EXHIBIT 1.1
8,400,000
PEMSTAR INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
_____ __, 2000
XXXXXX BROTHERS INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXXX SECURITIES INC.
CIBC WORLD MARKETS CORP.
FIDELITY CAPITAL MARKETS,
A DIVISION OF NATIONAL FINANCIAL
SERVICES CORPORATION,
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Pemstar Inc., a Minnesota corporation (the "Company"), proposes to sell
8,400,000 shares (the "Firm Stock") of the Company's common stock, par value
$.01 per share (the "Common Stock"). In addition, the Company and certain
Shareholders of the Company named in Schedule 2 hereto (the "Selling
Shareholders") propose to grant to the Underwriters named in Schedule 1 hereto
(the "Underwriters") an option to purchase up to an aggregate of 1,260,000
additional shares of the Common Stock on the terms and for the purposes set
forth in Section 3 (the "Option Stock"). Of the 1,260,000 shares of the Option
Stock, 880,000 are being sold by the Company and 380,000 by the Selling
Shareholders. The Firm Stock and the Option Stock, if purchased, are hereinafter
collectively called the "Stock." This is to confirm the agreement concerning the
purchase of the Stock from the Company and the Selling Shareholders, if
applicable, by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-1, and one or more
amendments thereto, with respect to the Stock has (i) been prepared by
the Company in conformity with the requirements of the United States
Securities Act of 1933 (the "Securities Act") and the rules and
regulations (the "Rule and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. Copies of such registration
statement and any amendments thereto have been delivered by the Company
to you as the
representatives (the "Representatives") of the Underwriters. As used in
this Agreement, "Effective Time" means the date and the time as of
which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in such registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including all
information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations in accordance with
Section 6(a) hereof and deemed to be a part of the registration
statement as of the Effective Time pursuant to paragraph (b) of Rule
430A of the Rules and Regulations; and "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations. The Commission
has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and do
not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in
Section 18) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and
are in good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged; and
none of the subsidiaries of the Company [(other than ________, ________
and ________ (collectively, the "Significant Subsidiaries"))] is a
"significant subsidiary," as such term is defined in Rule 405 of the
Rules and Regulations.
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(d) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable, were issued in compliance with all applicable
federal and state securities laws and conform to the description
thereof contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(e) The unissued shares of the Stock to be issued and sold by
the Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and
non-assessable; and the Stock will conform to the descriptions thereof
contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities
Exchange Act of 1934 (the "Exchange Act") and applicable state
securities laws in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance
of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(h) There are no contracts, agreements or understandings
between the Company and any person granting such person the right
(other than rights which have been waived or satisfied) to require the
Company to file a registration
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statement under the Securities Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act, other
than shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as otherwise
stated therein.
(l) Ernst & Young LLP ("E&Y"), who have certified certain
financial statements of the Company, whose report appears in the
Prospectus and who have delivered the initial letter referred to in
Section 9(g) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations; and McGladrey &
Xxxxxx, LLP ("M&P"), who have certified financial statements of the
Company whose report appears in the Prospectus and who have delivered
the initial letter referred to in Section 9(g) hereof, were independent
accountants as required by the Securities Act and the Rules and
Regulations during the periods covered by the financial statements on
which they reported contained in the Prospectus.
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(m) The Company and each of 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, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect the
value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and all 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.
(n) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value
of their respective properties and as is customary for companies
engaged in similar businesses in similar industries.
(o) Except as described in the Prospectus, the Company and
each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights
and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective
businesses will conflict with, and have not received any notice of any
claim of conflict with, any such rights of others.
(p) Except as described in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, might have a
material adverse effect on the consolidated financial position,
shareholders' equity, results of operations, business or prospects of
the Company and its subsidiaries; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(q) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(r) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Prospectus which is not so
described.
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(s) Except as described in the Prospectus, no labor
disturbance by the employees of the Company exists or, to the knowledge
of the Company, is imminent which might be expected to have a material
adverse effect on the consolidated financial position, shareholders'
equity, results of operations, business or prospects of the Company and
its subsidiaries.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(u) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof
and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which
has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the consolidated
financial position, shareholders' equity, results of operations,
business or prospects of the Company and its subsidiaries.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported
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accountability for its assets is compared with existing assets at
reasonable intervals.
