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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 25, 1997
Scotsman Industries, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-10182 36-3635892
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
820 Forest Edge Drive, Vernon Hills, IL 60061
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (847) 215-4500
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Item 7. Financial Statements and Exhibits.
(c) Exhibits:
1.2 Form of Underwriting Agreement related to the proposed
secondary offering of Common Stock of the Registrant
contemplated by Registration Statement No. 333-38489.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: November 25, 1997
Scotsman Industries, Inc.
By: /s/ Donald D. Holmes
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Name: Donald D. Holmes
Title: Vice President - Finance
and Secretary
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EXHIBIT INDEX
The following exhibits are filed herewith:
Exhibit No.
1.2 Form of Underwriting Agreement related to the proposed
secondary offering of Common Stock of the Registrant
contemplated by Registration Statement No. 333-38489.
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EXHIBIT 1.2
MBP DRAFT 11/24/97
1,611,699 Shares
SCOTSMAN INDUSTRIES, INC.
Common Stock, par value $0.10 per share
FORM OF
UNDERWRITING AGREEMENT
_____________, 1997
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_________ ___, 1997
Morgan Stanley & Co. Incorporated
William Blair & Company L.L.C.
and Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Certain shareholders named in Schedule I hereto (the "Selling
Shareholders") of Scotsman Industries, Inc., a Delaware corporation (the
"Company") severally propose to sell to the several Underwriters (as defined
below), an aggregate of 1,611,699 shares of Common Stock, par value $0.10 per
share, of the Company (the "Firm Shares"), each Selling Shareholder selling the
amount set forth opposite such Selling Shareholder's name in Schedule I hereto.
Morgan Stanley & Co. Incorporated, William Blair & Company, L.L.C. and
Robert W. Baird & Co. Incorporated shall act as representatives (the
"Representatives") of the several Underwriters.
The Company also proposes to sell to the several Underwriters not more
than an additional 241,755 shares of the Common Stock, par value $0.10 per
share, of the Company (the "Additional Shares") if and to the extent that the
Representatives shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the "Shares." The shares of the
Common Stock, par value $0.10 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock." The Company and the Selling Shareholders are hereinafter
sometimes collectively referred to as the "Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Shares. The
registration statement contains one prospectus to be used in connection with
the offering and sale of the Shares and one prospectus for a concurrent
offering of debt securities by the Company. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the prospectus (including the prospectus supplement) in the form first used to
confirm sales of Shares is hereinafter referred to as the "Prospectus." If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement.
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1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to and agrees with each of the Underwriters and each of the Selling
Shareholders that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by
the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and
incorporated by reference in the Prospectus complied or will comply when
so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) the
Registration Statement, when it became effective, did not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 1(b) do not
apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished
to the Company in writing by such Underwriter through you expressly for
use therein.
(c) The consolidated financial statements included in the
Registration Statement present fairly in all material respects the
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of the operations and cash flows
of the Company and its subsidiaries for the periods specified. Such
financial statements (except as disclosed in the notes thereto or
otherwise stated therein) have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the entire periods involved. The financial statement schedules, if any,
included in the Registration Statement present fairly in all material
respects the information stated therein. The selected financial data
included in the Prospectus present fairly in all material respects the
information shown therein and have been compiled on a basis consistent
with that of the audited consolidated financial statements included in
the Registration Statement. The pro forma financial statements and other
pro forma financial information, if any, included in the Registration
Statement present fairly in all material respects the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been
properly compiled on the pro forma bases described therein, and, in the
opinion of the Company, the assumptions used in the preparation
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thereof are reasonable and the adjustments used therein are appropriate
to give effect to the transactions or circumstances referred to therein.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries (as defined
in Rule 1-02(x) of the Commission's Regulation S-X), taken as a whole (a
"Material Adverse Effect").
(e) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect; all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and are
owned directly by the Company (other than directors' qualifying shares
and shares held by other persons to the extent such shares are required
by applicable law to be held by a person other than the Company), free
and clear of all liens, encumbrances, equities or claims.
