FSI INTERNATIONAL, INC. Common Stock PURCHASE AGREEMENT
Exhibit 1.1
FSI INTERNATIONAL, INC.
Common Stock
Common Stock
June 9, 2010
XXXXX-XXXXXX CAPITAL GROUP LLC
As Manager for the Underwriters named in Schedule I
c/o Xxxxx-Xxxxxx Capital Group LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
As Manager for the Underwriters named in Schedule I
c/o Xxxxx-Xxxxxx Capital Group LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
FSI International, Inc., a Minnesota corporation (the “Company”), proposes to issue and sell
to the several underwriters named in Schedule I hereto (the “Underwriters”) for whom you,
Xxxxx-Xxxxxx Capital Group LLC, are acting as manager (“Manager”), 5,400,000 shares of the Common
Stock (no par value per share) of the Company (the “Firm Shares”).
The Company also proposes to issue and sell to the several Underwriters up to an additional
810,000 shares of Common Stock (no par value per share) of the Company (the “Additional Shares”),
if and to the extent that you, as Manager of the offering to which this purchase agreement (this
“Agreement”) relates, 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 2 hereof. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the “Shares.” The
shares of common stock (no par value per share) of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the “Common Stock.” If the
firm or firms listed in Schedule I hereto include only the Manager, then the terms
“Underwriters” and “Manager” as used herein shall each be deemed to refer to such firm or firms.
The Company has prepared and filed, in accordance with the Securities Act of 1933, as amended
(the “Securities Act”), and the rules and regulations thereunder, with the Securities and Exchange
Commission (the “Commission”) a registration statement on Form S-3 (file number 333-165785),
including a prospectus, relating to certain securities (the “Shelf Securities”), including the
Shares, which registration statement and prospectus incorporate or are deemed to incorporate by
reference documents that the Company has filed, or will file, with the Commission in accordance
with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations thereunder. The registration statement as amended at the time it became or becomes
effective for purposes of Section 11 of the Securities Act (as such section applies to the
Underwriters), including the documents filed as part thereof and information contained or
incorporated by reference in the prospectus or otherwise deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A or Rule 430B under the Securities Act,
is hereinafter referred to as the “Registration Statement.” If the Company files 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. The
Company has also filed with, or transmitted for filing to, or shall promptly after the date of this
Agreement file with or transmit for filing to, the Commission a prospectus supplement (in the form
first used to confirm sales of the Shares (or in the form first made available to the Underwriters
by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act), the
“Prospectus
Supplement”) pursuant to Rule 424 under the Securities Act. The term “Base Prospectus” means
the prospectus dated April 12, 2010, relating to the Shelf Securities, in the form in which it has
most recently been filed with the Commission as part of the Registration Statement on or prior to
the date of this Agreement. The term “Prospectus” means the Base Prospectus as supplemented by the
Prospectus Supplement. The term “Preliminary Prospectus” means any preliminary form of Prospectus
(including without limitation the preliminary Prospectus Supplement dated June 8, 2010, filed with
the Commission pursuant to Rule 424).
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule
405 under the Securities Act; “Time of Sale Prospectus” means the Preliminary Prospectus, together
with the free writing prospectuses, if any, each identified in Schedule II hereto (each, a
“Permitted Free Writing Prospectus”), and other information conveyed to purchasers of the Shares at
or prior to the Time of Sale as set forth in Schedule II hereto; “Time of Sale” means 6:30
a.m. (Central Time) on the date of this Agreement; and “road show” has the meaning set forth in
Rule 433(h)(4) under the Securities Act. As used herein, the terms “Registration Statement,” “Base
Prospectus,” “Preliminary Prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the
documents, if any, deemed to be incorporated by reference therein, including, unless the context
otherwise requires, the documents, if any, filed as exhibits to such incorporated documents. For
purposes of this Agreement, all references to the Registration Statement, the Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed
to be the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system (“XXXXX”). The terms “supplement,” “amendment” and “amend” as used herein with
respect to the Registration Statement, the Base Prospectus, the Time of Sale Prospectus, any
Preliminary Prospectus, the Prospectus or any free writing prospectus shall include all documents
subsequently filed by the Company with the Commission pursuant to the Exchange Act that are deemed
to be incorporated by reference therein.
1. Representations and Warranties of the Company. The Company represents and warrants to and
agrees with each of the Underwriters on the date hereof, on the Closing Date and on each Option
Closing Date, if any, that:
(a) The Registration Statement has become effective under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus is in effect, and no proceedings for such purpose are
pending before or threatened by the Commission.
(b) The Base Prospectus and any Preliminary Prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424
under the Securities Act, complied when so filed in all material respects with the Securities Act
and the rules and regulations thereunder (including, without limitation, Rule 430B(a) or 430A(b)).
Each Preliminary Prospectus delivered to the Underwriters for use in connection with the offering
of Shares was and the Prospectus was or will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(c) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Time of Sale Prospectus or 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) each part of the Registration Statement, when such
part became effective, did not contain and each such part, 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, as of the date hereof, does not contain and, as amended or
supplemented, if applicable, will not, until the completion of the Prospectus Delivery Period (as
defined in Section 6(i)), contain any untrue statement of a material fact or
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omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading; (iv) the Registration Statement complies and, as amended or supplemented, if
applicable, will comply until the completion of the Prospectus Delivery Period in all material
respects with the Securities Act; the conditions to the use of Form S-3 in connection with the
offering and sale of the Shares as contemplated hereby have been satisfied; the Registration
Statement meets, and the offering and sale of the Shares as contemplated hereby complies with, the
requirements of Rule 415 under the Securities Act (including without limitation Rule 415(a)(5));
(v) at no time during the period that begins on June 7, 2010 and ends immediately prior to the
execution of this Agreement did the Base Prospectus or any Preliminary Prospectus 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;
(vi) the Time of Sale Prospectus does not, and at the Time of Sale, at the Closing Date (as defined
in Section 4) and, if applicable, each Option Closing Date (as defined in Section 5), the Time of
Sale Prospectus, as then amended or supplemented by the Company, 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;
(vii) each road show and each road show free writing prospectus, when considered together with the
Time of Sale Prospectus, does 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; and (viii) the Prospectus, as of the date it is filed with
the Commission pursuant to Rule 424, at the Closing Date and at each Option Closing Date, if any,
will comply in all material respects with the Securities Act (including without limitation Section
10(a) of the Securities Act) and 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, however, that the
representations and warranties set forth in this Section 1(c) do not apply to statements or
omissions in the Registration Statement, the Time of Sale Prospectus, any Preliminary Prospectus,
any Permitted Free Writing Prospectus, any road show or the Prospectus or any amendments or
supplements thereto based upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Manager expressly for use therein, it being agreed that the
only information furnished by the Underwriters to the Company expressly for use therein are the
statements contained in the underwriter table in the “Underwriting” section of the Prospectus
Supplement and the statements contained in the second, third and fourth full paragraphs on page
S-20 of the Prospectus Supplement in the “Underwriting” section.