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) is in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets
may be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its
business.
(y) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(z) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any of
the property now or previously owned or leased by the Company or its
subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a material adverse effect on the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any
of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the
aggregate with all such spills, discharges, leaks,
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emissions, injections, escapes, dumpings and releases, a material
adverse effect on the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries; and the terms "hazardous wastes", "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(aa) Neither the Company nor any subsidiary is and, after
giving effect to the offering and sale of the stock, neither the
Company nor any subsidiary will be an "investment company" within the
meaning of such term under the Investment Company Act of 1940 (the
"Investment Company Act") and the Rules and Regulations of the
Commission thereunder.
2. Representations, Warranties and Agreements of the Selling
Shareholders. Each Selling Shareholder severally represents, warrants and agrees
that:
(a) The Selling Shareholder has, and immediately prior to each
applicable Delivery Date (as defined in Section 5 hereof) the Selling
Shareholder will have good and valid title to the shares of Stock to be
sold by the Selling Shareholder hereunder on such date, free and clear
of all liens, encumbrances, equities or claims; and upon delivery of
such shares and payment therefor pursuant hereto, good and valid title
to such shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters.
(b) The Selling Shareholder has placed in custody under a
custody agreement (the "Custody Agreement" and, together with all other
similar agreements executed by the other Selling Shareholders, the
"Custody Agreements") with [insert name of custodian], as custodian
(the "Custodian"), for delivery under this Agreement, certificates in
negotiable form (with signature guaranteed by a commercial bank or
trust company having an office or correspondent in the United States or
a member firm of the New York or American Stock Exchanges) representing
the shares of Stock to be sold by the Selling Shareholder hereunder.
(c) The Selling Shareholder has duly and irrevocably executed
and delivered a power of attorney (the "Power of Attorney" and,
together with all other similar agreements executed by the other
Selling Shareholders, the "Powers of Attorney") appointing the
Custodian and one or more other persons, as attorneys-in-fact, with
full power of substitution, and with full authority (exercisable by any
one or more of them) to execute and deliver this Agreement and to take
such other action as may be necessary or desirable to carry out the
provisions hereof on behalf of the Selling Shareholder.
(d) The Selling Shareholder has full right, power and
authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement; the execution,
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delivery and performance of this Agreement, the Power of Attorney and
the Custody Agreement by the Selling Shareholder and the consummation
by the Selling Shareholder of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Selling Shareholder is a party or by which
the Selling Shareholder is bound or to which any of the property or
assets of the Selling Shareholder is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Selling Shareholder (if applicable), the articles of partnership of
the Selling Shareholder (if applicable), the deed of trust of the
Selling Shareholder (if applicable) or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Selling Shareholder or the property or assets of
the Selling Shareholder; and, except for the registration of the Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Power of
Attorney or the Custody Agreement by the Selling Shareholder and the
consummation by the Selling Shareholder of the transactions
contemplated hereby and thereby.
(e) The Registration Statement and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, do not and will not, as of the
applicable effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or
the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein.
(f) The Selling Shareholder has no reason to believe that the
representations and warranties of the Company contained in Section 1
hereof are not materially true and correct, is familiar with the
Registration Statement and the Prospectus (as amended or supplemented)
and has no knowledge of any material fact, condition or information not
disclosed in the Registration Statement, as of the effective date, or
the Prospectus (or any amendment or supplement thereto), as of the
applicable filing date, which has adversely affected or may adversely
affect the business of the Company and is not prompted to sell shares
of Common Stock by any information
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concerning the Company which is not set forth in the Registration
Statement and the Prospectus.
(g) The Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which 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 of the Stock.
3. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell the Firm Stock to the
several Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase the number of shares of the Firm Stock set opposite that
Underwriter's name in Schedule 1 hereto. The respective purchase obligations of
the Underwriters with respect to the Firm Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 880,000 shares of Option Stock and each Selling Shareholder
grants to the Underwriters an option to purchase up to the number of shares of
Option Stock set opposite his, her or its name in Schedule 2 hereto, severally
and not jointly. Such option is granted for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 5 hereof. Shares of Option Stock shall be purchased severally for the
account of the Underwriters in proportion to the number of shares of Firm Stock
set opposite the name of such Underwriters in Schedule 1 hereto. Each
Underwriter shall be obligated to purchase from the Company, and from each
Selling Shareholder, that number of shares of the Option Stock which represents
the same proportion of the number of shares of the Option Stock to be sold by
the Company, and by each Selling Shareholder, as the number of shares of the
Option Stock set forth opposite the name of such Underwriter in Schedule 1
represents of the total number of shares of the Option Stock to be purchased by
all of the Underwriters pursuant to this Agreement. The respective purchase
obligations of each Underwriter with respect to the Option Stock shall be
adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts. The price of both the
Firm Stock and any Option Stock shall be $_____ per share.
The Company and the Selling Shareholders shall not be obligated to
deliver any of the Stock to be delivered on any Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
4. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
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Directed Share Program. It is understood that approximately 831,600
shares of the Firm Stock ("Directed Shares") will initially be reserved by the
Underwriters for offer and sale to employees and persons having business
relationships with the Company and its subsidiaries ("Directed Share
Participants") upon the terms and conditions set forth in the Prospectus and in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. Under no circumstances will Xxxxxx Brothers Inc. or any
Underwriter be liable to the Company or to any Directed Share Participant for
any action taken or omitted to be taken in good faith in connection with such
Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share Participant on or
immediately after the date of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated hereby.
The Company agrees to pay all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program, including counsel
fees and any stamp duties or other taxes incurred by the Underwriters in
connection with the Directed Share Program.
In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless Xxxxxx Brothers Inc. and the other Underwriters from and against any
loss, claim, damage, expense, liability or action which (i) arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the approval of the Company for
distribution to Directed Share Participants in connection with the Directed
Share Program 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, (ii) arises out of the failure of any Directed Share Program
participant to pay for and accept delivery of Directed Shares that the
Participant agreed to purchase or (iii) is otherwise related to the Directed
Share Program, other than losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted
directly from the bad faith or gross negligence of Xxxxxx Brothers Inc. and the
other Underwriters.
5. Delivery of and Payment for the Stock. Delivery of and payment for
the Firm Stock shall be made at the office of Xxxxxxxx & Xxxxx, 000 Xxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 A.M., New York City time, on
the fourth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Firm Stock shall be
registered in such names and in such denominations as the Representatives shall
request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
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certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date."
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on such Second Delivery
Date. On such Second Delivery Date, the Company and the Selling Shareholders
shall deliver or cause to be delivered the certificates representing the Option
Stock to the Representatives for the account of each Underwriter against payment
to or upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company and the Selling Shareholder shall make the certificates
representing the Option Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to such Second Delivery Date.
12
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than Commission's close of business
on the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise the Representatives, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits other than this Agreement and the
computation of per share earnings) and (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus;
and, if the delivery of a prospectus is required at any time after the
Effective Time in connection with the offering or sale of the Stock or
any other securities relating thereto and if at such time any events
shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the Securities Act, to notify the
Representatives and, upon their request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as the
13
Representatives may from time to time reasonably request of an amended
or supplemented Prospectus which will correct such statement or
omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Representatives and counsel for the
Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to
the Representatives an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(g) For a period of five years following the Effective Date,
to furnish to the Representatives copies of all materials furnished by
the Company to its shareholders and all public reports and all reports
and financial statements furnished by the Company to the principal
national securities exchange upon which the Common Stock may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock;
(i) For a period of 180 days from the date of the Prospectus,
not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (other
than the Stock and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding
options, warrants or rights), or sell or grant options, rights
14
or warrants with respect to any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than the grant
of options pursuant to option plans existing on the date hereof), or
(2) enter into any swap or other derivatives transaction that transfers
to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case without the prior written consent of Xxxxxx Brothers Inc.;
and to cause each officer, director and existing shareholder of the
Company to furnish to the Representatives, prior to the First Delivery
Date, a letter or letters, in form and substance satisfactory to
counsel for the Underwriters, pursuant to which each such person shall
agree not to, directly or indirectly, (1) offer for sale, sell, pledge
or otherwise dispose of (or enter into any transaction or device which
is designed to, or could be expected to, result in the disposition by
any person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or (2)
enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case
for a period of 180 days from the date of the Prospectus, without the
prior written consent of Xxxxxx Brothers Inc.;
(j) Prior to the Effective Date, to apply for the listing of
the Stock on the Nasdaq National Market System and to use its best
efforts to complete that listing, subject only to official notice of
issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus; and
(l) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission thereunder.