(f) This Agreement has been duly authorized, executed and delivered
by the Company.
(g) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(h) The shares of Common Stock (including the shares to be sold by
the Selling Shareholders) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are validly
issued, fully paid and non-assessable.
(i) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision
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of applicable law or the certificate of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company or
any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company
or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this Agreement,
except such as may be required by any securities or Blue Sky laws other
than the federal securities laws in connection with the offer and sale of
the Shares.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(l) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(m) Each preliminary prospectus related to the Shares filed as part
of the registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Securities
Act, complied when so filed in all material respects with the Securities
Act and the applicable rules and regulations of the Commission
thereunder.
(n) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds to be received
by the Company therefrom as described in the Prospectus, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(o) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals
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or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
Material Adverse Effect.
(p) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
(q) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders, severally and not jointly, represents and
warrants to and agrees with each of the Underwriters and the Company that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under,
this Agreement, the Custody Agreement signed by such Selling Shareholder
and _________, as Custodian, relating to the deposit of the Shares to be
sold by such Selling Shareholder (the "Custody Agreement") and the Power
of Attorney appointing certain individuals as such Selling Shareholder's
attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
"Power of Attorney") will not contravene any provision of applicable law,
or the certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or any
agreement or other instrument binding upon such Selling Shareholder or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over such Selling Shareholder, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by such
Selling Shareholder of its obligations under this Agreement or the
Custody Agreement or Power of Attorney of such Selling
Shareholder, 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.
(c) Such Selling Shareholder has, and on the Closing Date will have,
valid title to the Shares to be sold by such Selling Shareholder and the
legal right and power, and all authorization and approval required by
law, to enter into this Agreement, the Custody Agreement and the Power of
Attorney and to sell, transfer and deliver the Shares to be sold by such
Selling Shareholder.
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(d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Shareholder and are
valid and binding agreements of such Selling Shareholder.
(e) Delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will pass title to such Shares free and clear
of any security interests, claims, liens, equities and other
encumbrances.
(f) The information pertaining to such Selling Shareholder under the
caption "Selling Shareholders" in the Prospectus is complete and accurate
in all material respects.
(g) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided that
the representations and warranties set forth in this paragraph 2(g) apply
to statements or omissions in the Registration Statement or the
Prospectus to the extent such statements or omissions are based upon
information relating to any Selling Shareholder furnished to the Company
in writing by such Selling Shareholder through you expressly for use
therein.
3. AGREEMENTS TO SELL AND PURCHASE. Each Selling Shareholder,
severally and not jointly, hereby agrees to sell to the several
Underwriters, and each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees, severally and not jointly, to purchase from the Selling Shareholders at
U.S. $________ a share (the "Purchase Price") the respective numbers of Firm
Shares set forth in Schedule II opposite the name of such Underwriters.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 241,755
Additional Shares at the Purchase Price. If the Representatives, on behalf of
the Underwriters, elect to exercise such option, the Representatives shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below)
but not earlier than the Closing Date nor later than ten business days after
the date of such notice. Additional Shares may be purchased as provided in
Section 5 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. If any Additional Shares are
to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears
the same proportion to the
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total number of Additional Shares to be purchased as the number of Firm
Shares set forth in Schedule II hereto opposite the name of such Underwriter
bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise (including pursuant to
Rule 144). The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder or (B) grants by the Company of options to purchase Common Stock
under its current stock option plans or the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of
a security outstanding on the date hereof of which the Underwriters have been
advised in writing. In addition, each Selling Shareholder, agrees that,
without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the Underwriters, it will not, during the period ending 90 days after
the date of the Prospectus, make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
U.S. $_____ a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of U.S.
$________ a share under the Public Offering Price, and that any Underwriter may
allow, and such dealers may reallow, a concession, not in excess of U.S.
