niche operations include
Interstate Nuclear Services in the garment decontamination area, UniClean
Cleanroom Services in the manufacturing process protection, aerospace and
biotechnology areas, and Specialty Uniform in the custom care clothing
area. To further its nuclear garment services business, the Company has
shifted its customer focus away from domestic nuclear energy generation
facilities towards long-term United States Department of Energy contracts
and has entered the European market, where reliance on nuclear power
plants for energy generation is much greater than in the United States.
The Company also continues to develop its specialized cleanroom
protective wear service by expanding geographic coverage from its current
cleanroom sites on the West Coast and New England and by undertaking
detailed site surveys for the establishment of additional processing
centers. In the custom care clothing area, the Company is working to
increase market penetration from its Los Angeles and Boston facilities
and is actively evaluating major markets for possible additional
facilities. The Company continues to evaluate other niche businesses
which could capitalize on the Company's branch network and customer
service orientation.
PRODUCTS AND SERVICES
The Company provides its customers with personalized workplace uniforms and
protective work clothing in a broad range of styles, colors, sizes and fabrics.
The Company's uniform products include shirts, pants, jackets, coveralls,
jumpsuits, smocks, aprons and specialized protective wear, such as garments for
use in radioactive and clean room environments and fire retardant garments. The
Company also offers non-garment items and services, such as industrial wiping
products, floormats, mop dust-control service and other textile
20
<PAGE> 22
products. At certain specialized facilities, the Company also decontaminates and
cleans clothes which may have been exposed to radioactive materials and services
special cleanroom protective wear.
The Company offers its customers a range of garment service options,
including full-service rental programs in which garments are cleaned and
serviced by the Company and lease programs in which garments are cleaned and
maintained by individual employees, as well as the opportunity to purchase
garments and related items directly. As part of its rental business, the Company
picks up a customer's soiled uniforms or other items on a periodic basis
(usually weekly) and delivers at the same time cleaned and processed replacement
items. The Company's centralized services, specialized equipment and economies
of scale generally allow it to be more cost effective in providing garment
services than customers could be by themselves, particularly those customers
with high employee turnover rates. The Company's uniform program is intended not
only to help its customers foster greater company identity, but to enhance their
corporate image and improve employee safety, productivity and morale. The
Company typically serves its customers pursuant to written service contracts
that range in duration from three to five years.
CUSTOMERS
The Company serves businesses of all sizes in numerous industry categories.
Typical customers include automobile service centers and dealers, delivery
services, food and general merchandise retailers, food processors and service
operations, light manufacturers, maintenance facilities, restaurants, service
companies, soft and durable goods wholesalers, transportation companies, and
others who require employee clothing for image, identification, protection or
utility purposes. Among the largest customers of the Company's conventional
uniform rental business are divisions, units, regional operations or franchised
agencies of such major organizations as General Electric Company, Honda
(Canada), The Coca-Cola Company, Speedy Muffler King, Wal-Mart Stores, Inc. and
E.I. du Pont de Nemours and Company. The Company currently services over 100,000
customer locations in 45 states, Canada and Europe from approximately 125
service locations and distribution centers. For fiscal 1995, 1996 and 1997, the
Company's garment rental operations produced approximately 67%, 67% and 68%,
respectively, of its revenues, while non-garment rentals accounted for 22%, 23%
and 22%, the specialized garment services business accounted for approximately
8%, 7% and 7%, and direct sales of garments accounted for 3%, of the Company's
revenues during each such period. During the past five years, no single customer
accounted for more than 1% of total revenues in any year.
MARKETING AND CUSTOMER SERVICE
The Company employs more than 300 trained sales representatives whose sole
function is to market the Company's services to potential customers and develop
new accounts. The Company also utilizes its route salespeople to maximize sales
to existing customers, such as by offering garment rental customers the
opportunity to purchase non-garment items. Potential customers are contacted by
mail, by telephone and in-person. Sales representatives develop their
appointments through the use of an extensive, proprietary database of
pre-screened and qualified business prospects. This database is built through
responses to the Company's promotional initiatives, through contacts via its
World Wide Web site and trade shows and through the selective use of purchased
lists. The Company also endeavors to elevate its brand identity through certain
advertising and promotional initiatives, including the sponsorship of a NASCAR
auto racing team.
The Company believes that customer service is the most important element in
developing and maintaining its market position and that its emphasis on customer
service is reflected throughout its business. The Company serves its customers
through approximately 925 route salespersons, who generally interact on a weekly
basis with their accounts, and more than 500 service support people, who are
charged with expeditiously handling customer requirements regarding the
outfitting of new customer employees, garment repair and replacement, billing
inquiries and other matters. The Company's policy is to respond to all customer
inquiries and problems within 24 hours.
The Company's customer service function is supported by its fully-networked
management information systems, which provide Company personnel with access to
information on the status of customers' orders, inventory availability and
shipping information, as well as information regarding customers' individual
21
<PAGE> 23
employees, including names, sizes, uniform styles and colors. The Company has
recently established a national account sales group that targets larger
customers with nationwide operations for which the Company can serve as the
primary supplier of garment services. The Company currently employs four persons
in its national account sales organization and it intends to expand this group
as it becomes more established.
COMPETITION
The uniform rental and sales industry is highly competitive. The Company
believes that the top five companies in the uniform rental segment of the
industry currently generate over half of the industry's volume. The remainder of
the market, however, is divided among more than 600 smaller businesses, many of
which serve one or a limited number of markets or geographic service areas and
generate annual revenues of less than $1.0 million, and a small group of which
have revenues of up to approximately $200 million. Although the Company is one
of the larger companies engaged in the uniform rental and sales business, there
are other firms in the industry which are larger and have greater financial
resources than the Company. The Company's leading competitors include ARAMARK
Corporation, Cintas Corporation, G&K Services, Inc. and Unitog Company. In
addition to its traditional rental competitors, the Company may increasingly
compete in the future with businesses that focus on selling uniforms and other
related items. The principal methods of competition in the industry are quality
of service and price. The Company also competes with industry competitors for
acquisitions, which has the effect of increasing the price for acquisitions and
reducing the number of available acquisition candidates. The Company believes
that its ability to compete effectively is enhanced by the superior customer
service and support that it provides its customers.
MANUFACTURING AND SOURCING
The Company manufactured approximately 55% of all garments which it placed
in service during fiscal 1997. These included work pants manufactured at its
plant in Luquillo, Puerto Rico, shirts manufactured at its plant in Cave City,
Arkansas, and jackets and certain specialty garments manufactured at its plant
in Wilburton, Oklahoma. The balance of the garments used in its programs are
purchased from a variety of industry suppliers. While the Company currently
acquires the raw materials with which it produces its garments from a limited
number of suppliers, the Company believes that such materials are readily
available from other sources. To date, the Company has experienced no
significant difficulty in obtaining any of its raw materials or supplies.
EMPLOYEES
At August 30, 1997, the Company employed approximately 7,000 persons, about
5% of whom are represented by unions pursuant to six separate collective
bargaining agreements. The Company considers its employee relations to be good.
FACILITIES
At August 30, 1997, the Company owned or occupied 128 facilities containing
an aggregate of approximately 3.3 million square feet located in the United
States, Canada, Puerto Rico and the Netherlands. These facilities include its
garment manufacturing plants in Luquillo, Puerto Rico, Cave City, Arkansas, and
Wilburton, Oklahoma, as well as 11 decontamination facilities located in
Massachusetts, New Mexico, California, Washington, Hawaii, Pennsylvania, South
Carolina, Virginia, Georgia, Illinois and The Netherlands. The Company owns 74
of these facilities containing approximately 2.5 million square feet, and, by
the end of fiscal 1998, expects to complete construction of its 310,000 square
foot Owensboro, Kentucky distribution center, which the Company believes will be
one of the largest and most advanced garment distribution facilities in the
industry. The Company believes that by owning its manufacturing facilities, it
can produce custom garment programs for its larger customers, offer a diverse
range of designs within its standard line of garments and better control the
quality, price and speed at which it produces such garments. The Company also
believes that its industrial laundry facilities are among the most modern in the
industry.
The Company owns substantially all of the machinery and equipment used in
its operations. In the opinion of the Company, all of its facilities and its
production, cleaning and decontamination equipment have
22
<PAGE> 24
been well maintained, are in good condition and are adequate for the Company's
present needs. The Company also owns and leases a fleet of approximately 1,700
delivery vans, trucks and other vehicles. The Company believes that these
vehicles are in good repair and are adequate for the Company's present needs.
ENVIRONMENTAL MATTERS
The Company and its operations are subject to various federal, state and
local laws and regulations governing, among other things, the generation,
handling, storage, transportation, treatment and disposal of hazardous wastes
and other substances. In particular, industrial laundries use and must dispose
of detergent waste water and other residues. The Company is attentive to the
environmental concerns surrounding the disposal of these materials and has
through the years taken measures to avoid their improper disposal. In the past,
the Company has settled, or contributed to the settlement of, actions or claims
brought against the Company relating to the disposal of hazardous materials and
there can be no assurance that the Company will not have to expend material
amounts to remediate the consequences of any such disposal in the future.
Further, under environmental laws, an owner or lessee of real estate may be
liable for the costs of removal or remediation of certain hazardous or toxic
substances located on or in or emanating from such property, as well as related
costs of investigation and property damage. Such laws often impose liability
without regard to whether the owner or lessee knew of or was responsible for the
presence of such hazardous or toxic substances. There can be no assurances that
acquired or leased locations have been operated in compliance with environmental
laws and regulations or that future uses or conditions will not result in the
imposition of liability upon the Company under such laws or expose the Company
to third-party actions such as tort suits.
In addition, the federal Environmental Protection Agency has recently
proposed a federal environmental regulatory framework applicable to industrial
laundry operations that would replace local regulations. Scheduled to take
effect in 1999, these regulations, if implemented as proposed, would require the
Company to expend substantial amounts on compliance, thereby increasing the
Company's operating costs and capital expenditures. To the extent such costs and
expenses could not be offset through price increases, the Company's results of
operations could be adversely affected.
The Company's nuclear garment decontamination facilities are licensed by
the Nuclear Regulatory Commission, or in certain cases by the applicable state
agency, and are subject to regulation by federal, state and local authorities.
In recent years, there has been increased scrutiny and, in certain cases,
regulation of nuclear facilities or related services that have resulted in the
suspension of operations at certain nuclear facilities served by the Company or
disruptions of the Company's ability to service such facilities. There can be no
assurance that such increased scrutiny will not lead to the shut-down of such
facilities or otherwise cause material disruptions in the Company's garment
decontamination business.