(d) Prior to the execution of this Agreement, the Company has not, directly or indirectly,
offered or sold any Shares by means of any “prospectus” (within the meaning of the Securities Act)
or used any “prospectus” (within the meaning of the Securities Act) in connection with the offer or
sale of the Shares, in each case other than the Preliminary Prospectus, the Permitted Free Writing
Prospectuses and/or any road show free writing prospectuses; the Company has not, directly or
indirectly, prepared, used or referred to any free writing prospectuses, without the prior written
consent of the Manager, other than the Permitted Free Writing Prospectuses and road shows furnished
or presented to the Manager before first use. Each Permitted Free Writing Prospectus has been
prepared, used or referred to in compliance with Rules 164 and 433 under the Securities Act;
assuming that such Permitted Free Writing Prospectus is so sent or given after the Registration
Statement was filed with the Commission (and after such Permitted Free Writing Prospectus was, if
required pursuant to Rule 433(d) under the Securities Act, filed with the Commission), the sending
or giving, by any Underwriter, of any Permitted Free Writing Prospectus will satisfy the provisions
of Rule 164 and Rule 433; the conditions set forth in one or more of subclauses (i) through (iv),
inclusive, of Rule 433(b)(1) under the Securities Act are satisfied, and the registration statement
relating to the offering of the Shares contemplated hereby, as initially filed with the Commission,
includes a prospectus that, other than by reason of Rule 433 or Rule 431 under the Securities Act,
satisfies the requirements of Section 10 of the Securities Act; neither the
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Company nor the
Underwriters are disqualified, by reason of subsection (f) or (g) of Rule 164 under the Securities
Act, from using, in connection with the offer and sale of the Shares, free writing prospectuses
pursuant to Rules 164 and 433 under the Securities Act; each Permitted Free Writing Prospectus
that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities
Act or that was prepared by or behalf of or used or referred to by the Company complies or will
comply in all material respects with the requirements of the Securities Act; and neither any
Permitted Free Writing Prospectus nor any road show free writing prospectus conflicts with the
information contained in the Registration Statement, any Preliminary Prospectus, Time of Sale
Prospectus or Prospectus.
(e) The Company was, at the time the Registration Statement was initially filed and when it
became effective, eligible to use Form S-3 under General Instruction I.B.1 and without reliance on
General Instruction I.B.6 to register the offering of the Shares contemplated hereby. The Company
was not an “ineligible issuer” (as defined in Rule 405 under the Securities Act) as of the
eligibility determination date for purposes of Rules 164 and 433 under the Securities Act with
respect to the offering of the Shares contemplated by the Registration Statement.
(f) The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
included or approved for listing on the NASDAQ Global Market (“NASDAQ”) and the Company has taken
no action designed to, or likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act or delisting the Common Stock from NASDAQ nor has the Company received
any notification that the Commission or NASDAQ is contemplating terminating such registration or
listing. The Company has complied in all material respects with the applicable requirements of
NASDAQ for maintenance of inclusion of the Common Stock thereon. The Shares are duly listed, and
admitted and authorized for trading, subject to official notice of issuance, on NASDAQ.
(g) To the Company’s knowledge, there are no affiliations or associations between (i) any
member of Financial Industry Regulatory Authority (“FINRA”) and (ii) the Company or any of the
Company’s officers, directors or 5% or greater security holders or any beneficial owner of the
Company’s unregistered equity securities that were acquired at any time on or after the 180th day
immediately preceding the date the Registration Statement was initially filed with the Commission,
except as disclosed in the Registration Statement (excluding the exhibits thereto), the Time of
Sale Prospectus and the Prospectus.
(h) 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 Time of Sale
Prospectus and 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 (i) have a material adverse effect on the assets, business, condition (financial
or otherwise), results of operation or prospects of Company and its subsidiaries, taken as a whole,
(ii) prevent or materially interfere with consummation of the transactions contemplated hereby, or
(iii) result in the delisting of shares of Common Stock from NASDAQ (the occurrence of any such
effect, prevention, interference or result described in the foregoing clauses (i), (ii) or (iii)
being herein referred to as a “material adverse effect”).
(i) Each “significant subsidiary” of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each, a “Subsidiary” and, collectively, the “Subsidiaries”) has been duly
organized, is validly existing as a corporation in good standing under the laws of the jurisdiction
of its organization, has the corporate power and authority to own its property and to conduct its
business as described in the Time of Sale Prospectus and 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
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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,
free and clear of all liens, encumbrances, equities or
claims, except as described in the Time of Sale Prospectus and the Prospectus. The only
subsidiaries of the Company are the subsidiaries listed on Exhibit 21.0 to the Company’s most
recent annual report on Form 10-K as filed with the Commission.
(j) This Agreement has been duly authorized, executed and delivered by the Company.
(k) The authorized and outstanding capitalization of the Company is as set forth in the Time
of Sale Prospectus and will be as set forth in the Prospectus, subject, in each case, to the
issuance of shares of Common Stock upon exercise of stock options and warrants disclosed as
outstanding in the Time of Sale Prospectus and the Prospectus, as the case may be, and the grant of
stock options under existing equity incentive plans described in the Time of Sale Prospectus and
the Prospectus. Except as described in the Time of Sale Prospectus and the Prospectus, there are
no options, warrants, agreements, contracts or other rights in existence to purchase or acquire
from the Company or any subsidiary of the Company any shares of the capital stock of the Company or
any subsidiary of the Company. The authorized capital stock of the Company conforms and will
conform as to legal matters to the description thereof contained in the Time of Sale Prospectus and
the Prospectus. The description of the Company’s stock option, stock purchase and other stock
plans or arrangements, and the options or other rights granted thereunder, set forth in the Time of
Sale Prospectus and the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangement, options and rights.
(l) The Company has not sold, issued or distributed any shares of Common Stock during the
six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or
Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee stock-based compensation plans or pursuant to
outstanding options, rights or warrants.
(m) The shares of Common Stock outstanding prior to the issuance of the Shares to be sold by
the Company have been duly authorized, are validly issued, fully paid and non-assessable, have been
issued in compliance with applicable securities laws and were not issued in violation of any
preemptive or similar rights. All prior offers and sales of securities by the Company were made in
compliance in all material respects with the Securities Act and all other applicable laws and
regulations.
(n) 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.
(o) Neither the execution and delivery by the Company of, nor the performance by the Company
of its obligations under, this Agreement will conflict with, contravene, result in a breach or
violation of, or imposition of any lien, charge or encumbrance upon any assets of the Company or
any of its subsidiaries pursuant to, or constitute a default under (i) any statute, law, rule,
regulation, judgment, order or decree of any governmental body, regulatory or administrative agency
or court having jurisdiction over the Company or any subsidiary; (ii) the articles of incorporation
or bylaws (or similar constitutional or organizational documents) of the Company or any of its
subsidiaries; or (iii) any contract, agreement, obligation, covenant or instrument to which the
Company or any of its subsidiaries (or any of their respective assets) is subject or bound.
(p) No approval, authorization, consent or order of or filing with any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or agency, or of or with
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any self-regulatory organization or other non-governmental regulatory authority (including, without
limitation, NASDAQ), or approval of the Company’s shareholders, is required in connection with the
issuance and sale of the Shares or the consummation of the transactions contemplated hereby, other
than (i) registration of the Shares under the Securities Act, which has been effected (or, with
respect to any
Rule 462 Registration Statement, will be effected in accordance Rule 462(b) under the
Securities Act); (ii) any necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the Underwriters; or (iii) under the
FINRA rules.
(q) There are no actions, suits, claims, investigations or proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company or any of its subsidiaries or
any of their respective directors or officers is or would be a party or of which any of their
respective properties is or would be subject at law or in equity, before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority or agency, or before
or by any self-regulatory organization or other non-governmental regulatory authority (including,
without limitation, NASDAQ) (i) other than any such action, suit, claim, investigation or
proceeding accurately described in the Time of Sale Prospectus and the Prospectus which, if
resolved adversely to the Company or any of its subsidiaries, would not, individually or in the
aggregate, have a material adverse effect or (ii) that are required to be described in the Time of
Sale Prospectus or the Prospectus and are not so described. There are no statutes, regulations,
contracts or other documents that are required to be described in the Registration Statement, the
Time of Sale Prospectus or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(r) The Company is not, and after giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus will not be, required to
register as an “investment company” as such term is defined in the Investment Company Act of 1940,
as amended.