$_______ a share, to any Underwriter or to certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by each
Selling Shareholder shall be made to such Selling Shareholder in Federal or
other funds immediately available in Chicago, Illinois against delivery of such
Firm Shares for the respective accounts of the several Underwriters at 9:00
A.M., Chicago, Illinois time, on _______________, 1997, or at such other time
on the same or such other date, not later than _______________, 1997, as shall
be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in Chicago, Illinois against delivery of
such Additional Shares for
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the respective accounts of the several Underwriters at 9:00 A.M., Chicago,
Illinois time, on the date specified in the notice described in Section 3 or at
such other time on the same or on such other date, in any event not later than
_______________, 1997, as shall be designated in writing by the
Representatives. The time and date of such payment are hereinafter referred to
as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes
payable in connection with the transfer of the Shares to the Underwriters duly
paid, against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Sellers to sell the Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Shares on
the Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than [___________] (Chicago, Illinois
time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) All the representations and warranties of the Company and the
Selling Shareholders contained in this Agreement shall be true and
correct on the Closing Date with the same force and effect as if made on
and as of the Closing, and the Company and the Selling Shareholders each
shall have complied in all material respects with all of the agreements
and satisfied all of the conditions on its respective part to be
performed or satisfied hereunder on or before the Closing Date.
(b) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded the Company
or any of the Company's securities or in the rating outlook for the
Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole,
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from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement)
that, in your judgment, is material and adverse and that makes it,
in your judgment, impracticable to market the Shares on the terms
and in the manner contemplated in the Prospectus.
(c) The Underwriters and the Selling Shareholders shall have
received on the Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Company, to the effect set forth in
clause (b)(i) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has complied with all
of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(d) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by on behalf of each
Selling Shareholder, to the effect that the representations and
warranties of such Selling Shareholder contained in this Agreement are
true and correct as of the Closing Date and that such Selling Shareholder
has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
Any officer signing and delivering such certificate on behalf of a
Selling Shareholder may rely upon the best of his or her knowledge as to
proceedings threatened.
(e) The Underwriters and the Selling Shareholders shall have
received on the Closing Date an opinion of Sidley & Austin, special
counsel to the Company, dated the Closing Date, to the effect that:
(i) the Company is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (in rendering the foregoing
opinion, Sidley & Austin may rely upon a certificate of the Company
as to what jurisdictions the Company is required to be qualified in
to the extent Sidley & Austin believes the reliance upon such
certificate is reasonable);
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(ii) each significant subsidiary (as defined in Rule 1-02(w) of the
Commission's Regulation S-X) (hereafter a "Subsidiary") of the
Company is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own its property and to conduct its business
as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a Material
Adverse Effect (in rendering the foregoing opinion, Sidley & Austin
may rely upon a certificate of the Company as to what jurisdictions
the Subsidiaries are required to be qualified in to the extent
Sidley & Austin believes the reliance upon such certificate is
reasonable);
(iii) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus;
(iv) the shares of Common Stock to be sold by the Selling
Shareholders have been duly authorized and are validly issued, fully
paid and non-assessable;
(v) all of the issued shares of capital stock of each Subsidiary of
the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and, to the knowledge of such counsel
after due inquiry, are owned directly or indirectly by the Company
(other than directors' qualifying shares and shares held by other
persons to the extent such shares are required by applicable law to
be held by a person other than the Company), free and clear of all
liens, encumbrances, equities or claims;
(vi) the Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable,
and, to the knowledge of such counsel after due inquiry, the
issuance of such Shares will not be subject to any preemptive or
similar rights;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or, to such
counsel's knowledge after reasonable inquiry, any agreement or other
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries, taken as a whole,
or, to such counsel's knowledge after reasonable inquiry, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the