LEGAL PROCEEDINGS
From time to time the Company is subject to legal proceedings and claims
arising from the conduct of its business operations, including personal injury,
customer contract disputes, employment claims and environmental matters as
described above. The Company maintains insurance coverage providing
indemnification against many of such claims. In the opinion of the Company, the
ultimate disposition of these matters on an aggregate basis will not have a
material adverse effect on the Company's financial position or results of
operations.
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<PAGE> 25
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as of the date of this
Prospectus with respect to the directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Aldo Croatti............................. 80 Chairman of the Board of Directors
Ronald D. Croatti........................ 54 Vice Chairman of the Board of Directors,
President and Chief Executive Officer
Cynthia Croatti.......................... 42 Treasurer and Director
Albert Cohen............................. 70 Director
Donald J. Evans.......................... 72 Director
Reynold L. Hoover........................ 70 Director
Robert L. Croatti........................ 61 Executive Vice President
John B. Bartlett......................... 56 Senior Vice President and Chief Financial
Officer
Bruce P. Boynton......................... 49 Vice President, Canadian Operations
Dennis G. Assad.......................... 52 Vice President, Sales and Marketing
</TABLE>
The principal occupation and positions for the past five years of the
directors and executive officers named above are as follows:
ALDO CROATTI has been Chairman of the Board since the Company's
incorporation in 1950 and of certain of its predecessors since 1940.
RONALD D. CROATTI joined the Company in 1965. Mr. Croatti became director
of the Company in 1982 and Vice Chairman of the Board in 1986 and has served as
Chief Executive Officer since 1991 and President since August 31, 1995. Mr.
Croatti has overall responsibility for the management of the Company.
CYNTHIA CROATTI joined the Company in 1980. Ms. Croatti has served as
director since 1995 and Treasurer since 1982 and, in addition, has primary
responsibility for overseeing the purchasing and direct sales functions of the
Company.
REYNOLD L. HOOVER has served as director of the Company since 1983. Mr.
Hoover has been an Environmental Consultant since 1995. From 1991 to 1995, Mr.
Hoover served as Manager of Environmental Affairs for The Stanley Works, a
manufacturer of hand tools.
ALBERT COHEN has served as director of the Company since 1989. Mr. Cohen is
Chairman of the Board and Chief Executive Officer of Electronic Space Systems
Corporation, a manufacturer of aerospace ground equipment.
DONALD J. EVANS has served as director of the Company since 1973. Mr. Evans
has served as General Counsel and First Deputy Commissioner, Massachusetts
Department of Revenue, since November 1996. Prior to that time, Mr. Evans was a
partner in the law firm of Goodwin, Procter & Hoar LLP, the Company's general
counsel.
ROBERT L. CROATTI joined the Company in 1959. Mr. Croatti has served as
Executive Vice President since 1986 and has primary responsibility for
overseeing the rental operations of the Company.
JOHN B. BARTLETT joined the Company in 1977. Mr. Bartlett has served as
Senior Vice President and Chief Financial Officer since 1986 and has primary
responsibility for overseeing the financial functions of the Company, as well as
its human resources and information systems departments.
BRUCE P. BOYNTON joined the Company in 1976. Mr. Boynton has served as Vice
President, Canadian Operations since 1986 and is the chief operating officer for
the Company's Canadian operations.
DENNIS G. ASSAD joined the Company in 1975. Mr. Assad has served as Vice
President, Sales and Marketing since 1995 and has primary responsibility for
overseeing the sales and marketing functions of the Company. Prior to that time,
Mr. Assad served as a Regional General Manager of the Company.
Ronald D. Croatti, Cynthia Croatti and Robert L. Croatti are a son,
daughter and nephew, respectively, of Aldo Croatti.
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<PAGE> 26
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information concerning the
beneficial ownership of shares of Common Stock and Class B Common Stock, as of
January 30, 1998, and as adjusted to reflect the sale of Common Stock offered
hereby, by Aldo Croatti, the Selling Stockholder and each person known by the
Company to beneficially own 5% or more of the Common Stock or Class B Common
Stock. Except as otherwise specified, the named beneficial owner has sole voting
and investment power.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED PRIOR TO SHARES BENEFICIALLY OWNED AFTER
OFFERING OFFERING
---------------------------------------- ---------------------------------------
PERCENTAGE NUMBER PERCENTAGE
OF COMBINED OF NUMBER OF COMBINED
NUMBER OF VOTING SHARES OF VOTING
SHARES OWNERSHIP POWER OFFERED SHARES OWNERSHIP POWER
NAME OWNED PERCENTAGE(1) (1)(2) (3) OWNED PERCENTAGE(1) (1)(2)
---- ---------- ------------- ----------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aldo Croatti(4).......... 10,199,060 49.7% 76.1% 2,000,000 8,199,060 40.0% 70.7%
Marie Croatti(5)......... 1,448,132 7.1% 10.2% 0 1,448,132 7.1% 11.8%
William Blair &
Company, L.L.C.(6)..... 1,108,687 5.4% * 0 1,108,687 5.4% 1.0%
Societe Generale Asset
Management Corp.(7).... 799,500 3.9% * 0 799,500 3.9% *
</TABLE>
- ---------------
* Less than one percent.
(1) Percentages are based upon 7,903,864 shares of Common Stock and 12,606,744
shares of Class B Common Stock outstanding on January 30, 1998, and
9,903,864 shares of Common Stock and 10,606,744 shares of Class B Common
Stock after the Offering, respectively. See Note (3) below.
(2) Each share of Common Stock has one vote and each share of Class B Common
Stock has ten votes.
(3) All of the shares offered hereby by the Selling Stockholder are shares of
Class B Common Stock, which will automatically convert into shares of Common
Stock upon their sale in the Offering. See "Description of Capital Stock."
If the Underwriters' over-allotment option is exercised in full, Mr.
Croatti, the Selling Stockholder, will sell an additional 300,000 shares.
Following such sale, Mr. Croatti would own 38.5% of the aggregate number of
outstanding shares of Common Stock and Class B Common Stock (with 69.7% of
the combined voting power of the outstanding shares of Common Stock and
Class B Common Stock).
(4) All shares shown are shares of Class B Common Stock, representing 80.9% of
such class, owned by The Aldo A. Croatti Trust -- 1983, of which Aldo
Croatti is the sole trustee and a beneficiary. The information presented
does not include any shares owned by Mr. Croatti's wife or children, as to
which shares Mr. Croatti disclaims any beneficial interests. Mr. Croatti's
address is c/o UniFirst Corporation, 68 Jonspin Road, Wilmington,
Massachusetts 01887.
(5) Includes 423,168 shares of Class B Common Stock and 84,792 shares of Common
Stock owned of record by Marie Croatti, the wife of the Selling Stockholder,
as Trustee under several trusts, the beneficiaries of which are the
grandchildren of Aldo Croatti, as to which shares Mrs. Croatti disclaims any
beneficial interest. Mrs. Croatti individually owns 940,172 shares of Class
B Common Stock, representing 7.5% of such class. Mrs. Croatti's address is
c/o UniFirst Corporation, 68 Jonspin Road, Wilmington, Massachusetts 01887.
(6) The address of William Blair & Company, L.L.C. is 222 West Adams Street,
Chicago, IL 60606. William Blair & Company, L.L.C. owns shares of Common
Stock only, representing 14.0% of such class as of January 30, 1998 and
11.2% of such class after the Offering. The Company has relied solely upon
information provided by William Blair & Company, L.L.C.
(7) The address of Societe Generale Asset Management Corp. is 1221 Avenue of the
Americas, New York, New York 10020. Societe Generale Asset Management Corp.
shares voting power over the shares listed with its investment advisory
client(s). The Company has relied solely upon the information set forth in
Schedule 13G, dated January 28, 1998, filed with the Securities and Exchange
Commission (the "Commission").
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<PAGE> 27
DESCRIPTION OF CAPITAL STOCK
General. The Company has authorized (i) 30,000,000 shares of Common Stock,
par value $0.10 per share and (ii) 20,000,000 shares of Class B Common Stock par
value $0.10 per share. Except as set forth below, shares of Class B Common Stock
are identical in all respects to shares of Common Stock. The Company has also
authorized a class of Preferred Stock, par value $1.00 per share, to have such
terms, rights and preferences as may be designated by the Board of Directors. No
Preferred Stock has been designated or issued as of the date of this Prospectus.
Voting. Each share of Common Stock is entitled to one vote per share. Each
share of Class B Common Stock is entitled to ten votes per share. All actions
submitted to a vote of stockholders are voted on by holders of Common Stock and
Class B Common Stock voting together as a class, except for the election for
directors and as otherwise set forth below. With respect to the election of
directors, holders of Common Stock vote as a separate class to elect 25% of the
total number of directors. Holders of Common Stock have the sole right to remove
directors elected by them. Holders of Common Stock and holders of Class B Common
Stock, voting together as a single class, have the right to elect the remaining
directors. In addition, the affirmative vote of the prescribed majority of the
outstanding shares of Common Stock or Class B Common Stock, voting as separate
classes, is required to approve any matters that require class votes under the
Business Corporation law of the Commonwealth of Massachusetts.
Dividends. Holders of Common Stock are entitled to a cash dividend on each
outstanding share equal to 125% of the cash divided payable on each outstanding
share of Class B Common Stock when and if declared by the Company's Board of
Directors. In the case of dividends or other distributions payable on the Common
Stock or the Class B Common Stock in shares of such stock, including
distributions pursuant to stock splits or dividends, Common Stock shall be
payable only to holders of Common Stock and Class B Common Stock shall be
payable only to holders of Class B Common Stock. In no event will either Common
Stock or Class B Common Stock be split up, subdivided, combined or reclassified
unless the shares of the other class are proportionately split up, subdivided or
reclassified. The Board of Directors may vary the rate of cash dividend payable
on shares of Common Stock or Class B Common Stock, but in no event may holders
of Common Stock receive a cash dividend of less than 125% of the cash dividend
paid on each share of Class B Common Stock.
Merger or Consolidation of the Company. In the case of any consolidation
or merger of the Company as a result of which the stockholders of the Company
are entitled to receive cash, stock, other securities or other property with
respect to or in exchange for such stock, or in the case of any liquidation of
the Company as an entity, each holder of Common Stock and Class B Common Stock
will be entitled to receive an equal amount of consideration for each share of
Common Stock or Class B Common Stock surrendered in such merger, consolidation
or liquidation.
Restrictions on Transfer of Class B Common Stock; Convertibility of Class B
Common Stock into Common Stock. As more fully described in the Company's
Restated Articles of Organization, the transferability of the Class B Common
Stock is significantly restricted. In the case of holders of Class B Common
Stock who are individuals, permitted transfers include transfers to certain
family members of the holder and certain entities controlled by, or for the
benefit of, the holder or such family members. The Class B Common Stock is
convertible at all times and without cost to the holder (except for any transfer
taxes that may be payable) into Common Stock on a share for share basis.