(s) The financial statements included or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, together with the related notes and
schedules, present fairly the consolidated financial position of the Company and its subsidiaries
as of the dates indicated and the consolidated results of operations, cash flows and changes in
stockholders’ equity of the Company for the periods specified and have been prepared in compliance
with the requirements of the Securities Act and Exchange Act and in conformity with U.S. generally
accepted accounting principles applied on a consistent basis during the periods involved; all pro
forma financial statements or data included or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, if any, comply with the requirements of
the Securities Act and the Exchange Act, and the assumptions used in the preparation of such pro
forma financial statements and data are reasonable, the pro forma adjustments used therein are
appropriate to give effect to the transactions or circumstances described therein and the pro forma
adjustments have been properly applied to the historical amounts in the compilation of those
statements and data; the other financial and statistical data contained or incorporated by
reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus are
accurately and fairly presented and prepared on a basis consistent with the financial statements
and books and records of the Company; there are no financial statements (historical or pro forma)
that are required to be included or incorporated by reference in the Registration Statement, the
Time of Sale Prospectus or the Prospectus that are not included or incorporated by reference as
required; the Company and its subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not described in the Time of
Sale Prospectus and the Prospectus or in documents incorporated therein by reference; and all
disclosures contained or incorporated by reference in the Time of Sale Prospectus and the
Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G under the Exchange Act and Item 10 of
Regulation S-K under the Securities Act, to the extent applicable.
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(t) KPMG LLP, which has expressed its opinion with respect to the financial statements filed
as a part of the Registration Statement and included in the Registration Statement, the Time of
Sale Prospectus and the Prospectus, is (x) an independent registered public accounting firm within
the meaning of the Securities Act and the rules and regulations thereunder, (y) a registered public
accounting firm (as defined in Section 2(a)(12) of the Xxxxxxxx-Xxxxx Act of 2002 and any related rules
and regulations promulgated by the Commission thereunder (the “Xxxxxxxx-Xxxxx Act”)) and (z)
in the performance of their work for the Company, not in violation of the auditor independence
requirements of the Xxxxxxxx-Xxxxx Act. Except as described in the Time of Sale Prospectus and the
Prospectus, there are no material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or any other relationships with unconsolidated entities or
other persons, that may have a material current or, to the Company’s knowledge, future effect on
the Company’s financial condition, changes in financial condition, results of operations,
liquidity, capital expenditures, capital resources or significant components of revenue or
expenses.
(u) All statistical or market-related data included or incorporated by reference in the Time
of Sale Prospectus, the Prospectus and the Permitted Free Writing Prospectuses are based on or
derived from sources that the Company reasonably believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data from such sources to the extent
required. Each “forward-looking statement” (within the meaning of Section 27A of the Securities
Act or Section 21E of the Exchange Act) contained or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus, the Prospectus and the Permitted Free Writing Prospectuses
or any road show free writing prospectus has been made or reaffirmed with a reasonable basis and in
good faith.
(v) 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 or failure to comply with the terms and conditions of such permits, licenses or approvals
would not have a material adverse effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential liabilities to third
parties) which would have a material adverse effect.
(w) 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.
(x) Subsequent to the respective dates as of which information is given in each of the
Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) there has not occurred
any material adverse change, or any development involving a prospective material adverse change, in
the assets, business, condition (financial or otherwise), management, operations or earnings of the
Company and its subsidiaries, taken as a whole; (ii) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or contingent, nor entered into any material
transaction; (iii) the Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on its capital stock
other than ordinary and customary dividends; and (iv) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company
7
and its
subsidiaries, except in
each case as described in each of the Registration Statement, the Time of Sale Prospectus and the
Prospectus, respectively.
(y) The Company and its subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them which is material to
the business of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Time of Sale Prospectus and the
Prospectus or such as do
not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the Company and its
subsidiaries, in each case except as described in the Time of Sale Prospectus and the Prospectus.
(z) Each of the Company and its subsidiaries owns or possesses all inventions, patent
applications, patents, trademarks (both registered and unregistered), trade names, service names,
copyrights, trade secrets and other proprietary information described in the Registration
Statement, the Time of Sale Prospectus and the Prospectus as being owned or licensed by it or which
is necessary for the conduct of, or material to, its businesses as currently conducted or its
business as proposed to be conducted and described in the Registration Statement, the Time of Sale
Prospectus and the Prospectus (collectively, the “Intellectual Property”), and, except as disclosed
in the Time of Sale Prospectus, the Prospectus, or documents incorporated by reference therein, (i)
there are no third parties who have or, to the Company’s knowledge, will be able to establish
rights to any Intellectual Property, except for, and to the extent of, the ownership rights of the
owners of the Intellectual Property which the Registration Statement, the Time of Sale Prospectus
and the Prospectus disclose is licensed to the Company; (ii) there is no infringement by third
parties of any Intellectual Property that would have a material adverse effect; (iii) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the Company’s rights in or to any Intellectual Property, and the Company is unaware of
any facts which could form a reasonable basis for any such action, suit, proceeding or claim; (iv)
there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the validity, enforceability or scope of any Intellectual Property, and the
Company is unaware of any facts which could form a reasonable basis for any such action, suit,
proceeding or claim; (v) there is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company or any of its subsidiaries infringes or
otherwise violates, or would, upon the commercialization of any product or service described in the
Registration Statement, the Time of Sale Prospectus and the Prospectus as under development,
infringe or violate, any patent, trademark, trade name, service name, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any facts which could form a
reasonable basis for any such action, suit, proceeding or claim; (vi) the Company and its
subsidiaries have complied with the terms of each agreement pursuant to which Intellectual Property
has been licensed to the Company or any of its subsidiaries, and all such agreements are in full
force and effect; (vii) there is no patent or patent application that contains claims that
interfere with the issued or pending claims of any of the Intellectual Property or that challenges
the validity, enforceability or scope of any of the Intellectual Property; and (viii) there is no
prior art that may render any patent application within the Intellectual Property unpatentable that
has not been disclosed to the U.S. Patent and Trademark Office.
(aa) No material labor dispute with the employees of the Company or any of its subsidiaries
exists, or, to the knowledge of the Company, is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could have a material adverse effect. Neither the
Company nor any of its subsidiaries is in violation of any provision of the Employee Retirement
Income Security Act of 1974,
8
as amended, or the rules and regulations promulgated thereunder,
except for such violations as would not have a material adverse effect.
(bb) The Company and each of its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent and customary in
the businesses in which they are engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its existing insurance
coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a material adverse effect.
(cc) The Company and its subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect.
(dd) Except as otherwise would not have a material adverse effect, no subsidiary of the
Company is subject to any material direct or indirect prohibition on paying any dividends to the
Company, on making any other distribution on such subsidiary’s capital stock, on repaying to the
Company any loans or advances to such subsidiary from the Company or on transferring any of such
subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as
described in the Time of Sale Prospectus and the Prospectus or documents incorporated by reference
therein.
(ee) The Company maintains “internal control over financial reporting” (as defined in Rules
13a-15 and 15d-15 under the Exchange Act) in compliance with the requirements of the Exchange Act.