7. Further Agreements of the Selling Shareholders. Each Selling
Shareholder agrees:
(a) For a period of 180 days from the date of the Prospectus,
not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (other
than the Stock) or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the
economic benefits or risks of ownership of
15
such shares of Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or
other securities, in cash or otherwise, in each case without the prior
written consent of Xxxxxx Brothers Inc.
(b) That the Stock to be sold by the Selling Shareholder
hereunder, which is represented by the certificates held in custody for
the Selling Shareholder, is subject to the interest of the Underwriters
and the other Selling Shareholders thereunder, that the arrangements
made by the Selling Shareholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Shareholder
hereunder shall not be terminated by any act of the Selling
Shareholder, by operation of law, by the death or incapacity of any
individual Selling Shareholder or, in the case of a trust, by the death
or incapacity of any executor or trustee or the termination of such
trust, or the occurrence of any other event.
(c) To deliver to the Representatives prior to the First
Delivery Date a properly completed and executed United States Treasury
Department Form W-8 (if the Selling Shareholder is a non-United States
person or Form W-9 (if the Selling Shareholder is a United States
person.)
8. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and distributing this Agreement and
any other related documents in connection with the offering, purchase, sale and
delivery of the Stock; (e) the costs of delivering and distributing the Custody
Agreements and the Powers of Attorney; (f) the filing fees incident to securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of sale of the Stock; (g) any applicable listing or other fees; (h)
the fees and expenses of qualifying the Stock under the securities laws of the
several jurisdictions as provided in Section 6 (h) and of preparing, printing
and distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (i) all fees and expenses of an independent
underwriter; (j) all costs and expenses of the Underwriters, including the fees
and disbursements of counsel for the Underwriters, incident to the offer and
sale of shares of the Stock by the Underwriters to employees and persons having
business relationships with the Company and its subsidiaries, as described in
Section 4; and (k) all other costs and expenses incident to the performance of
the obligations of the Company and the Selling Shareholders under this
Agreement; provided that, except as provided in this Section 8 and in Section
14, the Underwriters shall pay their own costs and expenses, including the costs
and expenses of their counsel, any transfer taxes on the Stock which they may
sell and the expenses of advertising any offering of the Stock made by the
Underwriters.
16
9. Conditions of Underwriters' Obligations. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company and the
Selling Shareholders contained herein, to the performance by the Company and the
Selling Shareholders of their respective obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of
Xxxxxxxx & Xxxxx, counsel for the Underwriters, is material or omits to
state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Custody
Agreements, the Powers of Attorney, the Stock, the Registration
Statement and the Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company and the Selling Shareholders shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Xxxxxx & Xxxxxxx LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) The Company and each of its subsidiaries have
been duly incorporated and are validly existing as
corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified
to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their
respective businesses requires such qualification and have all
power and authority necessary to own or hold their respective
properties and conduct the businesses in which they are
engaged;
17
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the shares of Stock
being delivered on such Delivery Date) have been duly and
validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof
contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly
and validly authorized and issued and are fully paid,
non-assessable and (except for directors' qualifying shares
and except as set forth in the Prospectus) are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(iii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(iv) The Company and each of its subsidiaries have
good and marketable title in fee simple to all real property
owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the use
made and proposed to be made of such property by the Company
and its subsidiaries; and all 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;
(v) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any
of its subsidiaries, might have a material adverse effect on
the consolidated financial position, shareholders' equity,
results of operations, business or prospects of the Company
and its subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(vi) The Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the
18
Registration Statement has been issued and, to the knowledge
of such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vii) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to such Delivery Date (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act
and the Rules and Regulations;
(viii) To the best of such counsel's knowledge, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right (other
than rights which have been waived or satisfied) to require
the Company to include securities in the securities registered
pursuant to the Registration Statement. To the best of such
counsel's knowledge, there are no contracts or other documents
which are required to be described in the Prospectus or filed
as exhibits to the Registration Statement by the Securities
Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement
or incorporated therein by reference as permitted by the Rules
and Regulations;
(ix) This Agreement has been duly authorized,
executed and delivered by the Company;
(x) The issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject,
nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets; and,