Further Issuances of Class B Common Stock. Additional shares of Class B
Common Stock will not be issued except in connection with stock splits,
dividends or similar recapitalizations or if such additional issuance is
approved by the Company's Board of Directors and the holders of the required
numbers of shares of Common Stock and Class B Common Stock voting as separate
classes.
Termination and Conversion of Class B Common Stock. All outstanding shares
of Class B Common Stock will automatically be converted into Common Stock on a
share-for-share basis (i) at any time the number of shares of Class B Common
Stock falls below 10% of the aggregate number of outstanding shares of Common
Stock and Class B Common Stock combined, (ii) at any time the Company's Board of
Directors
26
<PAGE> 28
and the holders of a majority of the outstanding shares of Class B Common Stock
approve the conversion of all shares of Class B Common Stock into Common Stock
or (iii) if, as a result of the existence of the Class B Common Stock, the
Common Stock becomes excluded from trading on the New York Stock Exchange and
all other national securities exchanges and is also excluded from quotation on
the Nasdaq or any other national quotation system.
Potential Anti-Takeover Effects of Class B Common Stock and Charter and
By-Law Provisions. The voting control by the Selling Stockholder and certain of
his family members and certain provisions of Massachusetts law, the Company's
Restated Articles of Organization and the By-laws could discourage or frustrate
future attempts to effect a change in control of the Company (for example by
means of tender offer for, or open market purchases of, Common Stock) that are
not approved by the Selling Stockholder. Such provisions could limit the price
that certain investors might be willing to pay in the future for shares of the
Company's Common Stock. The Company's Board of Directors is divided into three
classes with directors in each class elected for three year terms, which would
make it difficult for any third party to gain control of Company's Board of
Directors. The Restated Articles of Organization and the By-laws also impose
various procedural and other requirements which would make it difficult to
affect certain corporate actions. Shares of preferred stock may be issued by the
Board of Directors without stockholder approval on such terms as the Board may
determine. The rights of the holders of Common Stock will be subject to, and may
be adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future. The issuance of preferred stock could make it more
difficult for a third party to acquire, or discourage a third party from
acquiring, a majority of the outstanding voting stock of the Company. The
Company has no present plans to issue any shares of preferred stock.
27
<PAGE> 29
UNDERWRITING
William Blair & Company, L.L.C., as Underwriter ("Blair"), subject to the
terms and conditions set forth in the Underwriting Agreement by and among the
Company, the Selling Stockholder and Blair (the "Underwriting Agreement"), has
agreed to purchase from the Selling Stockholder the 2,000,000 shares of Common
Stock (excluding the over-allotment shares) offered hereby.
The nature of Blair's obligations under the Underwriting Agreement is such
that all shares of the Common Stock offered hereby, excluding shares covered by
the over-allotment option granted to Blair, must be purchased if any are
purchased.
Blair has advised the Company and the Selling Stockholder that it proposes
to offer the Common Stock directly to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of not more than $ per share.
Additionally, Blair may allow, and such dealers may re-allow, a concession not
in excess of $ per share to certain other dealers. After the shares are
released for sale to the public, the public offering price and other selling
terms may be changed by Blair.
The Selling Stockholder has granted to Blair an option, exercisable within
30 days after the date of this Prospectus, to purchase up to an additional
300,000 shares of Common Stock at the same price per share to be paid by Blair
for the other shares offered hereby. Blair may exercise the option for the
purpose of covering over-allotments, if any, made in connection with the
distribution of the Common Stock offered hereby.
The Company, the Selling Stockholder and the Company's directors and
executive officers have agreed, subject to certain exceptions, that they will
not sell, offer to sell, issue, distribute or otherwise dispose of any shares of
Common Stock or any options, rights or warrants with respect to any shares of
Common Stock or register any shares of Common Stock for sale under the
Securities Act, for a period of 90 days after the date of this Prospectus
without the prior written consent of Blair, except that the Selling Stockholder
may sell shares pursuant to the over-allotment option.
In connection with the Offering, Blair may engage in transactions that may
stabilize, maintain or otherwise affect the market price of the Common Stock,
including stabilizing bids, short-covering transactions or the imposition of
penalty bids. A "stabilizing bid" is a bid for, or the purchase of, the Common
Stock on behalf of Blair for the purposes of fixing or maintaining the price of
the Common Stock. A "short-covering transaction" is a bid for, or the purchase
of, the Common Stock on behalf of Blair to reduce a short position incurred by
Blair in connection with the Offering. A "penalty bid" is an arrangement
permitting Blair to reclaim the selling concession otherwise accruing to a
broker-dealer in connection with the Offering if the Common Stock originally
sold by such broker-dealer is purchased by Blair in a stabilizing or covering
transaction and has therefore not been effectively placed by such broker-dealer.
Blair has advised the Company that such transactions may be effected on the New
York Stock Exchange or otherwise and, if commenced, may be discontinued at any
time.
The Company and the Selling Stockholder have agreed to indemnify Blair and
its controlling persons against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments Blair may be required to make
in respect thereof.
As of January 30, 1998, Blair owned beneficially approximately 1,108,687
shares of the Common Stock. See "Principal and Selling Stockholders."
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholder by Goodwin, Procter & Hoar LLP,
Boston, Massachusetts. Sidley & Austin, Chicago, Illinois is acting as counsel
for William Blair & Company, L.L.C. in connection with certain legal matters
relating to the Common Stock offered hereby.
28
<PAGE> 30
EXPERTS
The consolidated financial statements and schedule of the Company
incorporated by reference in the Prospectus and elsewhere in the Registration
Statement to the extent and for the periods indicated in their reports have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information concerning the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained upon written request addressed to the Commission, Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Reports, proxy statements and other information concerning the Company
can also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. Copies of reports, proxy and information
statements and other information regarding registrants that file electronically
(including the Company) are available on the Commission's website at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement"). This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement which may be inspected
and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated herein by reference: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended August 30, 1997; (ii) the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November
29, 1997; and (iii) the description of the Company's Common Stock contained in
the registration statement on Form 8-A filed by the Company with the Commission.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in any subsequently filed document which is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephonic requests for such copies should be directed to the Company's
principal office: UniFirst Corporation, 68 Jonspin Road, Wilmington,
Massachusetts 01887, Attn: John B. Bartlett (978) 658-8888.
29
<PAGE> 31
(1) Picture of a typical local stockroom of the Company.
(2) Picture of a Company employee loading a washing machine at a Company
facility.
(3) Picture of a route salesman of the Company.
(4) Picture of three employees of customers of the Company wearing the Company's
uniforms.
<PAGE> 32
================================================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR
WILLIAM BLAIR & COMPANY, L.L.C. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Safe Harbor for Forward-Looking
Statements.......................... 9
Use of Proceeds....................... 9
Price Range of Common Stock and
Dividend Policy..................... 10
Selected Consolidated Financial
Data................................ 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 18
Management............................ 24
Principal and Selling Stockholders.... 25
Description of Capital Stock.......... 26
Underwriting.......................... 28
Legal Matters......................... 28
Experts............................... 29
Available Information................. 29
Incorporation of Certain Documents by
Reference........................... 29
</TABLE>
================================================================================
================================================================================
2,000,000 SHARES
[UNIFIRST LOGO]
COMMON STOCK
--------------
PROSPECTUS
, 1998
--------------
WILLIAM BLAIR & COMPANY
================================================================================
<PAGE> 33
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated fees and expenses payable by
the Company and the Selling Stockholder in connection with the issuance and
distribution of the Securities registered hereby (all amounts except the
registration fee are estimated):
<TABLE>
<S> <C>
Registration fee......................................................... $ 17,429
NASD filing fee.......................................................... 6,408
Printing expenses........................................................ 60,000
Legal fees and expenses.................................................. 175,000
Accounting fees and expenses............................................. 75,000
Blue sky fees and expenses............................................... 5,000
Miscellaneous............................................................ 11,163
--------
Total.......................................................... $350,000
========
</TABLE>
The Company and the Selling Stockholder have agreed that all such expenses
will be shared equally between them.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of the Business Corporation Law of The Commonwealth of
Massachusetts provides that indemnification of directors, officers, employees or
other agents may be provided by a corporation in its (a) Articles of
Organization, (b) its by-laws or (c) by a vote of the Board of Directors.
Section 13(b)(1 1/2) of the Business Corporation Law of the Commonwealth of
Massachusetts provides that the Articles of Organization may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director provided that such provision shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Sections 61 or 62 of the Massachusetts Business Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article 6A of the Company's Restated Articles of Organization, as amended,
provides:
1. Except as limited by law or as provided in Paragraphs 2 and 3,
each Officer of this Corporation (and his heirs and personal
representatives) shall be indemnified by this Corporation against all
Expense incurred by him in connection with each Proceeding in which he is
involved as a result of his serving or having served as an Officer of this
Corporation or, at the request of this Corporation, as a director, officer,
employee or other agent of any other organization.
2. No indemnification shall be provided to an Officer with respect to
a matter as to which it shall have been adjudicated in any proceeding that
he did not act in good faith in the reasonable belief that his action was
in the best interests of this Corporation.
3. In the event that a Proceeding is compromised or settled so as to
impose any liability or obligation upon an Officer or upon this
Corporation, no indemnification shall be provided to said Officer with
respect to a matter if this Corporation has obtained an opinion of counsel
that with respect to said matter said Officer did not act in good faith in
the reasonable belief that his action was in the best interests of this
Corporation.
II-1
<PAGE> 34
4. To the extent authorized by the Board of Directors or the
stockholders, this Corporation may pay indemnification in advance of final
disposition of a Proceeding, upon receipt of an undertaking by the person
indemnified to repay such indemnification if it shall be established that
he is not entitled to indemnification by an adjudication under Paragraph 2
or by an opinion of counsel under Paragraph 3 hereof.
5. For the purposes of this Article,
(a) "Officer" means any person who serves or has served as a
director or in any other office filled by election or appointment by the
stockholders or the Board of Directors;
(b) "Proceeding" means any action, suit or proceeding, civil or
criminal, brought or threatened in or before any court, tribunal,
administrative or legislative body or agency; and
(c) "Expense" means any liability fixed by a judgment, order,
decree, or award in a Proceeding, any amount reasonably paid in
settlement of a Proceeding and any professional fees and other
disbursements reasonably incurred in a Proceeding.
6. Nothing in this Article shall limit any lawful rights to
indemnification existing independently of this Article.
Article 6G of the Company's Restated Articles of Organization provides:
No Director of this Company shall be personally liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, notwithstanding any provision of law imposing such liability;
provided, however, that this Article shall not eliminate or limit the
liability of a Director (i) for any breach of the Director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Sections 61 or 62 of the Massachusetts
Business Corporation Law, or (iv) with respect to any transaction from
which the Director derived an improper personal benefit.