The Company’s internal control over financial reporting has been designed by the Company’s
principal executive officer and principal financial officer, or under their supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles and is effective in performing the functions for which it was established. Except as
described in the Time of Sale Prospectus and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (i) no significant deficiency or material weakness in
the design or operation of the Company’s internal control over financial reporting (whether or not
remediated) which is reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information; (ii) no fraud, whether or not material, that
involves management or other employees of the Company who have a significant role in the Company’s
internal controls; and (iii) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
(ff) The Company maintains “disclosure controls and procedures” (as such term is defined in
Rules 13a-15 and 15d-15 under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s Chief Executive Officer and Chief Financial Officer by
others within those entities, and such disclosure controls and procedures are effective in
performing the functions for which they were established; the principal executive officers (or
their equivalents) and principal financial officers (or their equivalents) of the Company have made
all certifications required by the Xxxxxxxx-Xxxxx Act, and the statements made in each such
certification are accurate; the Company, its subsidiaries and its directors and officers are each
in compliance in all material respects with the applicable provisions of the Xxxxxxxx-Xxxxx Act.
The Company has used such disclosure controls and
9
procedures in preparing and evaluating the
disclosures in the Registration Statement, the Time of Sale Prospectus and the Prospectus.
(gg) Neither the Company nor any of its subsidiaries has sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or agreements referred to or
described in the Time of Sale Prospectus or the Prospectus, or referred to or described in, or
filed as an exhibit to, the Registration Statement that the Company is not actively seeking to
negotiate an extension of or new agreement related to or that the Company anticipates not being
able to renew, and no
such termination or non-renewal has been threatened by the Company or any of its subsidiaries
or, to the Company’s knowledge, any other party to any such contract or agreement.
(hh) All tax returns required to be filed by the Company or any of its subsidiaries have been
timely filed, and all taxes and other assessments of a similar nature (whether imposed directly or
through withholding) including any interest, additions to tax or penalties applicable thereto due
or claimed to be due from such entities have been timely paid, other than those being contested in
good faith and for which adequate reserves have been provided.
(ii) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is aware
of or has taken any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder; and the Company and its subsidiaries have instituted and maintain policies and
procedures designed to ensure continued compliance therewith, including without limitation a system
of internal accounting controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management’s general or specific authorization, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(jj) Neither the Company nor any of its subsidiaries nor any of their respective directors,
officers, affiliates or controlling persons has taken, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Shares.
(kk) The Company has not been advised, and has no reason to believe, that it and each of its
subsidiaries are not conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, except where failure to be so
in compliance would not have a material adverse effect.
(ll) Other than as contemplated by this Agreement, the Company has not incurred any liability
for any finder’s or broker’s fee or agent’s commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated hereby.
2. Agreements to Sell and Purchase. The Company hereby agrees to issue and sell 5,400,000
Shares to the several Underwriters at a price of $2.867 per share (the “Purchase Price”), and each
Underwriter, upon the basis of the representations and warranties herein contained, but subject to
the conditions herein set forth, agrees, severally and not jointly, to purchase from the Company at
the Purchase Price the number of Firm Shares (subject to such adjustments to eliminate fractional
shares as the Manager may determine) set forth opposite the name of such Underwriter set forth in
Schedule I hereto.
10
Moreover, the Company hereby agrees to issue and sell up to 810,000 Additional Shares to the
Underwriters at the Purchase Price, and the Underwriters, upon the basis of the representations and
warranties contained herein, but subject to the terms and conditions herein set forth, shall have
the right (but not the obligation) to purchase, severally and not jointly, up to the Additional
Shares at the Purchase Price. The Manager may exercise this right on behalf of the Underwriters in
whole or from time to time in part (but not more than once) by giving written notice not later than
30 days after the date of this Agreement. Any exercise 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. The purchase date must be at least one business day after the written notice is given
and may not be earlier than the closing date for the Firm
Shares or later than 10 business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering over-allotments made
in connection with the offering of the Firm Shares. On the day, if any, that Additional Shares are
to be purchased (an “Option Closing Date”), each Underwriter agrees, severally and not jointly, to
purchase the number of Additional Shares (subject to such adjustments to eliminate fractional
shares as the Manager may determine) that bears the same proportion to the total number of
Additional Shares to be purchased on the Option Closing Date as the number of Firm Shares set forth
in Schedule I hereto opposite the name of such Underwriter bears to the total number of
Firm Shares.
3. Terms of Public Offering. The Company is advised by the Manager that the Underwriters
propose to make a public offering of their respective portions of the Shares as soon after this
Agreement have become effective as in the Manager’s judgment is advisable. The Company is further
advised by the Manager that the Shares are to be offered to the public initially at $3.05 per share
(the “Public Offering Price”) and to certain dealers selected by the Manager at a price that
represents a concession not in excess of $0.109 per share under the Public Offering Price.
4. Payment and Delivery. Payment for the Firm Shares to be sold by the Company shall be made
to the Company in Federal or other funds immediately available in Minneapolis, Minnesota against
delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
Central Time, on June 14, 2010 or at such other time on the same or such other date, not later than
June 21, 2010, as shall be designated in writing by the Manager. 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 Minneapolis, Minnesota against delivery of such Additional Shares for the
respective accounts of the several Underwriters at 10:00 a.m., Central Time, on the date specified
in the corresponding notice described in Section 2 or at such other time on the same or on such
other date, in any event not later than July 21, 2010, as shall be designated in writing by the
Manager.
The Firm Shares and Additional Shares shall be registered in such names and in such
denominations as the Manager shall request in writing not later than one full business day prior to
the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and
Additional Shares shall be delivered to the Manager on the Closing Date or an 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.
5. Conditions to the Underwriters’ Obligations. The several obligations of the Underwriters
are subject to the condition that all representations and warranties on the part of the Company
contained in this Agreement are, on the date hereof, on the Closing Date and on each Option Closing
Date, if any, true and correct, the condition that the Company has performed its obligations
required to be performed prior to the Closing Date and the following further conditions:
11
(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date
and each Option Closing Date, if any:
(i) none of the ratings of the securities of the Company or any of its subsidiaries
have been downgraded 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 assets, business, condition (financial or otherwise), management,
operations, earnings or prospects of the Company and its subsidiaries, taken as a whole,
from that set forth in the Time of Sale Prospectus that makes it, in the Manager’s judgment,
impracticable
or inadvisable to offer or sell the Shares on the terms and in the manner contemplated
in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date and each Option Closing Date, if
any, a certificate, dated the Closing Date or such Option Closing Date, as the case may be, and
signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect
that the representations and warranties of the Company contained in this Agreement are true and
correct as of the Closing Date or such Option Closing Date, as the case may be, 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 or such Option Closing Date, as
the case may be, and as to such other matters as the Manager may reasonably request. The delivery
of the certificate provided for in this Section 5(b) shall constitute a representation and warranty
of the Company as to the statements made in such certificate.
(c) The Underwriters shall have received on the Closing Date and each Option Closing Date, if
any, an opinion of Faegre & Xxxxxx LLP, outside counsel for the Company, dated the Closing Date or
such Option Closing Date, as the case may be, in form and substance reasonably satisfactory to
counsel for the Underwriters to the effect set forth in Exhibit A hereto. The opinion of
Faegre & Xxxxxx LLP shall be rendered to the Underwriters at the request of the Company and shall
so state therein.
(d) The Underwriters shall have received on the Closing Date and each Option Closing Date, if
any, an opinion of Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP, counsel for the Underwriters, dated the
Closing Date or such Option Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters.
(e) The Underwriters shall have received, on each of the date hereof, the Closing Date and
each Option Closing Date, if any, a letter dated the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from KPMG
LLP, 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 the Registration Statement, the Time of Sale
Prospectus and the Prospectus; provided that the letter delivered on the Closing Date shall use a
“cut-off date” not earlier than the date hereof.