except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the
19
Stock by the Underwriters, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated hereby; (xi)
The statements set forth in the Prospectus under the captions
"Description of Capital Stock" and "Shares Eligible for Future
Sale" are accurate and complete in all material respects;
(xii) Neither the Company nor any subsidiary is and,
after giving effect to the offering and sale of the stock,
neither the Company nor any subsidiary will be an "investment
company" within the meaning of such term under the Investment
Company Act and the Rules and Regulations of the Commission
thereunder; and
(xiii) To the best of such counsel's knowledge, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right (other
than rights which have been waived or satisfied) to require
the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company
to include such securities in the securities registered
pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United States
of America and the laws of the States of Minnesota and New York; (ii)
rely (to the extent such counsel deems proper and specifies in its
opinion), as to matters of fact, upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall state
that it believes that both the Underwriters and it are justified in
relying upon such certificates. Such counsel shall also have furnished
to the Representatives a written statement, addressed to the
Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Representatives, to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis, has
acted as counsel to the Company in connection with previous financing
transactions and has acted as counsel to the Company in connection with
the preparation of the Registration Statement, and (y) based on the
foregoing, no facts have come to the attention of such counsel which
lead it to believe that the Registration Statement, as of the Effective
Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that the
Prospectus contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
20
circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect
that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except for the statements made
in the Prospectus under the captions "Description of Capital Stock,"
and "Shares Eligible for Future Sale," insofar as such statements
relate to the Stock and concern legal matters.
(e) The counsel for the Selling Shareholders shall have
furnished to the Representatives its written opinion, as counsel to the
Selling Shareholders for whom it is acting as counsel, addressed to the
Underwriters and dated the First Delivery Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(i) Each Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement; the execution, delivery
and performance of this Agreement, the Power of Attorney and
the Custody Agreement by each Selling Shareholder and the
consummation by each Selling Shareholder of the transactions
contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which any
Selling Shareholder is a party or by which any Selling
Shareholder is bound or to which any of the property or assets
of any Selling Shareholder is subject, nor will such actions
result in any violation of the provisions of the charter or
by-laws of any Selling Shareholder (if applicable), the
articles of partnership of any Selling Shareholder (if
applicable), the deed of trust of any Selling Shareholder (if
applicable) or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over any Selling Shareholder or the
property or assets of any Selling Shareholder; and, except for
the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or
body is required for the execution, delivery and performance
of this Agreement, the Power of Attorney or the Custody
Agreement by any Selling Shareholder and the consummation by
any Selling Shareholder of the transactions contemplated
hereby and thereby;
(ii) This Agreement has been duly authorized (if
applicable), executed and delivered by or on behalf of each
Selling Shareholder;
21
(iii) A Power-of-Attorney and a Custody Agreement
have been duly authorized (if applicable), executed and
delivered by each Selling Shareholder and constitute valid and
binding agreements of each Selling Shareholder, enforceable in
accordance with their respective terms;
(iv) Immediately prior to the each Delivery Date,
each Selling Shareholder had good and valid title to the
shares of Stock to be sold by such Selling Shareholder under
this Agreement, free and clear of all liens, encumbrances,
equities or claims, and full right, power and authority to
sell, assign, transfer and deliver such shares to be sold by
such Selling Shareholder hereunder; and
(v) Good and valid title to the shares of Stock to be
sold by each Selling Shareholder under this Agreement, free
and clear of all liens, encumbrances, equities or claims, has
been transferred to each of the several Underwriters.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United States
of America and the laws of the State of New York and (ii) in rendering
the opinion in Section 9(e)(iv) above, rely upon a certificate of each
Selling Shareholder in respect of matters of fact as to ownership of
and liens, encumbrances, equities or claims on the shares of Stock sold
by such Selling Shareholder, provided that such counsel shall furnish
copies thereof to the Representatives and state that it believes that
both the Underwriters and it are justified in relying upon such
certificate. Such counsel shall also have furnished to the
Representatives a written statement, addressed to the Underwriters and
dated each Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel [has acted as
counsel to each Selling Shareholder on a regular basis and] has acted
as counsel to each Selling Shareholder in connection with the
preparation of the Registration Statement, and (y) based on the
foregoing, no facts have come to the attention of such counsel which
lead it to believe that the Registration Statement, as of the Effective
Date, contained any untrue statement of a material fact relating to any
Selling Shareholder or omitted to state such a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus contains any untrue
statement of a material fact relating to any Selling Shareholder or
omits to state such a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect
that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus.