ITEM 16. EXHIBITS.
1. Form of Underwriting Agreement.
4.1* Restated Articles of Organization, as amended.
4.2** Bylaws.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
Securities being registered.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Powers of Attorney (included on the signature page hereof).
- ---------------
* The Restated Articles of Organization were previously filed as an exhibit to
the Company's Registration Statement on Form S-1 (2-83051). Articles of
Amendment dated January 12, 1988 were previously filed as an Exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended August 27,
1988. Articles of Amendment dated January 21, 1993 were previously filed as
an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 27, 1993.
** The Company's Bylaws were previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 1996.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered
II-2
<PAGE> 35
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the respective
registrant of expenses incurred or paid by a director, officer, or
controlling person of such registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Wilmington, Commonwealth of Massachusetts, on this
11th day of February, 1998.
UNIFIRST CORPORATION
By: /s/ RONALD D. CROATTI
-----------------------------------
RONALD D. CROATTI
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of UniFirst Corporation, hereby severally constitute and appoint
Ronald D. Croatti and John B. Bartlett, and each of them singly, our true and
lawful attorneys with full power to them, and each of them singly, to sign for
us and in our names in the capacities indicated below, the Registration
Statement filed herewith and any and all amendments to said Registration
Statement (or any registration statement for an offering pursuant to such
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933), and generally to do all such things in
our names and in our capacities as officers and directors to enable UniFirst
Corporation to comply with the provisions of the Securities Act of 1933 and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said registration statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated. Each person listed below has signed this
registration statement in their capacity as an officer or director of UniFirst
Corporation.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ ALDO CROATTI Chairman of the Board of Directors February 11, 1998
- ---------------------------------
ALDO CROATTI
/s/ RONALD D. CROATTI President, Chief Executive Officer February 11, 1998
- --------------------------------- and Vice Chairman of the Board of
RONALD D. CROATTI Directors (Principal Executive
Officer)
/s/ JOHN B. BARTLETT Senior Vice President and Chief February 11, 1998
- --------------------------------- Financial Officer (Principal
JOHN B. BARTLETT Financial Officer and Accounting
Officer)
/s/ CYNTHIA CROATTI Director February 11, 1998
- ---------------------------------
CYNTHIA CROATTI
/s/ REYNOLD L. HOOVER Director February 11, 1998
- ---------------------------------
REYNOLD L. HOOVER
/s/ ALBERT COHEN Director February 11, 1998
- ---------------------------------
ALBERT COHEN
/s/ DONALD J. EVANS Director February 11, 1998
- ---------------------------------
DONALD J. EVANS
</TABLE>
II-4
<PAGE> 37
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. Form of Underwriting Agreement.
4.1* Restated Articles of Organization, as amended.
4.2** Bylaws.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
Securities being registered.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Powers of Attorney (included on the signature page hereof).
- ---------------
* The Restated Articles of Organization were previously filed as an exhibit to
the Company's Registration Statement on Form S-1 (2-83051). Articles of
Amendment dated January 12, 1988 were previously filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended August 27,
1988. Articles of Amendment dated January 21, 1993 were previously filed as
an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 27, 1993.
** The Company's Bylaws were previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 1996.
II-5
<PAGE> 1
EXHIBIT 1
DRAFT 2/11/98
UniFirst Corporation
2,000,000 Shares of Common Stock(1)
UNDERWRITING AGREEMENT
_______________, 1998
William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
SECTION 1. Introductory. UniFirst Corporation, a Massachusetts
corporation ("Company"), has an authorized capital stock consisting of 2,000,000
shares of Preferred Stock, $1.00 par value per share, of which no shares are
outstanding as of the date hereof, 20,000,000 shares of Class B Common Stock,
$.10 par value per share ("Class B Common Stock"), of which 12,606,744 shares
will be outstanding immediately prior to the closing of the offering
("Offering") of shares contemplated by this Agreement, and 30,000,000 shares of
Common Stock, $.10 par value per share ("Common Stock"), of which 7,903,864
shares will be outstanding immediately prior to the closing of the Offering.
Certain stockholders of the Company (collectively referred to as the "Selling
Stockholders" and named in Schedule I hereto) propose to sell 2,000,000 shares
(the "Firm Shares") of the Company's issued and outstanding Common Stock.(2)
William Blair & Company, L.L.C. is the sole Underwriter in the Offering
(hereinafter referred to as the "Underwriter" or "you"). In addition, certain of
the Selling Stockholders propose to grant to the Underwriter an option to
purchase up to 300,000 additional shares of Common Stock ("Option Shares") as
provided in Section 5 hereof. The Firm Shares and, to the extent such option is
exercised, the Option Shares, are hereinafter collectively referred to as the
"Shares."
You have advised the Company and the Selling Stockholders that you propose
to make a public offering of the Shares as soon as you deem advisable after the
registration statement hereinafter referred to becomes effective, if it has not
yet become effective, and the Pricing Agreement hereinafter defined has been
executed and delivered.
Prior to the purchase and public offering of the Shares by the Underwriter,
the Company, the Selling Stockholders and the Underwriter shall enter into an
agreement substantially in the form of Exhibit A hereto ("Pricing Agreement").
The Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Company, the Selling Stockholders and the
Underwriter and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be deemed
to incorporate the Pricing Agreement.
The Company and each of the Selling Stockholders hereby confirm their
agreements with the Underwriter as follows:
- --------
(1) Plus an option to acquire up to 300,000 additional shares to cover
overallotments.
(2) Immediately prior to the closing of the Offering, all of the shares to be
sold by the Selling Stockholders will be shares of Class B Common Stock,
and such shares will automatically convert into shares of Common Stock upon
the closing of the Offering.
<PAGE> 2
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the Underwriter that:
(a) A registration statement on Form S-3 (File No. 33-_______) and a
related preliminary prospectus with respect to the Shares have been
prepared and filed with the Securities and Exchange Commission
("Commission") by the Company in conformity with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "1933 Act;" unless indicated to
the contrary, all references herein to specific rules are rules promulgated
under the 1933 Act); and the Company has so prepared and has filed such
amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof and will file such additional
amendments thereto and such amended prospectuses as may hereafter be
required. There have been or will promptly be delivered to you three signed
copies of such registration statement and amendments, together with three
copies of all documents incorporated by reference therein, three copies of
each exhibit filed therewith, and conformed copies of such registration
statement and amendments (but without exhibits) and of the related
preliminary prospectus or prospectuses and final forms of prospectus for
each of the Underwriter.
Such registration statement (as amended, if applicable) at the
time it becomes effective and the prospectus constituting a part thereof
(including the information, if any, deemed to be part thereof pursuant to
Rule 430A(b) and/or Rule 434), as from time to time amended or
supplemented, are hereinafter referred to as the "Registration Statement,"
and the "Prospectus," respectively, except that if any revised prospectus
shall be provided to the Underwriter by the Company for use in connection
with the offering of the Shares which differs from the Prospectus on file
at the Commission at the time the Registration Statement became or becomes
effective (whether or not such revised prospectus is required to be filed
by the Company pursuant to Rule 424(b)), the term Prospectus shall refer to
such revised prospectus from and after the time it was provided to the
Underwriter for such use. If the Company elects to rely on Rule 434 of the
1933 Act, all references to "Prospectus" shall be deemed to include,
without limitation, the form of prospectus and the term sheet, taken
together, provided to the Underwriter by the Company in accordance with
Rule 434 of the 1933 Act ("Rule 434 Prospectus"). Any registration
statement (including any amendment or supplement thereto or information
which is deemed part thereof) filed by the Company under Rule 462(b) ("Rule
462(b) Registration Statement") shall be deemed to be part of the
"Registration Statement" as defined herein, and any prospectus (including
any amendment or supplement thereto or information which is deemed part
thereof) included in such registration statement shall be deemed to be part
of the "Prospectus", as defined herein, as appropriate. The Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder are hereinafter collectively referred to as the
"Exchange Act." Any reference herein to any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the 1933 Act
("Incorporated Documents"), as of the date of such preliminary prospectus
or Prospectus, as the case may be. Any document filed by the Company under
the Exchange Act after the effective date of the Registration Statement or
the date of the Prospectus and incorporated by reference in the Prospectus
shall be deemed to be included in the Registration Statement and the
Prospectus as of the date of such filing and defined as an Incorporated
Document herein.
The Incorporated Documents, when they were or will be filed with
the Commission, conformed or will conform in all material respects to the
requirements of the Exchange Act and none of such documents contained or
will contain an untrue statement of a material fact or omitted or will not
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus, and each preliminary prospectus has
conformed in all material respects with the requirements of the 1933 Act
and, as of its date, has not included any untrue statement of a material
fact or
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<PAGE> 3
omitted to state a material fact necessary to make the statements therein
not misleading; and when the Registration Statement became or becomes
effective, and at all times subsequent thereto, up to the First Closing
Date or the Second Closing Date hereinafter defined, as the case may be,
the Registration Statement, including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to Rule
430A(b), if applicable, and the Prospectus and any amendments or
supplements thereto, contained or will contain all statements that are
required to be stated therein in accordance with the 1933 Act and in all
material respects conformed or will in all material respects conform to the
requirements of the 1933 Act, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company
makes no representation or warranty as to information contained in or
omitted from any preliminary prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof.
(c) The Company and its subsidiaries have been duly incorporated and
are validly existing as corporations in good standing under the laws of
their respective places of incorporation, with corporate power and
authority to own their properties and conduct their business as described
in the Prospectus; the Company and each of its subsidiaries are duly
qualified to do business as foreign corporations under the corporation law
of, and are in good standing as such in, each jurisdiction in which they
own or lease substantial properties, have an office, or in which
substantial business is conducted and such qualification is required except
in any such case where the failure to so qualify or be in good standing
would not have a material adverse effect upon the Company and its
subsidiaries taken as a whole; and no proceeding of which the Company has
knowledge has been instituted in any such jurisdiction, revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) The Company owns directly or indirectly 100 percent of the issued
and outstanding capital stock of each of its subsidiaries, free and clear
of any claims, liens, encumbrances or security interests and all of such
capital stock has been duly authorized and validly issued and is fully paid
and nonassessable.
(e) The issued and outstanding shares of capital stock of the Company
as set forth in the Prospectus have been duly authorized and validly
issued, are fully paid and nonassessable and free of preemptive or similar
rights, and conform to the description thereof contained in the Prospectus.