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Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by
any securities or Blue Sky laws other than the federal securities
laws in connection with the offer and sale of the Shares by the
Underwriters;
(ix) the statements (A) in the Prospectus under the captions
"Description of Certain Indebtedness" and "Description of Capital
Stock" and (B) in the Registration Statement in Items 14 and 15, in
each case insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly
present in all material respects the information called for with
respect to such legal matters, documents and proceedings by the
Securities Act;
(x) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to
be described in the Registration Statement or the Prospectus and are
not so described or of any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus (or required to be filed under the
Exchange Act) if upon such filing they would be incorporated, in
whole or in part, by reference therein) or to be filed as exhibits
to the Registration Statement that are not described or filed as
required;
(xi) In addition, such counsel shall state that in the course of
the preparation of the Registration Statement and the Prospectus,
such counsel has considered the information set forth therein in
light of the matters required to be set forth therein and
participated in conferences with representatives of the Underwriters
and officers and representatives of the Company, including its
counsel and independent public accountants, during the course of
which the contents of the Registration Statement and the Prospectus
and related matters were discussed, and, although such counsel has
not independently checked the accuracy or completeness of, or
otherwise verified, and accordingly is not passing upon, and does
not assume responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement
or the Prospectus, except as set forth in paragraph (ix) above, and
such counsel has relied as to factual aspects of materiality, to the
extent such counsel may reasonably do so in the discharge of such
counsel's professional responsibility, upon the judgment of officers
and representatives of the Company, as a result of such
consideration and participation, nothing has come to such counsel's
attention which causes it to believe that the Registration Statement
(other than the financial statements, financial data, statistical
data and supporting schedules, as to which such counsel need not
express a belief), at the time it became effective (but after giving
effect
11
<PAGE> 13
to Rule 430A under the Securities Act, if applicable) 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 (other
than the financial statements, financial data, statistical data and
supporting schedules, as to which such counsel need not express a
belief), as of its date or the Closing Date, included any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may (i) state that (A)
its opinion is limited to the laws of the United States of America,
the laws of the States of Illinois and New York and the General
Corporation Law of the State of Delaware and (B) any opinion or
statement that is expressed to be "to its knowledge" or is otherwise
qualified by words of like import means that the lawyers currently
practicing law with such counsel who have had an active involvement
in the transactions contemplated hereby have no current conscious
awareness of any facts or information contrary to such opinion or
statement and (ii) rely as to matters of fact upon the
representations contained in this Agreement and certificates of
officers of the Company and of public officials, provided that such
counsel believes such reliance is reasonable.
(f) The Underwriters and the Company shall have received on the
Closing Date an opinion of Debevoise & Plimpton, counsel for the Selling
Shareholders, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling
Shareholders;
(ii) the execution and delivery by each Selling Shareholder
of, and the performance by such Selling Shareholder of its
obligations under, this Agreement and the Custody Agreement
and Powers of Attorney of such Selling Shareholder will not
contravene any provision of applicable law, or the certificate
of incorporation or by-laws of such Selling Shareholder (if
such Selling Shareholder is a corporation), or, to the best of
such counsel's knowledge after due inquiry, any agreement or
other instrument binding upon such Selling Shareholder or any
judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Shareholder, and
no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of
its obligations under this Agreement or the Custody Agreement
or Power of Attorney of such Selling Shareholder, except such
as may be required by the securities or Blue Sky laws of the
various states in connection with offer and sale of the
Shares;
12
<PAGE> 14
(iii) each of the Selling Shareholders has valid title to the
Shares to be sold by such Selling Shareholder and legal right
and power, and all authorization and approval required by
laws, to enter into this Agreement and the Custody Agreement
and Power of Attorney of such Selling Shareholder and to sell,
transfer and deliver the Shares to be sold by such Selling
Shareholder;
(iv) the Custody Agreement and the Power of Attorney of each
Selling Shareholder have been duly authorized, executed and
delivered by such Selling Shareholder and are valid and
binding agreements of such Selling Shareholder; and
(v) delivery of the Shares to be sold by each Selling
Shareholder pursuant to this Agreement will pass title to such
Shares free and clear of any security interests, claims,
liens, equities and other encumbrances.