(f) No stop order suspending the effectiveness of the Registration Statement or preventing or
suspending the use of any Preliminary Prospectus, the Time of Sale Prospectus or the Prospectus
shall have been issued, and no proceedings for such purpose shall have been instituted or
threatened by the Commission; no notice of objection of the Commission to the use of the
Registration Statement shall have been received; and all requests for additional information on the
part of the Commission shall have been complied with to the Manager’s satisfaction.
12
(g) The “lock-up” agreements, each substantially in the form of Exhibit B hereto, between the
Underwriters and certain directors and officers of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities, delivered to the Underwriters
on or before the date hereof, shall be in full force and effect on the Closing Date.
(h) The Shares shall have been approved for listing on NASDAQ.
(i) FINRA shall not have raised any objection with respect to the fairness or reasonableness
of the underwriting, or other arrangements of the transactions, contemplated hereby.
(j) The several obligations of the Underwriters to purchase Additional Shares hereunder are
subject to the delivery to the Manager on the applicable Option Closing Date of such documents as
the Manager may reasonably request, including certificates of officers of the Company,
legal opinions and an accountants’ comfort letter, and other matters related to the issuance
of such Additional Shares.
6. Covenants of the Company. The Company covenants with each Underwriter as follows:
(a) To furnish to the Manager, without charge, two signed copies of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to the Manager in Minneapolis,
Minnesota, without charge, prior to 10:00 a.m. Central Time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section 6(f) or 6(g) below, as many
copies of the Time of Sale Prospectus, the Prospectus and any supplements and amendments thereto or
to the Registration Statement as the Manager may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus
or the Prospectus, during the Prospectus Delivery Period to furnish to the Manager a copy of each
such proposed amendment or supplement and not to file any such proposed amendment or supplement to
which the Manager reasonably objects in a timely manner, 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.
(c) To furnish to the Manager a copy of each proposed free writing prospectus in connection
with the sale of the Shares to be prepared by or on behalf of, used by, or referred to by the
Company and not to use or refer to any proposed free writing prospectus to which the Manager
reasonably objects.
(d) Not to take any action that would result in an Underwriter or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not
have been required to file thereunder.
(e) To advise the Manager promptly of any request during the Prospectus Delivery Period by the
Commission for amendments or supplements to the Registration Statement, the Base Prospectus, any
Preliminary Prospectus, any Permitted Free Writing Prospectus, any Prospectus Supplement or any
Prospectus or for additional information with respect thereto, or of notice of institution of
proceedings for, or the entry during the Prospectus Delivery Period of a stop order, suspending the
effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary
Prospectus, the Time of Sale Prospectus or the Prospectus; and if the Commission should enter such
a stop order, to use its reasonable best efforts to obtain the lifting or removal of such order as
soon as possible.
(f) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time
when the Prospectus is not yet available to prospective purchasers and any event shall occur or
13
condition exist as a result of which it is necessary to amend or supplement the Time of Sale
Prospectus in order to make the statements therein, in the light of the circumstances, not
misleading, or if any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration Statement then on file, or
if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time
of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the circumstances when delivered
to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or
supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale
Prospectus, as amended or supplemented, will comply with applicable law.
(g) 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 (or in lieu thereof the notice referred to
in Rule 173(a) under the Securities Act) 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 (or in lieu thereof the notice referred to in Rule
173(a) under the Securities Act) 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 Manager will furnish to
the Company) to which Shares may have been sold by Manager 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 (or in lieu thereof the notice referred to in Rule 173(a) under
the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with applicable law.
(h) If, at the time this Agreement is executed and delivered, it is necessary or appropriate
for a post-effective amendment to the Registration Statement, or a Registration Statement under
Rule 462(b) under the Securities Act, to be filed with the Commission and become effective before
the Shares may be sold by the Underwriters, the Company will use its reasonable best efforts to
cause such post-effective amendment or such Registration Statement to be filed and become
effective, and will pay any applicable fees in accordance with the Securities Act, as soon as
possible; and the Company will advise Manager promptly and, if requested by the Manager, will
confirm such advice in writing, (i) when such post-effective amendment or such Registration
Statement has become effective, and (ii) if Rule 430A under the Securities Act is used, when the
Prospectus is filed with the Commission pursuant to Rule 424(b) under the Securities Act (which the
Company agrees to file in a timely manner in accordance with such Rules).
(i) If, at any time during the period when a prospectus is required by the Securities Act to
be delivered (whether physically or through compliance with Rule 172 under the Securities Act or
any similar rule) in connection with any sale of Shares by an Underwriter or dealer (the
“Prospectus Delivery Period”), the Registration Statement shall cease to comply with the
requirements of the Securities Act with respect to eligibility for the use of the form on which the
Registration Statement was filed with the Commission, to (i) promptly notify the Manager, (ii)
promptly file with the Commission a new registration statement under the Securities Act, relating
to the Shares, or a post-effective amendment to the Registration Statement, which new registration
statement or post-effective amendment shall comply with the requirements of the Securities Act and
shall be in a form satisfactory to the Manager, (iii) use its reasonable best efforts to cause such
new registration statement or post-effective amendment to become
14
effective under the Securities Act
as soon as practicable, (iv) promptly notify the Manager of such effectiveness and (v) take all
other action necessary or appropriate to permit the public offering and sale of the Shares to
continue as contemplated in the Prospectus; all references in this subsection (i) to the
Registration Statement shall be deemed to include each such new registration statement or
post-effective amendment, if any.
(j) To file promptly during the Prospectus Delivery Period all reports and any definitive
proxy or information statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus (or, in lieu thereof, the notice referred to in Rule
173(a) under the Securities Act) is required in connection with the offering or sale of the Shares.
(k) To maintain during the Prospectus Delivery Period such controls and other procedures,
including without limitation those required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and
the applicable regulations thereunder, that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Commission’s
rules and forms, including without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the Company’s management, including its
principal executive officer and its principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required disclosure, to ensure that
material information relating to Company, including its Subsidiaries, is made known to them by
others within those entities.
(l) To comply during the Prospectus Delivery Period with all applicable provisions of the
Xxxxxxxx-Xxxxx Act
(m) Promptly to furnish such information or to take such action as the Manager may reasonably
request and otherwise to qualify the Shares for offer and sale under the securities or “blue sky”
laws of such jurisdictions as the Manager shall reasonably request, and to comply with such laws so
as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may
be necessary to complete the distribution of the Shares; provided, however, that the Company shall
not be required to qualify as a foreign corporation or to file a consent to service of process in
any jurisdiction (excluding service of process with respect to the offer and sale of the Shares);
and to promptly advise the Manager of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Shares for offer or sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(n) To timely file such reports pursuant to the Exchange Act as are necessary in order to make
generally available to its security holders as soon as practicable an earnings statement in
compliance with Rule 158 under the Securities Act for the purposes of, and to provide to the
Manager the benefits contemplated by, the last paragraph of Section 11(a) of the Securities Act.
(o) To use its reasonable best efforts to cause the Shares to be listed on NASDAQ.