(f) The making and performance by the Company of this Agreement and
the Pricing Agreement have been duly authorized by all necessary corporate
action and will not violate any provision of the Company's charter or
bylaws and will not result in the breach, or be in contravention, of any
provision of any agreement, franchise, license, indenture, mortgage, deed
of trust, or other instrument to which the Company or any subsidiary is a
party or by which the Company, any subsidiary or the property of any of
them may be bound or affected, or any order, rule or regulation applicable
to the Company or any subsidiary of any court or regulatory body,
administrative agency or other governmental body having jurisdiction over
the Company or any subsidiary or any of their respective properties, or any
order of any court or governmental agency or authority entered in any
proceeding to which the Company or any subsidiary was or is now a party or
by which it is bound. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or the
Pricing Agreement or the consummation of the transactions contemplated
herein or therein, except for compliance with the 1933 Act and blue sky
laws applicable to the public offering of the Shares by the Underwriter.
This Agreement has been duly executed and delivered by the Company.
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<PAGE> 4
(g) The accountants who have expressed their opinions with respect to
certain of the financial statements included or incorporated by reference
in the Registration Statement are independent accountants as required by
the 1933 Act.
(h) The consolidated financial statements of the Company included or
incorporated by reference in the Registration Statement present fairly the
consolidated financial position of the Company as of the respective dates
of such financial statements, and the consolidated results of operations
and cash flows of the Company for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
in the Prospectus. The financial information set forth in the Prospectus
under "Summary Financial Data" and "Selected Consolidated Financial Data"
presents fairly on the basis stated in the Prospectus, the information set
forth therein.
(i) Neither the Company nor any subsidiary is in violation of its
charter or in default under any consent decree, or in default with respect
to any material provision of any lease, loan agreement, franchise, license,
permit or other contract obligation to which it is a party; and there does
not exist any state of facts which constitutes an event of default as
defined in such documents or which, with notice or lapse of time or both,
would constitute such an event of default, in each case, except for
defaults which neither singly nor in the aggregate are material to the
Company and its subsidiaries taken as a whole.
(j) There are no material legal or governmental proceedings pending,
or to the Company's knowledge, threatened to which the Company or any
subsidiary is or may be a party or of which material property owned or
leased by the Company or any subsidiary is or may be the subject, or
related to environmental or discrimination matters which are not disclosed
in the Prospectus, or which question the validity of this Agreement or the
Pricing Agreement or any action taken or to be taken pursuant hereto or
thereto.
(k) There are no holders of securities of the Company having rights to
registration thereof or preemptive rights to purchase Common Stock.
(l) The Company and each of its subsidiaries have good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except
those, if any, which are not material to the Company and its subsidiaries
taken as a whole. The Company and each of its subsidiaries hold their
respective leased properties which are material to the Company and its
subsidiaries taken as a whole under valid and binding leases.
(m) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, the Company and its
subsidiaries, taken as a whole, have not incurred any material liabilities
or obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business and there has not been
any material adverse change in their condition (financial or otherwise) or
results of operations nor any material change in their capital stock,
short-term debt or long-term debt.
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<PAGE> 5
(o) The Company agrees not to sell, contract to sell or otherwise
dispose of any Common Stock or securities convertible into Common Stock for
a period of 90 days after this Agreement becomes effective without the
prior written consent of the Underwriter. The Company has obtained similar
agreements from each of its officers and directors.
(p) There is no material document 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 which is not described or filed as
required.
(q) The Company together with its subsidiaries owns and possesses all
right, title and interest in and to, or has duly licensed from third
parties, all trademarks, copyrights and other proprietary rights ("Trade
Rights") material to the business of the Company and each of its
subsidiaries taken as a whole. Neither the Company nor any of its
subsidiaries has received any notice of infringement, misappropriation or
conflict from any third party as to such material Trade Rights which has
not been resolved or disposed of and neither the Company nor any of its
subsidiaries has infringed, misappropriated or otherwise conflicted with
material Trade Rights of any third parties, which infringement,
misappropriation or conflict would have a material adverse effect upon the
condition (financial or otherwise) or results of operations of the Company
and its subsidiaries taken as a whole.
(r) The conduct of the business of the Company and each of its
subsidiaries is in compliance in all respects with applicable federal,
state, local and foreign laws and regulations, except where the failure to
be in compliance would not have a material adverse effect upon the
condition (financial or otherwise) or results of operations of the Company
and its subsidiaries taken as a whole.
(s) All offers and sales of the Company's capital stock prior to the
date hereof were at all relevant times registered pursuant to the
requirements of the 1933 Act or exempt from the registration requirements
thereof and were duly registered with or the subject of an available
exemption from the registration requirements of the applicable state
securities or blue sky laws.
(t) The Company has filed all necessary federal and state income and
franchise tax returns and has paid all taxes shown as due thereon, and
there is no tax deficiency that has been, or to the knowledge of the
Company might be, asserted against the Company or any of its properties or
assets that would or could be expected to have a material adverse affect
upon the condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole.
(u) A registration statement relating to the Common Stock has been
declared effective by the Commission pursuant to the Exchange Act and the
Common Stock is duly registered thereunder. The Shares are duly listed on
the New York Stock Exchange.
(v) The Company is not, and does not intend to conduct its business in
a manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act of 1940, as amended ("Investment
Company Act").
(w) Neither the Company nor any director, executive officer, agent,
employee or other person associated with or acting on behalf of the Company
has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provisions of the Foreign Corrupt Practices Act of 1972;
or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
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<PAGE> 6
SECTION 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Each Selling Stockholder severally represents and warrants to, and
agrees with, the Company and the Underwriter that:
(i) Such Selling Stockholder has, and on the First Closing Date or the
Second Closing Date hereinafter defined, as the case may be, will have,
valid and marketable title to the Shares proposed to be sold by such
Selling Stockholder hereunder on such date and full right, power and
authority to enter into this Agreement and the Pricing Agreement and to
sell, assign, transfer and deliver such Shares hereunder, free and clear of
all voting trust arrangements, liens, encumbrances, equities, claims and
community property rights; and upon delivery of and payment for such Shares
hereunder, the Underwriter will acquire valid and marketable title thereto,
free and clear of all voting trust arrangements, liens, encumbrances,
equities, claims and community property rights.
(ii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which might be reasonably
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(iii) The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement and the Pricing Agreement will not contravene any provision of
applicable law, or any agreement or other instrument binding upon such
Selling Stockholder or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over such Selling Stockholder,
and no consent, approval, authorization or order of or qualification with
any governmental body or agency is required for the performance by such
Selling Stockholder of its obligations under this Agreement and the Pricing
Agreement, except such as may be required by the securities or blue sky
laws of the various states in connection with the offer and sale of the
Shares.
[(iv) Such Selling Stockholder has executed and delivered a Power of
Attorney ("Power of Attorney") among the Selling Stockholder and Ronald D.
Croatti and John B. Bartlett (the "Agents"), naming the Agents as such
Selling Stockholder's attorneys-in-fact (and, by the execution by any Agent
of this Agreement, such Agent hereby represents and warrants that he has
been duly appointed as attorney-in-fact by the Selling Stockholders
pursuant to the Power of Attorney) for the purpose of entering into and
carrying out this Agreement and the Pricing Agreement, and the Power of
Attorney has been duly executed by such Selling Stockholder and a copy
thereof has been delivered to you.]
[(v) Such Selling Stockholder further represents, warrants and agrees
that such Selling Stockholder has deposited in custody, under a Custody
Agreement ("Custody Agreement") with _____________________________, as
custodian ("Custodian"), certificates in negotiable form for the Shares to
be sold hereunder by such Selling Stockholder, for the purpose of further
delivery pursuant to this Agreement. Such Selling Stockholder agrees that
the Shares to be sold by such Selling Stockholder on deposit with the
Custodian are subject to the interests of the Underwriter and the other
Selling Stockholders, that the arrangements made for such custody, and the
appointment of the Agents pursuant to the Power of Attorney, are to that
extent irrevocable, and that the obligations of such Selling Stockholder
hereunder and under the Power of Attorney and the Custody Agreement shall
not be terminated except as provided in this Agreement, the Power of
Attorney or the Custody Agreement by any act of such Selling Stockholder,
by operation of law, by the death or
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<PAGE> 7
incapacity of such Selling Stockholder or, by the occurrence of any other
event. If any individual Selling Stockholder should die or become
incapacitated, or if any other event should occur before the delivery of
the Shares hereunder, the documents evidencing Shares then on deposit with
the Custodian shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death, incapacity, or
other event had not occurred, regardless of whether or not the Custodian
shall have received notice thereof. Each Agent has been authorized by such
Selling Stockholder to execute and deliver this Agreement and the Pricing
Agreement and the Custodian has been authorized to receive and acknowledge
receipt of the proceeds of sale of the Shares to be sold by such Selling
Stockholder against delivery thereof and otherwise act on behalf of such
Selling Stockholder. The Custody Agreement has been duly executed by such
Selling Stockholder and a copy thereof has been delivered to you.]
(vi) Each preliminary prospectus, insofar as it has related to such
Selling Stockholder and, to the knowledge of such Selling Stockholder in
all other respects, as of its date, has conformed in all material respects
with the requirements of the 1933 Act and, as of its date, has not included
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading; and the
Registration Statement at the time of effectiveness, and at all times
subsequent thereto, up to the First Closing Date or the Second Closing Date
hereinafter defined, as the case may be, (1) as to such parts of the
Registration Statement and the Prospectus and any amendments or supplements
thereto, as they relate to such Selling Stockholder, and the Registration
Statement and the Prospectus and any amendments or supplements thereto, to
the knowledge of such Selling Stockholder in all other respects, contained
or will contain all statements that are required to be stated therein in
accordance with the 1933 Act and in all material respects conformed or will
in all material respects conform to the requirements of the 1933 Act, and
(2) neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as it relates to such Selling Stockholder,
and, to the knowledge of such Selling Stockholder in all other respects,
included or will include any untrue statement of a material fact or omitted
or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
neither clause (1) nor (2) shall have any effect if information has been
given by such Selling Stockholder to the Company and the Underwriter in
writing which would eliminate or remedy any such untrue statement or
omission.
(vii) Such Selling Stockholder agrees with the Company and the
Underwriter not to sell, contract to sell or otherwise dispose of any
Common Stock for a period of 90 days after this Agreement becomes effective
without the prior written consent of the Underwriter.
(b) Each of the Selling Stockholders severally represents and warrants that
the representations and warranties of the Company set forth in Section 2 of this
Agreement are true and correct.
(c) In order to document the Underwriter's compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or on the First Closing Date a
properly completed and executed United States Treasury Department Form W-8 or
W-9 (or other applicable form of statement specified by Treasury Department
regulations in lieu thereof).