(g) The Underwriters shall have received on the Closing Date an
opinion of Mayer, Brown & Platt, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (vi),
(vii), (ix) (but only as to the statements in the Prospectus under
"Description of Capital Stock" and also as to the statements in
Prospectus under "Underwriters") and (xi) of paragraph (e) above.
With respect to subparagraph (xi) of paragraph (e) above, Sidley &
Austin and Mayer, Brown & Platt may state that their opinion and belief
are based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (other
than documents incorporated by reference) and review and discussion of
the contents thereof (including documents incorporated therein by
reference), but are without independent check or verification, except as
specified. With respect to paragraph (f) above, Debevoise & Plimpton may
rely upon an opinion or opinions of other counsel for any Selling
Shareholders and, with respect to factual matters and to the extent such
counsel deems appropriate, upon the representations of each Selling
Shareholder contained herein and in the Custody Agreement and Power of
Attorney of such Selling Shareholder and in other documents and
instruments; provided that (A) each such counsel for the Selling
Shareholders is satisfactory to your counsel, (B) a copy of each opinion
so relied upon is delivered to you and is in form and substance
satisfactory to your counsel, (C) copies of such Custody Agreements and
Powers of Attorney and of any such other documents and instruments shall
be delivered to you and shall be in form and substance satisfactory to
your counsel and (D) Debevoise & Plimpton shall state in their opinion
that they are justified in relying on each such other opinion.
The opinions of Sidley & Austin and Debevoise & Plimpton described
in paragraphs (e) and (f) above (and any opinions of counsel for any
Selling Shareholder
13
<PAGE> 15
referred to in the immediately preceding paragraph) shall be
rendered to the Underwriters and the Selling Shareholders at the request
of the Company or one or more of the Selling Shareholders, as the case
may be, and shall so state therein.
(h) The Underwriters and the Selling Shareholders shall have
received, on each of the date hereof and the Closing Date, a letter dated
the date hereof or the Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, from Arthur Andersen LLP and
Coopers & Lybrand L.L.P., each independent public accountants, containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you
on or before the date hereof, shall be in full force and effect on the
Closing Date.
(j) The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the
due authorization and issuance of the Additional Shares and other matters
related to the issuance of the Additional Shares.
7. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish you, without charge, 3 signed copies of the
Registration Statement (including exhibits thereto and, upon your
request, documents incorporated therein by reference) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) but including, upon your request, documents
incorporated therein by reference and to furnish to you in New York City,
without charge, prior to 10:00 A.M. New York City time on the business
day next succeeding the date of this Agreement and during the period
mentioned in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated therein by reference and any supplements and
amendments thereto as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement
to which you reasonably object, and to file with the Commission within
the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
14
<PAGE> 16
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters it is
necessary to amend or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its
own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To cooperate with you to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request; provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction or to subject
itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 1998 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of
the Company's counsel and the Company's accountants in connection with
the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing
of the Registration Statement, any preliminary prospectus, the Prospectus
and amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters (excluding any
Shares sold by a Selling Shareholder), including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky memorandum in connection with the offer and sale of the Shares under
state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities
laws as provided in
15
<PAGE> 17
Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with any Blue Sky memorandum, (iv) all
filing fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the
Shares by the National Association of Securities Dealers, Inc., (v) all
costs and expenses incident to listing the Shares on the NYSE, (vi) the
cost of printing certificates representing the Shares, (vii) the costs
and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on
any "road show" undertaken in connection with the marketing of the
offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and
any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other costs and expenses
incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 8
entitled "Indemnity and Contribution", and the last paragraph of Section
10 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes
payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make. The Selling
Shareholders agree to pay the expenses of their own counsel.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
8. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus related to the Shares or the
Prospectus (as amended or supplemented), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; provided, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of
16
<PAGE> 18
such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of noncompliance by the Company with Section
7(a) hereof. The Company under this provision shall have no responsibility for
information provided by any Selling Shareholder relating to such Selling
Shareholder furnished in writing by or on behalf of the Selling Shareholder
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus relating to the
Shares or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Shareholder furnished in
writing by or on behalf of such Selling Shareholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Selling Shareholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a), (b) or (c) of this Section 8, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such
17
<PAGE> 19
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Section and (iii) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Selling Shareholders and all persons, if any, who control any Selling
Shareholder within the meaning of either such Section, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Morgan Stanley & Co.