(p) During the period beginning on the date of this Agreement and continuing to and including
60 days after the date of the Prospectus, and without the prior written consent of the Manager, not
to (i) issue, 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, lend, 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, (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 such transaction described in clause (i) or
(ii) above is to be settled by delivery of the
15
Common Stock or such other securities, in cash or
otherwise, (iii) file any registration statement with the Commission relating to the offering of
any shares of Common Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (iv) publicly announce an intention to effect any transaction specified in clause
(i), (ii) or (iii). The restrictions contained in the preceding sentence shall not apply to (i)
the Shares to be sold hereunder, (ii) the grant of options to purchase shares of Common Stock, or
the grant of shares of restricted stock or other equity incentive awards pursuant to the Company’s
equity incentive plans under the terms of such plans in effect on the date hereof, or the sale of
shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans (or the
filing of a registration statement on Form S-8 to register shares of Common Stock or other
securities issuable under such plans), or (iii) 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 of this Agreement. Notwithstanding the foregoing, if (i) during the last 17 days of the 60-day
restricted period, the Company issues an earnings release or material news or a material event
relating to the Company occurs; or (ii) prior to the expiration of the 60-day restricted period,
the Company announces that it will release earnings results during the 16-day period beginning on
the last day of the 60-day period, the restrictions imposed by Section
6(p) of this Agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the material news or
material event; provided, however, that this sentence shall not apply, and the Manager will waive
any extension beyond the initial Lock-Up Period (as defined in such “lock-up” agreements) of the
“lock-up” agreements delivered to the Underwriters pursuant to Section 5(g), if the research
published or distributed on the Company is compliant under Rule 139 of the Securities Act and the
Company’s securities are actively traded as defined in Rule 101(c)(1) of Regulation M of the
Exchange Act. The Company shall promptly notify the Manager of any earnings release, news or event
that may give rise to an extension of the initial 60-day restricted period.
(q) To prepare, if the Manager so requests, a final term sheet relating to the offering of the
Shares, containing only information that describes the final terms of the Shares or the offering in
a form consented to by the Manager, and to file such final term sheet within the period required by
Rule 433(d)(5)(ii) under the Securities Act following the date the final terms have been
established for the offering of the Shares.
(r) To comply with Rule 433(d) under the Securities Act (without reliance on Rule 164(b) under
the Securities Act) and with Rule 433(g) under the Securities Act with respect to the Shares.
(s) Not to take, directly or indirectly, any action designed, or which will constitute, or has
constituted, or might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Shares.
(t) Not, at any time at or after the execution of this Agreement, to offer or sell any Shares
by means of any “prospectus” (within the meaning of the Securities Act) or use any “prospectus”
(within the meaning of the Securities Act) in connection with the offer or sale of the Shares,
except in each case other than the Prospectus.
(u) To apply the net proceeds to the Company from the sale of the Shares in the manner set
forth under the caption “Use of Proceeds” in the Prospectus Supplement.
7. Expenses. Whether or not the transactions contemplated in this Agreement are consummated
or this Agreement is terminated, the Company agrees 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 Time of Sale Prospectus, the Prospectus, any free writing prospectus
prepared by or on behalf of, used by, or referred to by the Company and amendments and supplements
to any of the foregoing, including all
16
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, including any transfer or other taxes payable thereon, (iii) the cost of printing or
producing any securities or blue sky memorandum in connection with the offer and sale of the Shares
under the securities laws of the jurisdictions in which the Shares may be offered or sold and all
expenses in connection with the qualification of the Shares for offer and sale under such
securities laws as provided in Section 6(l) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by FINRA, (v) all costs and expenses
incident to listing the Shares on NASDAQ, (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 preparation or dissemination of any road show, 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, (ix) the
document production charges and expenses associated with printing this Agreement, and (x) 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.
Except as set forth in the preceding paragraph, the Underwriters will pay all of their costs
and expenses, including stock transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make. Notwithstanding the above, if the
sale of the Shares provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 5 is not satisfied, because of any termination of this
Agreement by the Underwriters pursuant to Section 9 hereof or because of any refusal, inability or
failure on the part of the Company to perform any obligation or covenant hereunder or comply with
any provision hereof other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect
to themselves, severally, through the Manager on demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereby; provided, that such
out-of-pocket expenses (including fees and disbursements of counsel) shall not exceed $32,500 in
the aggregate.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each
Underwriter, 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, and each affiliate of any
Underwriter within the meaning of Rule 405 under the Securities 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, arising out of or based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, or 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, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Time of Sale Prospectus, any issuer free
writing prospectus as defined in Rule 433(h) under the Securities Act, any issuer information that
the Company has filed, or is required to file, pursuant to Rule 433(d) of the Securities Act, any
road show not constituting a free writing prospectus, any road show free writing
17
prospectus or the
Prospectus or any amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which there were made, not misleading; provided, however, that the
Company shall not be liable under this Section 8(a) to the extent that such losses, claims, damages
or liabilities are caused by, arise out of or are based upon any such untrue statement or omission
or alleged untrue statement or omission made therein in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by such Underwriter
through the Manager expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, the directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 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, arising from or based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof or 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, or
(ii) any untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined
in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is
required to file, pursuant to Rule 433(d) of the Securities Act, any road show not constituting a
free writing prospectus, or the Prospectus or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which there were made, not
misleading, in each case to the extent, but only to the extent, that such untrue statement or
omission or alleged untrue statement or omission was made therein in reliance upon and in
conformity with information relating to such Underwriter furnished to the Company in writing by
such Underwriter through the Manager expressly for use therein.
(c) In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
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 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 or
who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act, and
(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 that all such fees and
expenses shall
18
be reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons and affiliates of any Underwriters, such firm shall be
designated in writing by the Manager. 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. 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. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for reasonable fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall not have either (x) reimbursed the
indemnified party in accordance with such request prior to the date of such settlement or (y)
notified the indemnified party of a bona fide dispute that such fees and expenses are owed under
this Agreement. 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.
(d) To the extent the indemnification provided for in 8(a) or 8(b) 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 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 and
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 well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand and the Underwriters
on the other hand in connection with the offering of the 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 the Company 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 Company 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 Company 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.
(e) The Company 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 Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 8(d) 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
19
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 8 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.
(f) The indemnity and contribution provisions contained in this Section 8 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, any person controlling any Underwriter
or any affiliate of any Underwriter, 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. The Underwriters may terminate this Agreement by notice given by the Manager
to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date
(a) trading generally shall have been suspended or materially limited or minimum prices shall have
been established on, or by, as the case may be, any of the New York Stock Exchange or NASDAQ, (b)
trading of any securities of the Company shall have been suspended or materially limited on any
exchange or in any over-the-counter market, (c) a material disruption in securities
settlement, payment or clearance services in the United States shall have occurred, (d) any
moratorium or material limitation on commercial banking activities shall have been declared by
Federal, Minnesota or New York state authorities, (e) there shall have occurred any outbreak or
escalation of hostilities, act of terrorism involving the United States or declaration by the
United States of a national emergency or war, or (f) any other calamity or crisis or any material
change in financial, political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in clause (e) or (f), makes it, in the Manager’s judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms
and in the manner contemplated in the Time of Sale Prospectus or the Prospectus (exclusive of any
supplement thereto).
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 an 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 I 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 the Manager 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 on such date,
and arrangements satisfactory to the Manager and the Company 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 or the Company. In any such case either the Manager
or the
20
Company 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, in the Time
of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected.
If, on an 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 on such
Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date 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. 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.
11. Representations and Indemnities to Survive. The respective agreements, representations,
warranties, indemnities and other statements of the Company and the Underwriters set forth or made
pursuant to this Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Shares. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Entire Agreement. This Agreement, together with any contemporaneous written agreements
and any prior written agreements (to the extent not superseded by this Agreement) that relate
to the offering of the Shares, represents the entire agreement between the Company, on the one
hand, and the Underwriters, on the other, with respect to the preparation of any Preliminary
Prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the
purchase and sale of the Shares.