SECTION 4. Representations and Warranties of the Underwriter. The
Underwriter represents and warrants to the Company and the Selling Stockholders
that the information set forth (a) on the cover page of the Prospectus with
respect to price, underwriting discount and terms of the Offering, (b) in the
stabilization paragraph on the second page of the Prospectus and (c) in the
third paragraph under the caption "Underwriting" in the Prospectus was furnished
to the Company by and on behalf of the Underwriter for use in connection with
the preparation of the Registration Statement and is correct and complete in all
material respects.
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<PAGE> 8
SECTION 5. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Selling Stockholders agree to sell to
the Underwriter and the Underwriter agrees to purchase from the Selling
Stockholders the respective number of Firm Shares set forth opposite the names
of the Selling Stockholders in Schedule I hereto at the price per share set
forth in the Pricing Agreement. The initial public offering price and the
purchase price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted under
Rule 15c6-1 under the Exchange Act (or the third business day if required under
Rule 15c6-1 under the Exchange Act or unless postponed in accordance with the
provisions of Section 12) following the date the Registration Statement becomes
effective (or, if the Company has elected to rely upon Rule 430A, the fourth
business day, if permitted under Rule 15c6-1 under the Exchange Act (or the
third business day if required under Rule 15c6-1 under the Exchange Act) after
execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Underwriter and the
Company, the [Custodian] will deliver to you at the offices of counsel for the
Selling Stockholders or through the facilities of The Depository Trust Company
for the account of the Underwriter, certificates representing the Firm Shares to
be sold by them, respectively, against payment of the purchase price therefor in
immediately available funds payable to the order of the [Custodian]. Such time
of delivery and payment is herein referred to as the "First Closing Date." The
certificates for the Firm Shares so to be delivered will be in such
denominations and registered in such names as you request by notice to the
[Custodian] prior to 10:00 A.M., Chicago Time, on the second business day
preceding the First Closing Date, and will be made available at the Company's
expense for checking and packaging by the Underwriter at 10:00 A.M., Chicago
Time, on the business day preceding the First Closing Date. Payment for the Firm
Shares so to be delivered shall be made at the time and in the manner described
above at the offices of counsel for the Selling Stockholders.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company and certain of the Selling Stockholders hereby grant an option to the
Underwriter to purchase up to an aggregate of 300,000 Option Shares, at the same
purchase price per share to be paid for the Firm Shares, for use solely in
covering any overallotments made by the Underwriter in the sale and distribution
of the Firm Shares. The option granted hereunder may be exercised at any time
(but not more than once) within 30 days after the date of the Prospectus upon
notice by you to the Company and the Agents setting forth the aggregate number
of Option Shares as to which the Underwriter is exercising the option, the names
and denominations in which the certificates for such shares are to be registered
and the time and place at which such certificates will be delivered. Such time
of delivery (which may not be earlier than the First Closing Date), being herein
referred to as the "Second Closing Date," shall be determined by you, but if at
any time other than the First Closing Date, shall not be earlier than three nor
later than 10 full business days after delivery of such notice of exercise. The
number of Option Shares to be purchased from each such Selling Stockholder is
set forth in Schedule I hereto. If less than all Option Shares are to be
purchased, the number of Option Shares to be purchased from each such Selling
Stockholder shall be in the same proportion as the number of Option Shares to be
sold by each bears to the total number of Option Shares. Certificates for the
Option Shares will be made available at the Company's expense for checking and
packaging at 10:00 A.M., Chicago Time, on the business day preceding the Second
Closing Date. The manner of payment for and delivery of the Option Shares shall
be the same as for the Firm Shares as specified in the preceding paragraph.
SECTION 6. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will advise you and the Selling Stockholders promptly
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, or of any notification of the suspension of
qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceedings for that purpose, and will also
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<PAGE> 9
advise you and the Selling Stockholders promptly of any request of the
Commission for amendment or supplement of the Registration Statement, of
any preliminary prospectus or of the Prospectus, or for additional
information.
(b) The Company will give you and the Selling Stockholders notice of
its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any Rule 462(b)
Registration Statement or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the Shares which differs
from the prospectus on file at the Commission at the time the Registration
Statement became or becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) and any term
sheet as contemplated by Rule 434) and will furnish you and the Selling
Stockholders with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file any such amendment or supplement or use any such
prospectus to which you or counsel for the Underwriter shall reasonably
object.
(c) If the Company elects to rely on Rule 434 of the 1933 Act, the
Company will prepare a term sheet that complies with the requirements of
Rule 434. If the Company elects not to rely on Rule 434, the Company will
provide the Underwriter with copies of the form of prospectus, in such
numbers as the Underwriter may reasonably request, and file with the
Commission such prospectus in accordance with Rule 424(b) of the 1933 Act
by the close of business in New York City on the second business day
immediately succeeding the date of the Pricing Agreement. If the Company
elects to rely on Rule 434, the Company will provide the Underwriter with
copies of the form of Rule 434 Prospectus, in such numbers as the
Underwriter may reasonably request, by the close of business in New York on
the business day immediately succeeding the date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any event occurs as a result of
which the Prospectus, including any amendments or supplements thereto,
would include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements thereto and including
any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the Shares which differs
from the prospectus on file with the Commission at the time of
effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with
the 1933 Act, the Company promptly will advise you thereof and will
promptly prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance; and, in case the Underwriter is required to deliver
a prospectus nine months or more after the effective date of the
Registration Statement, the Company upon request, but at the expense of the
Underwriter, will prepare promptly such prospectus or prospectuses as may
be necessary to permit compliance with the requirements of Section 10(a)(3)
of the 1933 Act.
(e) Neither the Company nor any of its subsidiaries will, prior to the
earlier of the Second Closing Date or termination or expiration of the
related option, incur any liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course of
business, except as contemplated by the Prospectus.
(f) Neither the Company nor any of its subsidiaries will acquire any
capital stock of the Company prior to the earlier of the Second Closing
Date or termination or expiration of the related option nor will the
Company declare or pay any dividend or make any other distribution upon the
Common Stock payable to stockholders of record on a date prior to the
earlier of the Second Closing Date or termination or expiration of the
related option, except in either case as contemplated by the Prospectus.
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<PAGE> 10
(g) As soon as practicable, but in any event not later than 15 months
after the effective date of the Registration Statement, the Company will
make generally available to its security holders an earnings statement
(which need not be audited) covering a period of at least 12 months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the
1933 Act.
(h) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an
Underwriter or dealer, the Company will furnish to you at its expense,
subject to the provisions of subsection (d) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus, the
Incorporated Documents and all amendments and supplements to any such
documents in each case as soon as available and in such quantities as you
may reasonably request, for the purposes contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriter in qualifying or
registering the Shares for sale under the blue sky laws of such
jurisdictions as you designate, and will continue such qualifications in
effect so long as reasonably required for the distribution of the Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not currently qualified or where it would be subject to taxation as a
foreign corporation.
(j) During the period of five years hereafter, the Company will
furnish you with a copy (i) as soon as practicable after the filing
thereof, of each report filed by the Company with the Commission, any
securities exchange or the NASD; (ii) as soon as practicable after the
release thereof, of each material press release in respect of the Company;
(iii) as soon as available, of each report of the Company mailed to
stockholders; and (iv) any additional information of a public nature
concerning the Company or its business that you may request.
(k) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule
430A and/or Rule 434, then immediately following the execution of the
Pricing Agreement, the Company will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A, Rule 424(b)
and/or Rule 434, copies of an amended Prospectus, or, if required by such
Rule 430A and/or Rule 434, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted. If required, the Company will prepare and file, or transmit for
filing, a Rule 462(b) Registration Statement not later than the date of the
execution of the Pricing Agreement. If a Rule 462(b) Registration Statement
is filed, the Company shall make payment of, or arrange for payment of, the
additional registration fee owing to the Commission required by Rule 111.
(l) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the New York Stock Exchange.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriter and the expenses incurred by the Underwriter other than those
contemplated by clause (ii) below) incurred in connection with the performance
of the Company's obligations hereunder, including without limiting the
generality of the foregoing, all fees and expenses of legal counsel for the
Company and of the Company's independent accountants, all costs and expenses
incurred in connection with the preparation, printing, filing and distribution
of the Registration Statement, each preliminary prospectus and the Prospectus
(including all Incorporated Documents, exhibits and financial statements) and
all amendments and supplements provided for herein, this Agreement, the Pricing
Agreement, [the
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<PAGE> 11
Power of Attorney, the Custody Agreement] and a blue sky memorandum; (ii) all
costs, fees and expenses (including legal fees and disbursements of counsel for
the Underwriter) incurred by the Underwriter in connection with qualifying or
registering all or any part of the Shares for offer and sale under blue sky
laws, including the preparation of a blue sky memorandum relating to the Shares;
and (iii) all fees and expenses of the Company's transfer agent, printing of the
certificates for the Shares and all transfer taxes, if any, with respect to the
sale and delivery of the Shares to the Underwriter.
The provisions of this Section shall not affect any agreement which the
Company and the Selling Stockholders may make for the allocation or sharing of
such expenses and costs.
SECTION 8. Conditions of the Obligations of the Underwriter. The
obligations of the Underwriter to purchase and pay for the Firm Shares on the
First Closing Date and the Option Shares on the Second Closing Date shall be
subject to the accuracy of the representations and warranties on the part of the
Company and the Selling Stockholders herein set forth as of the date hereof and
as of the First Closing Date or the Second Closing Date, as the case may be, to
the accuracy of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 1:00 P.M.,
Chicago Time, on the first full business day after the date of this
Agreement, or such later time as shall have been consented to by you but in
no event later than 1:00 P.M., Chicago Time, on the third full business day
following the date hereof; and prior to the First Closing Date or the
Second Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending
or, to the knowledge of the Company, the Selling Stockholders or you, shall
be contemplated by the Commission. If the Company has elected to rely upon
Rule 430A and/or Rule 434, the information concerning the public offering
price of the Shares and price-related information shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within the
prescribed period and the Company will provide evidence satisfactory to the
Representatives of such timely filing (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rules 430A and 424(b)). If a Rule
462(b) Registration Statement is required, such Registration Statement
shall have been transmitted to the Commission for filing and become
effective within the prescribed time period and, prior to the First Closing
Date, the Company shall have provided evidence of such filing and
effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the blue sky
laws of such states as shall have been specified by the Underwriter.
(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of
the certificates representing the Shares, the execution and delivery of
this Agreement and the Pricing Agreement, and all corporate proceedings and
other legal matters incident thereto, and the form of the Registration
Statement and the Prospectus (except financial statements) shall have been
approved by counsel for the Underwriter exercising reasonable judgment.
(d) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of fact, which, in the opinion of counsel for
the Underwriter, is material or omits to state a fact which, in the opinion
of such counsel, is material and is required to be stated therein or
necessary to make the statements therein not misleading.