Incorporated. In the case of any such separate firm for the Company and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm
for the Selling Shareholders and such control persons of any Selling
Shareholders, such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Shareholders under the Powers of Attorney.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. 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 on claims that are the
subject matter of such proceeding.
(e) To the extent the indemnification provided for in paragraph (a), (b)
or (c) of this Section 8 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, 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 indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
18
<PAGE> 20
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one
hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Sellers or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective number of Shares they have purchased hereunder, and not
joint.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that 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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company and the
Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Shareholder or any person controlling
any Selling Shareholder, or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Shares.
9. TERMINATION. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior
19
<PAGE> 21
to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment,
is material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event, singly or together with any other such
event, makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
10. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule II bears to
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify,
to purchase the Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the number of Shares that any Underwriter has agreed to purchase pursuant to
this Agreement be increased pursuant to this Section 10 by an amount in excess
of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you, the Company and the Selling Shareholders for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Shareholders. In any such case either you or the
relevant Sellers shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Additional
Shares to be purchased, the non-defaulting Underwriters shall have the option
to (i) terminate their obligation hereunder to purchase Additional Shares or
(ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the
absence of such default.
20
<PAGE> 22
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or a Selling
Shareholder to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company or a Selling Shareholder shall
be unable to perform its obligations under this Agreement, the Company or the
Selling Shareholder, as the case may be, will reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
11. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
SCOTSMAN INDUSTRIES, INC.
By
---------------------------
Name:
Title:
21
<PAGE> 23
[SELLING SHAREHOLDER]
By
--------------------------------
Name:
Title:
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
WILLIAM BLAIR & COMPANY, L.L.C.
Robert W. Baird & Co. Incorporated
Acting severally on behalf of themselves
and the several Underwriters
named in Schedule I hereto.
By Morgan Stanley & Co. Incorporated
By
---------------------------------
Name:
Title:
22
<PAGE> 24
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
SELLING SHAREHOLDER TO BE SOLD
------------------- ----------
<S> <C>
[NAMES OF SELLING SHAREHOLDERS]
-----------
Total . . . . . .
===========
</TABLE>
<PAGE> 25
SCHEDULE II
UNDERWRITERS
<TABLE>
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated
William Blair & Company L.L.C.
Robert W. Baird & Co. Incorporated
-----------
Total U.S. Firm Shares . . .
===========
</TABLE>
<PAGE> 26
[FORM OF LOCK-UP LETTER]
__________________, 199_
Morgan Stanley & Co. Incorporated
William Blair & Company, L.L.C.
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley"), William Blair & Company, L.L.C. and Robert W. Baird & Co.
Incorporated, as Representatives of the several Underwriters, propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") with
Scotsman Industries, Inc., a Delaware corporation (the "Company") providing for
the public offering (the "Public Offering") by the several Underwriters,
including Morgan Stanley (the "Underwriters"), of 1,611,699 shares (the
"Shares") of the Common Stock, $0.10 par value per share of the Company (the
"Common Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(provided that such shares or securities are either now owned by the
undersigned or are hereafter acquired prior to or in connection with the Public
Offering), or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to
the sale of any Shares to the Underwriters pursuant to the Underwriting
Agreement. In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley on behalf of the Underwriters, it will not, during
the period commencing on the date hereof and ending 90 days after the date of
the Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an
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Underwriting Agreement, the terms of which are subject to agreement between
the Company and the Underwriters.
Very truly yours,
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(Name)
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(Address)