13. No Fiduciary Duty. The Company acknowledges and agrees that: (a) the Underwriter has been
retained solely to act as an underwriter in connection with the sale of the Securities and that no
fiduciary, advisory or agency relationship between the Company and the Underwriter has been created
in respect of any of the transactions contemplated by this Agreement, irrespective of whether the
Underwriter has advised or are advising the Company on other matters; (b) the price and other terms
of the Securities set forth in this Agreement were established by the Company following discussions
and arms-length negotiations with the Underwriter and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement; (c) it has been advised that the Underwriter and its affiliates are
engaged in a broad range of transactions which may involve interests that differ from those of the
Company and that the Underwriter has no obligation to disclose such interest and transactions to
the Company by virtue of any fiduciary, advisory or agency relationship; (d) it has been advised
that the Underwriter is acting, in respect of the transactions contemplated by this Agreement,
solely for the benefit of the Underwriter, and not on behalf of the Company; (e) it waives to the
fullest extent permitted by law, any claims it may have against the Underwriter for breach of
fiduciary duty or alleged breach of fiduciary duty in respect of any of the transactions
contemplated by this Agreement and agrees, to the extent permitted by law, that the Underwriter
shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary
duty claim on behalf of or in right of the Company, including stockholders, employees or creditors
of the Company.
14. Research Analyst Independence. The Company acknowledges that the Underwriters’ research
analysts and research departments are required to be independent from their investment banking
divisions and are subject to certain regulations and internal policies, and that the Underwriters’
research analysts may hold views and make statements or investment recommendations and/or publish
research reports with respect to the Company and/or the offering that differ from the views of
their respective investment banking divisions. The Company hereby waives and releases, to the
fullest extent permitted
21
by law, any claims that the Company may have against the Underwriters with
respect to any conflict of interest that may arise from the fact that the views expressed by their
independent research analysts and research departments may be different from or inconsistent with
the views or advice communicated to the Company by the Underwriters’ investment banking divisions.
The Company acknowledges that the Underwriters are full service securities firms and as such, from
time to time, subject to applicable securities laws, rules and regulations, may effect transactions
for their own accounts or the accounts of their customers and hold long or short positions in debt
or equity securities of the Company; provided, however, that nothing in this Section 14 shall
relieve any Underwriter of any responsibility or liability it may otherwise bear in connection with
activities in violation of applicable securities laws, rules and regulations.
15. Counterparts. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart by facsimile or electronic transmission shall be equally as effective as
delivery of an original counterpart of this Agreement. The failure by a party to deliver an
original executed counterpart to this Agreement shall not affect the validity, enforceability and
binding effect of this Agreement.
16. Applicable Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
17. 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.
18. Notices. All communications hereunder shall be in writing and effective only upon receipt
and if to the Underwriters shall be delivered, mailed or sent to the Manager at Xxxxx-Xxxxxx
Capital Group LLC, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx, Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx, with copies to the Legal Department and Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP,
Plaza VII Building, Suite 3300, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Fax (000)
000-0000 Attention: Xxxxx X. Xxxxxxxxx, Esq.; and if to the Company shall be delivered, mailed or
sent to FSI International, Inc., 0000 Xxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxxx 00000-0000, Fax (000)
000-0000 Attention: Chief Executive Officer with a copy to Faegre & Xxxxxx LLP, 2200 Xxxxx Fargo
Center, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Fax (000) 000-0000 Attention:
Xxxxxxx X. Xxxx.
22
| Very truly yours, FSI International Inc. |
||||
| By: | /s/ Xxxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxxx X. Xxxxxxxxx | |||
| Title: | Chief Financial Officer | |||
Accepted as of the date hereof
Xxxxx-Xxxxxx Capital Group LLC
By:
|
/s/ Xxxx Xxxxx | |||
| Name: Xxxx Xxxxx | ||||
| Title: Managing Partner, Chairman |
SCHEDULE I
| Number of Firm Shares | Number of Additional Shares | |||||||
| Underwriter | To Be Purchased | To Be Purchased | ||||||
Xxxxx-Xxxxxx Capital Group LLC |
3,780,000 | 567,000 | ||||||
Xxxxxxxxx & Company LLC |
1,620,000 | 243,000 | ||||||
Total |
5,400,000 | 810,000 | ||||||
SCHEDULE II
Time of Sale Prospectus
| 1. | Preliminary Prospectus, including Preliminary Prospectus Supplement dated June 8, 2010 and Base Prospectus dated April 12, 2010 | |
| 2. | Free Writing Prospectus dated June 9, 2010, containing pricing and other information |
EXHIBIT A
FORM OF OPINION OF COMPANY’S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(c)
TO BE DELIVERED PURSUANT TO SECTION 5(c)
1. 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 Time of Sale Prospectus and the
Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction
listed on Annex A hereto;
2. The Company has an authorized capitalization as set forth in the Time of Sale Prospectus and the
Prospectus, and the authorized capital stock of the Company conforms as to legal matters in all
material respects to the description thereof contained in each of the Time of Sale Prospectus and
the Prospectus;
3. 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 statutory preemptive or similar rights
or to such counsel’s knowledge any other preemptive or similar rights;
4. This Agreement has been duly authorized, executed and delivered by the Company;
5. Neither the execution and delivery by the Company of, nor the performance by the Company of its
obligations under, this Agreement will conflict with, contravene, result in a breach or violation
of, or imposition of any lien, charge or encumbrance upon any property or assets of the Company, or
constitute a default under (i) to such counsel’s knowledge, any statute, law, rule, regulation,
judgment, order or decree of any governmental body, regulatory or administrative agency or court
having jurisdiction over the Company; (ii) the articles of incorporation or bylaws of the Company;
or (iii), to such counsel’s knowledge, any contract, agreement, obligation, covenant or instrument
identified as an exhibit to the Company’s most recent annual report on Form 10-K and subsequent
quarterly reports on Form 10-Q. To such counsel’s knowledge, 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 the
securities or “blue sky” laws of the various jurisdictions in connection with the offer and sale of
the Shares;
6. The statements constituting a summary of matters of law, and those statements that are
descriptions of contracts, agreements or other legal documents or of legal proceedings, or refer to
statements of law or legal conclusions or include descriptions of requirements that are or may be
imposed on the Company under certain provisions of statutes, rules, regulations or statements of
law, included in (A) the Base Prospectus under the captions “Description of Our Capital Stock,”
“Description of Our Preferred Stock,” “Description of Our Warrants,” “Description of Our Units” and
“Plan of Distribution,” (B) the Prospectus Supplement on page S-13 under the caption “Our revised
articles of incorporation . . .” and (C) the Registration Statement in Item 15, in each case fairly
and accurately summarize in all material respects such matters, documents or proceedings;
7. 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
2
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;
8. The Company is not, and after giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus will not be, required to
register as an “investment company” as such term is defined in the Investment Company Act of 1940,
as amended; and
We also advise you that we have participated in conferences with officers and other representatives
of the Company and representatives of the Manager and Manager’s counsel at which the contents of
the Registration Statement, the Time of Sale Prospectus and the Prospectus, and related matters
were discussed and, although we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Registration Statement, the
Time of Sale Prospectus and the Prospectus (other than as specified above), on the basis of the
foregoing, nothing has come to our attention that would lead us to believe that (i) the
Registration Statement, as of the time it became effective for purposes of Section 11 of the
Securities Act, contained any untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein not misleading, (ii) the Time of Sale
Prospectus as of the Time of Sale contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein not misleading, or (iii)
the Prospectus, as of its date or at the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it being understood that in
each case we express no belief as to the financial statements or schedules or other financial or
statistical data derived therefrom or other statistical data, included in the Registration
Statement, the Time of Sale Prospectus and the Prospectus).