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<PAGE> 12
(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or its subsidiaries, whether or not arising in the ordinary
course of business, which, in the judgment of the Underwriter, makes it
impractical or inadvisable to proceed with the public offering of the
Shares as contemplated hereby.
(f) There shall have been furnished to you on the First Closing Date
or the Second Closing Date, as the case may be, except as otherwise
expressly provided below:
(i) An opinion of Goodwin, Procter & Hoar LLP, counsel for the
Company and for the Selling Stockholders, addressed to the Underwriter
and dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Massachusetts with corporate power and authority
to own its properties and conduct its business as described in
the Prospectus; and the Company has been duly qualified to do
business as a foreign corporation under the corporation law of,
and is in good standing as such in, every jurisdiction where the
ownership or leasing of property, or the conduct of its business
requires such qualification except where the failure so to
qualify would not have a material adverse effect upon the
condition (financial or otherwise) or results of operations of
the Company and its subsidiaries taken as a whole;
(2) an opinion to the same general effect as clause (1) of
this subparagraph (i) in respect of each subsidiary of the
Company;
(3) all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized, validly
issued and is fully paid and nonassessable, and the Company owns
directly or indirectly 100 percent of the outstanding capital
stock of each subsidiary, and to the best knowledge of such
counsel, such stock is owned free and clear of any claims, liens,
encumbrances or security interests;
(4) the authorized capital stock of the Company, of which
there is outstanding the amount set forth in the Registration
Statement and Prospectus, conforms as to legal matters in all
material respects to the description thereof in the Registration
Statement and Prospectus;
(5) the issued and outstanding capital stock of the Company
has been duly authorized and validly issued and is fully paid and
nonassessable and free of preemptive or similar rights;
(6) the certificates for the Shares to be delivered
hereunder are in due and proper form, and when duly countersigned
by the Company's transfer agent and delivered to you or upon your
order against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement and the Pricing
Agreement, the Shares represented thereby will be duly authorized
and validly issued, fully paid and nonassessable and free of
preemptive or similar rights;
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<PAGE> 13
(7) the Registration Statement has become effective under
the 1933 Act, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act, and
the Registration Statement (including the information deemed to
be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
applicable), the Prospectus and each amendment or supplement
thereto (except for the financial statements and other
statistical or financial data included therein as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act; such
counsel has no reason to believe that either the Registration
Statement (including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to
Rule 430A(b) and/or Rule 434, if applicable) or the Prospectus,
or the Registration Statement or the Prospectus as amended or
supplemented (except as aforesaid), as of their respective
effective or issue dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as amended or supplemented, if
applicable, as of the First Closing Date or the Second Closing
Date, as the case may be, contained any untrue statement of a
material fact or omitted to state any material fact necessary to
make the statements therein not misleading in light of the
circumstances under which they were made; and such counsel does
not know of any legal or governmental proceedings pending or
threatened required to be described in the Prospectus which are
not described as required, nor of any contracts or documents of a
character required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed, as required;
(8) the statements under the caption "Description of Capital
Stock" in the Prospectus, insofar as such statements constitute a
summary of documents referred to therein or matters of law, are
accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to
such documents and matters;
(9) this Agreement and the Pricing Agreement and the
performance of the Company's obligations hereunder have been duly
authorized by all necessary corporate action and this Agreement
and the Pricing Agreement have been duly executed and delivered
by and on behalf of the Company, and are legal, valid and binding
agreements of the Company, except as enforceability of the same
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights and
by the exercise of judicial discretion in accordance with general
principles applicable to equitable and similar remedies and
except as to those provisions relating to indemnities for
liabilities arising under the 1933 Act as to which no opinion
need be expressed; and no approval, authorization or consent of
any public board, agency, or instrumentality of the United States
or of any state or other jurisdiction is necessary in connection
with the issue or sale of the Shares by the Company pursuant to
this Agreement (other than under the 1933 Act and applicable blue
sky laws) or the consummation by the Company of any other
transactions contemplated hereby;
(10) the execution and performance of this Agreement will
not contravene any of the provisions of, or result in a default
under, any agreement, franchise, license, indenture, mortgage,
deed of trust, or other instrument known to such counsel, of the
Company or any of its subsidiaries or by which the property of
any of them is bound and which contravention or default would be
material to the Company and its subsidiaries taken as a whole; or
violate any of the provisions of the charter or bylaws of the
Company or any
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<PAGE> 14
of its subsidiaries or, so far as is known to such counsel,
violate any statute, order, rule or regulation of any regulatory
or govern-mental body having jurisdiction over the Company or any
of its subsidiaries;
(11) all documents incorporated by reference in the
Prospectus, when they were filed with the Commission, complied as
to form in all material respects with the requirements of the
Exchange Act; and such counsel has no reason to believe that any
of such documents, when they were so filed, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made when such
documents were so filed, not misleading; such counsel need
express no opinion as to the financial statements or other
financial or statistical data contained in any such document;
(12) to such counsel's knowledge, all offers and sales of
the Company's capital stock prior to the date hereof were either
(1) made pursuant to a registration statement filed by the
Company with the Commission under the 1933 Act or (2) at all
relevant times exempt from the registration requirements of the
1933 Act, and in either case (1) or (2), and were duly registered
or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws;
(13) with respect to each Selling Stockholder, this
Agreement and the Pricing Agreement have been duly executed and
delivered by or on behalf of each such Selling Stockholder; the
Agents and the Custodian for each such Selling Stockholder have
been duly and validly authorized to carry out all transactions
contemplated herein on behalf of each such Selling Stockholder;
and the performance of this Agreement and the Pricing Agreement
and the consummation of the transactions herein contemplated by
such Selling Stockholders will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute or instrument known to such counsel to
which any of such Selling Stockholders is a party or by which any
are bound or to which any of the property of such Selling
Stockholders is subject, or any order, rule or regulation known
to such counsel of any court or governmental agency or body
having jurisdiction over any of such Selling Stockholders or any
of their properties; and no consent, approval, authorization or
order of any court or governmental agency or body is required for
the consummation of the transactions contemplated by this
Agreement and the Pricing Agreement in connection with the sale
of Shares to be sold by such Selling Stockholders hereunder,
except such as have been obtained under the 1933 Act and such as
may be required under applicable blue sky laws in connection with
the purchase and distribution of such Shares by the Underwriter;
(14) each Selling Stockholder has full right, power and
authority to enter into this Agreement and the Pricing Agreement
and to sell, transfer and deliver the Shares to be sold on the
First Closing Date or the Second Closing Date, as the case may
be, by such Selling Stockholder hereunder and good and marketable
title to such Shares so sold, free and clear of all voting trust
arrangements, liens, encumbrances, equities, claims and community
property rights whatsoever, has been transferred to the
Underwriter (who counsel may assume to be bona fide purchasers)
who has purchased such Shares hereunder;
(15) this Agreement and the Pricing Agreement are legal,
valid and binding agreements of each Selling Stockholder except
as enforceability of the same may be limited
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<PAGE> 15
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights and by the exercise of
judicial discretion in accordance with general principles
applicable to equitable and similar remedies and except with
respect to those provisions relating to indemnities for
liabilities arising under the 1933 Act, as to which no opinion
need be expressed; and
(16) the Power of Attorney and Custody Agreement have been
duly executed and delivered by each Selling Stockholder and
constitute valid and binding agreements of each such Selling
Stockholder in accordance with their respective terms.
In rendering such opinion, such counsel may state that they
are relying upon the certificate the transfer agent for the Common
Stock, as to the number of shares of Common Stock at any time or times
outstanding, and that insofar as their opinion under clause (7) above
relates to the accuracy and completeness of the Prospectus and
Registration Statement, it is based upon a general review with the
Company's representatives and independent accountants of the
information contained therein, without independent verification by
such counsel of the accuracy or completeness of such information. Such
counsel may also rely upon, as to factual matters, on certificates of
the Selling Stockholders and of officers of the Company and of state
officials, in which case their opinion is to state that they are so
doing and copies of said opinions or certificates are to be attached
to the opinion unless said opinions or certificates (or, in the case
of certificates, the information therein) have been otherwise
furnished to the Underwriter.
(ii) Such opinion or opinions of Sidley & Austin, counsel for the
Underwriter, dated the First Closing Date or the Second Closing Date,
as the case may be, with respect to the incorporation of the Company,
the validity of the Shares to be sold by the Company, the Registration
Statement and the Prospectus and other related matters as you may
reasonably require, and the Company shall have furnished to such
counsel such documents and shall have exhibited to them such papers
and records as they request for the purpose of enabling them to pass
upon such matters.
(iii) A certificate of the chief executive officer and the chief
financial officer of the Company, dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) the representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such
Closing Date; and
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary
prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the best
knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or contemplated under
the 1933 Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty of
the Company as to the facts required in the immediately foregoing
clauses (1) and (2) of this subparagraph to be set forth in said
certificate.
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<PAGE> 16
(iv) A certificate of each Selling Stockholder dated the First
Closing Date or the Second Closing Date, as the case may be, to the
effect that the representations and warranties of such Selling
Stockholder set forth in Section 3 of this Agreement are true and
correct as of such date and the Selling Stockholder has complied with
all the agreements and satisfied all the conditions on the part of
such Selling Stockholder to be performed or satisfied at or prior to
such date.
(v) At the time the Pricing Agreement is executed and also on the
First Closing Date or the Second Closing Date, as the case may be,
there shall be delivered to you a letter addressed to you, as
Representatives of the Underwriter, from Arthur Andersen LLP,
independent accountants, the first one to be dated the date of the
Pricing Agreement, the second one to be dated the First Closing Date
and the third one (in the event of a second closing) to be dated the
Second Closing Date, to the effect set forth in Schedule II. There
shall not have been any change or decrease specified in the letters
referred to in this subparagraph which makes it impractical or
inadvisable in the judgment of the Underwriter to proceed with the
public offering of the Shares as contemplated hereby.
(vi) At the time the Pricing Agreement is executed, there shall
be delivered to you a letter from each of the Company's executive
officers and directors and each Selling Stockholder in which each such
person agrees not to sell, contract to sell or otherwise dispose of
any Common Stock (except Common Stock registered and sold in this
offering) for a period of 90 days after the date of the Prospectus
without the prior written consent of William Blair & Company, L.L.C.
(vii) A certificate of the chief executive officer and chief
financial officer of the Company, dated the First Closing Date or the
Second Closing Date, as the case may be, verifying the truth and
accuracy of any statistical or financial figure included in the
Prospectus which has not been otherwise verified by the letters
referred to in clause (v) above, such verification to include the
provision of documentary evidence supporting any such statistical or
financial figure.