3
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
TO BE SIGNED AND DELIVERED PURSUANT TO SECTION 5(g)
TO BE SIGNED AND DELIVERED PURSUANT TO SECTION 5(g)
June 9, 2010
Xxxxx-Xxxxxx Capital Group LLC
Xxxxxxxxx & Company LLC
c/o Xxxxx-Xxxxxx Capital Group LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Xxxxxxxxx & Company LLC
c/o Xxxxx-Xxxxxx Capital Group LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: FSI International, Inc.
Ladies and Gentlemen:
The undersigned is an owner of record or the beneficial owner of certain shares of common
stock, no par value, of FSI International, Inc. (“Common Stock”) or securities convertible into or
exchangeable or exercisable for Common Stock. FSI International, Inc. (the “Company”) proposes to
carry out a public offering of Common Stock (the “Offering”) pursuant to the terms and conditions
of a purchase agreement (the “Purchase Agreement”) between the Company and Xxxxx-Xxxxxx Capital
Group LLC, as manager of the Offering (the “Manager”) and the underwriters named in Schedule
I to the Purchase Agreement (the “Underwriters”). The undersigned recognizes that the Offering
will be of benefit to the undersigned and will benefit the Company by, among other things, raising
additional capital for general corporate purposes, including working capital. The undersigned
acknowledges that the Underwriters are relying on this letter (this “Lock-Up Agreement”) in
carrying out the Offering and in entering into underwriting arrangements with the Company with
respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will
not, in each case without the prior written consent of the Manager (which consent may be withheld
in its absolute discretion), during the period specified in the second succeeding paragraph (the
“Lock-Up Period”) directly or indirectly, (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, lend, or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or exchangeable for shares of
Common Stock currently or hereafter owned either of record or beneficially (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by the
undersigned (the “Undersigned’s Securities”) 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
Undersigned’s Securities, whether such transaction described in clause (i) or (ii) above is to be
settled by delivery of the Undersigned’s Securities or such other securities, in cash or otherwise.
The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any
hedging or other transaction which is designed to or which reasonably could be expected to lead to
or result in a sale or disposition of the Undersigned’s Securities even if such Undersigned’s
Securities would be disposed of by someone other than the undersigned. Such prohibited hedging or
other transactions
4
would include without limitation any short sale or any purchase, sale or grant
of any right (including
without limitation any put or call option) with respect to any of the Undersigned’s Securities
or with respect to any security that includes, relates to, or derives any significant part of its
value from such Undersigned’s Securities.
In addition, the undersigned agrees that, without the prior written consent of the Manager, it
will not, during the Lock-Up Period, make any demand for, or exercise any right with respect to,
the registration of any Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The initial Lock-Up Period will commence on the date of this Lock-Up Agreement and continue
and include the date 60 days after the date of the final prospectus used to sell Common Stock in
the Offering pursuant to the Purchase Agreement, provided, however, that if (1) during the last 17
days of the initial Lock-Up Period, the Company issues an earnings release or material news or a
material event relating to the Company occurs or (2) prior to the expiration of the initial Lock-Up
Period, the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will
be extended until the expiration of the 18-day period beginning on the date of the earnings release
or the occurrence of the material news or material event.
The undersigned hereby acknowledges that the Company will be requested to agree in the
Purchase Agreement to provide written notice to the undersigned of any event that would result in
an extension of the Lock-Up Period pursuant to the previous paragraph and agrees that any such
notice properly delivered will be deemed to have been given to, and received by, the undersigned.
The undersigned further agrees that, prior to engaging in any transaction or taking any other
action that is subject to the terms of this Lock-Up Agreement during the period from the date of
this Lock-Up Agreement to and including the 34th day following the expiration of the initial 60-day
lock-up period, it will give notice thereof to the Company and will not consummate such transaction
or take any such action unless it has received written confirmation from the Company that the
Lock-Up Period (as may have been extended pursuant to the previous paragraph) has expired.
Notwithstanding the foregoing, (1) the undersigned may transfer the Undersigned’s Securities
(i) as a bona fide gift or gifts, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, and (iii) by will or intestacy to the
undersigned’s legal representative, heir or legatee, or (2) if the undersigned is a corporation,
company, business trust, association, limited liability company, partnership, limited liability
partnership, limited liability limited partnership or other entity (collectively, the “Entities”
or, individually, the “Entity”), the undersigned may transfer shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of Common Stock to any person or
Entity which controls, is directly or indirectly controlled by, or is under common control with the
undersigned and, if the undersigned is a partnership or limited liability company, it may transfer
the Common Stock or securities convertible into or exchangeable or exercisable for any shares of
Common Stock to its partners, former partners or an affiliated partnership (or members, former
members or an affiliated limited liability company) managed by the same manager or managing partner
(or managing member, as the case may be) or management company, or managed by an entity
controlling, controlled by, or under common control with, such manager or managing partner (or
managing member) or management company in accordance with partnership (or membership) interests;
provided, in each case of transfer pursuant to clause (1) or (2), that (x) such transfer shall not
involve a disposition for value, (y) the transferee agrees in writing with the Manager to be bound
by the terms of this Lock-Up Agreement, and (z) no filing by any party under Section 16(a) of the
Exchange Act shall be
5
required or shall be made voluntarily in connection with such transfer. For
purposes of this Lock-Up
Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not
more remote than first cousin.
In addition, the foregoing restrictions shall not apply to (i) the exercise of stock options
granted pursuant to the Company’s equity incentive plans; provided that it shall apply to any of
the Undersigned’s Securities issued upon such exercise, or (ii) the establishment of any contract,
instruction or plan (a “Plan”) that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B)
under the Exchange Act; provided that no sales of the Undersigned’s Securities shall be made
pursuant to such a Plan prior to the expiration of the Lock-Up Period (as such may have been
extended pursuant to the provisions hereof), and such a Plan may only be established if no public
announcement of the establishment or existence thereof and no filing with the Securities and
Exchange Commission or other regulatory authority in respect thereof or transactions thereunder or
contemplated thereby, by the undersigned, the Company or any other person, shall be required, and
no such announcement or filing is made voluntarily, by the undersigned, the Company or any other
person, prior to the expiration of the Lock-Up Period (as such may have been extended pursuant to
the provisions hereof).
In furtherance of the foregoing, the undersigned agrees to promptly notify the Manager of any
action that may violate the foregoing restrictions, and the undersigned hereby consents to the
Company and its transfer agent and registrar’s decision to decline to make any transfer of shares
of Common Stock if such transfer would constitute a violation of this Agreement.
Anything to the contrary notwithstanding, if (i) the Purchase Agreement does not become
effective by [ ], 2010 (ii) after becoming effective, the Purchase Agreement (other than the
provisions which survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares to be sold thereunder, or (iii) prior to the Purchase Agreement becoming
effective, the Company or the Underwriters notifies the other in writing that it does not intend to
proceed with the Offering, this Lock-Up Agreement shall immediately lapse and become null and void
and the undersigned shall be released from all obligations under this Lock-Up Agreement.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.
This Lock-Up Agreement will be governed by, and construed in accordance with, the laws of the
State of Minnesota.
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| Printed Name of Holder | ||||
By: |
||||
| Signature | ||||
| Printed Name of Person Signing | ||||
| (and indicate capacity of person signing if | ||||
| signing as custodian, trustee, or on behalf of an entity) | ||||
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