(viii) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Sidley & Austin, counsel for the Underwriter, which approval shall not be
unreasonably withheld. The Company shall furnish you with such manually signed
or conformed copies of such opinions, certificates, letters and documents as you
request.
If any condition to the Underwriter's obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and the Selling
Stockholders without liability on the part of any Underwriter or the Company or
any Selling Stockholder, except for the expenses to be paid or reimbursed by the
Company pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof.
SECTION 9. Reimbursement of Underwriter's Expenses. If the sale to the
Underwriter of the Shares on the First Closing Date is not consummated because
any condition of the Underwriter's obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company or the
Selling Stockholders to perform any agreement herein or to comply with any
provision hereof, unless such failure to satisfy such condition or to comply
with any provision hereof is due to the default or omission of any Underwriter,
the Company agrees to reimburse you upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
reasonably incurred by you and them in connection with the proposed purchase and
the sale of the
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<PAGE> 17
Shares. Any such termination shall be without liability of any party to any
other party except that the provisions of this Section, Section 7 and Section 11
shall at all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You, the Company
and the Selling Stockholders will use your, its and their best efforts to cause
the Registration Statement to become effective, if it has not yet become
effective, and to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 11. Indemnification. (a) The Company and each Selling
Stockholder jointly and severally agree to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the 1933 Act or the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the 1933 Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company and/or such Selling Stockholders, as the case may be),
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
including the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A and/or Rule 434, if applicable, any
preliminary prospectus, 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; and will reimburse the Underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
the Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that neither the Company nor any Selling Stockholder will be liable in any such
case to the extent that (i) any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Underwriter, specifically for use therein; or (ii) if such
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus and (1) any such loss, claim, damage or liability
suffered or incurred by the Underwriter (or any person who controls the
Underwriter) resulted from an action, claim or suit by any person who purchased
Shares which are the subject thereof from the Underwriter in the offering and
(2) the Underwriter failed to deliver or provide a copy of the Prospectus to
such person at or prior to the confirmation of the sale of such Shares in any
case where such delivery is required by the 1933 Act. In addition to their other
obligations under this Section 11(a), the Company and the Selling Stockholders
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 11(a), they will reimburse the Underwriter on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's and the Selling Stockholders' obligation to
reimburse the Underwriter for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. This indemnity agreement will be in addition to any liability
which the Company and the Selling Stockholders may otherwise have.
Without limiting the full extent of the Company's agreement to indemnify
the Underwriter, as herein provided, each Selling Stockholder shall be liable
under the indemnity agreements contained in paragraph (a) of this Section only
for an amount not exceeding the proceeds received by such Selling Stockholder
from the sale of Shares hereunder.
(b) The Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who signed the Registration Statement, and
each Selling Stockholder and each person, if any, who controls the Company
within the meaning of the 1933 Act or the Exchange Act, against any losses,
claims, damages or liabilities to which the Company, or any such director,
officer, Selling Stockholder or controlling person may become subject under the
1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or
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<PAGE> 18
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or 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 the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto in reliance upon and in conformity with Section
4 of this Agreement or any other written information furnished to the Company by
the Underwriter specifically for use in the preparation thereof; and will
reimburse any legal or other expenses reasonably incurred by the Company, or any
such director, officer, Selling Stockholder or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. In addition to their other obligations under this Section 11(b), the
Underwriter agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 11(b), it will reimburse the Company and the Selling Stockholders
on a monthly basis for all reasonable legal and other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriter's obligation to reimburse the Company and the Selling Stockholders
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defense in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of paragraph (a)
representing all indemnified parties not having different or additional defenses
or potential conflicting interest among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
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<PAGE> 19
(d) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, 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 or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Selling Stockholders and the Underwriter 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, the Selling Stockholders and the Underwriter in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling Stockholders
and the Underwriter shall be deemed to be in the same proportion in the case of
the Company and the Selling Stockholders, as the total price paid to the Company
and the Selling Stockholders for the Shares by the Underwriter (net of
underwriting discount but before deducting expenses), and in the case of the
Underwriter as the underwriting discount received by them bears to the total of
such amounts paid to the Company and the Selling Stockholders and received by
the Underwriter as underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the Selling Stockholders and
the Underwriter shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company or by the
Selling Stockholders or by the Underwriter 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 and liabilities 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 action or claim.
The Company, the Selling Stockholders and the Underwriter agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section,
the Underwriter shall not 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 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The provisions of this Section shall survive any termination of this
Agreement.
SECTION 12. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 13 and as to all other provisions at
10:00 A.M., Chicago Time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday); but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company and the Selling Stockholders or by release of any Shares
for sale to the public. For the purposes of this Section, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by you of
telegrams offering the Shares for sale to securities dealers.
SECTION 13. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without
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<PAGE> 20
liability on the part of the Company or the Selling Stockholders to the
Underwriter (except for the expenses to be paid or reimbursed pursuant to
Section 7 hereof and except to the extent provided in Section 11 hereof) or
of the Underwriter to the Company or the Selling Stockholders.
(b) This Agreement may also be terminated by you prior to the First
Closing Date, and the option referred to in Section 5, if exercised, may be
cancelled at any time prior to the Second Closing Date, if (i) trading in
securities on the New York Stock Exchange shall have been suspended or
minimum prices shall have been established on such exchange, or (ii) a
banking moratorium shall have been declared by Illinois, New York, or
United States authorities, or (iii) there shall have been any change in
financial markets or in political, economic or financial conditions which,
in the opinion of the Underwriter, either renders it impracticable or
inadvisable to proceed with the offering and sale of the Shares on the
terms set forth in the Prospectus or materially and adversely affects the
market for the Shares, or (iv) there shall have been an outbreak of major
armed hostilities between the United States and any foreign power which in
the opinion of the Underwriter makes it impractical or inadvisable to offer
or sell the Shares. Any termination pursuant to this paragraph (b) shall be
without liability on the part of the Underwriter to the Company or the
Selling Stockholders or on the part of the Company to the Underwriter or
the Selling Stockholders (except for expenses to be paid or reimbursed
pursuant to Section 7 hereof and except to the extent provided in Section
11 hereof).
SECTION 14. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the Underwriter set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriter or the Company or any of its or their partners, principals,
members, officers or directors or any controlling person, or the Selling
Stockholders as the case may be, and will survive delivery of and payment for
the Shares sold hereunder.
SECTION 15. Notices. All communications hereunder will be in writing
and, if sent to the Underwriter will be mailed, delivered or telecopied and
confirmed to you at the address set forth on the first page of this Agreement
with a copy to Larry A. Barden, Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603; if sent to the Company will be mailed, delivered or
telecopied and confirmed to the Company at its corporate headquarters with a
copy to Raymond C. Zemlin, Goodwin, Procter & Hoar LLP, Exchange Place, Boston
Massachusetts 02109; and if sent to the Selling Stockholders will be mailed,
delivered or telecopied and confirmed to the Agents and the Custodian at such
addresses as they have previously furnished to the Company and the Underwriter,
with a copy to Raymond C. Zemlin, Goodwin, Procter & Hoar LLP, Exchange Place,
Boston Massachusetts 02109.
SECTION 16. Successors. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 11,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from the
Underwriter merely by reason of such purchase.
SECTION 17. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 18. Applicable Law. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois.
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<PAGE> 21
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
Underwriter, all in accordance with its terms.
Very truly yours,
UNIFIRST CORPORATION
By:
-------------------------------------
Chief Executive Officer
The Selling Stockholders Named in
Schedule I hereto
By:
-------------------------------------
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
WILLIAM BLAIR & COMPANY, L.L.C.
By:
-------------------------------------
Principal
-21-
<PAGE> 22
SCHEDULE I
<TABLE>
<CAPTION>
Number of Number of
Firm Shares Option Shares
to be Sold to be Sold
---------- ----------
<S> <C> <C>
Selling Stockholders:
--------- -------
TOTAL 2,000,000 300,000
========= =======
</TABLE>
-22-
<PAGE> 23
EXHIBIT A
UniFirst Corporation
2,000,000 Shares Common Stock(1)
PRICING AGREEMENT
_______________, 1998
William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated _________________,
1998 (the "Underwriting Agreement") relating to the sale by the Selling
Stockholders and the purchase by the Underwriter of the above referenced Shares.
All terms herein shall have the definitions contained in the Underwriting
Agreement except as otherwise defined herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and each
of the Selling Stockholders agree with the Underwriter as follows:
1. The public offering price per share for the Shares shall be
$__________.
2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $_____________, being an amount equal to the
public offering price set forth above less $____________ per share.
- ----------------
(1) Plus an option to acquire up to 300,000 additional shares to cover
overallotments.
<PAGE> 24
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
Underwriter, all in accordance with its terms.
Very truly yours,
UNIFIRST CORPORATION
By:
-------------------------------------
Chief Executive Officer
The Selling Stockholders Named in
Schedule I to the Underwriting Agreement
By:
-------------------------------------
Agent and Attorney-in-Fact
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
WILLIAM BLAIR & COMPANY, L.L.C.
By:
-------------------------------------
Principal
-2-
<PAGE> 1
[GOODWIN, PROCTER & HOAR LLP Letterhead]
Exhibit 5.1
February 11, 1998
Unifirst Corporation
68 Jonspin Road
Wilmington, MA 01877
Ladies and Gentlemen:
This opinion is furnished in our capacity as counsel to Unifirst
Corporation, a Massachusetts corporation (the "Company"), in connection with the
registration, pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), of 2,300,000 shares (the "Shares") of Common Stock, par value
$0.10 per share, of the Company.
In connection with rendering this opinion, we have examined the Restated
Articles of Organization and the By-Laws of the Company, both as amended to
date; such records of the corporate proceedings of the Company as we have deemed
material; a registration statement on Form S-3 under the Securities Act relating
to the Shares (the "Registration Statement") and the prospectus contained
therein; and such other certificates, records and documents as we considered
necessary for the purposes of this opinion.
We are attorneys admitted to practice in The Commonwealth of Massachusetts.
We express no opinion concerning the laws of any jurisdiction other than the
laws of the United States of America and the laws of The Commonwealth of
Massachusetts.
Based upon the foregoing, we are of the opinion that the Shares are duly
authorized, validly issued and fully paid and non-assessable.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act and applicable requirements of state laws
regulating the offer and sale of securities.
<PAGE> 2
[GOODWIN, PROCTER & HOAR LLP Letterhead]
Unifirst Corporation
February 11, 1998
Page 2
We hereby consent to being named as counsel to the Company in the
Registration Statement, to the reference therein to our firm under the caption
"Legal Matters" and to the inclusion of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
UniFirst Corporation:
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated November 5,
1997 incorporated by reference in UniFirst Corporation's Form 10-K for the year
ended August 30, 1997 and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 10, 1998
II-6