22
(f) The Representatives shall have received from Xxxxxxxx &
Xxxxx, special counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the
Representatives shall have received from each of E&Y and M&P a letter,
in form and substance satisfactory to the Representatives, addressed to
the Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as
of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(h) With respect to the letter of E&Y and M&P referred to in
paragraph (g) and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company
shall have furnished to the Representatives a letter (the "bring-down
letter") of such accountants, addressed to the Underwriters and dated
such Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board,
its Chief Executive Officer and its Chief Financial Officer stating
that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such
Delivery Date; the
23
Company has complied with all its agreements contained herein;
and the conditions set forth in Sections 9(a) and 9(k) have
been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of
the Effective Date, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or
amendment to the Registration Statement or the Prospectus.
(j) Each Selling Shareholder (or the Custodian or one or more
attorneys-in-fact on behalf of the Selling Shareholders) shall have
furnished to the Representatives on each Delivery Date a certificate,
dated such Delivery Date, signed by, or on behalf of, the Selling
Shareholder (or the Custodian or one or more attorneys-in-fact) stating
that the representations, warranties and agreements of the Selling
Shareholder contained herein are true and correct as of the Delivery
Date and that the Selling Shareholder has complied with all agreements
contained herein to be performed by the Selling Shareholder at or prior
to such Delivery Date.
(k) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority
having
24
jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority in interest
of the several Underwriters, impracticable or inadvisable to proceed
with the public offering or delivery of the Stock being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(m) The National Market System shall have approved the Stock
for listing, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter including any Underwriter acting as a qualified independent
underwriter pursuant to the rules of the National Association of
Securities Dealers, Inc., their officers and employees and each person,
if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the Prospectus or
in any amendment or supplement thereto, or (B) in any materials or
information provided to investors by, or with the approval of, the
Company in connection with the marketing of the offering of the Stock
("Marketing Materials"), including any roadshow or investor
presentations made to investors by the Company (whether in person or
electronically); (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto, or in any Marketing
Materials, any material fact required to be stated therein or necessary
to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter
in connection with, or relating in any manner to, the Stock or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
25
of or based upon matters covered by clause (i) or (ii) above (provided
that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter
and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred;
(b) The Selling Shareholders, jointly and severally, shall
indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within
the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that
Underwriter, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall
reimburse each Underwriter, its officers and employees and each such
controlling person for any legal or other expenses reasonably incurred
by that Underwriter, its officers and employees or controlling person
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Selling Shareholders
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or in any such amendment or supplement in reliance
upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section
10(f). The foregoing indemnity agreement is in addition to any
liability which the Selling Shareholders may otherwise have to any
Underwriter or any officer, employee or controlling person of that
Underwriter.
26
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees,
each of its directors (including any person who, with his or her
consent, is named in the Registration Statement as about to become a
director of the Company), and each person, if any, who controls the
Company within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (B) in any Blue Sky Application or
(ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company and
any such director, officer or controlling person for any legal or other
expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 10, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 10 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 10. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the
27
indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the Representatives shall have the right to employ
counsel to represent jointly the Representatives and those other
Underwriters and their respective officers, employees and controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against
the Company or any Selling Shareholder under this Section 10 if, in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees and
controlling persons to be jointly represented by separate counsel, and
in that event the fees and expenses of such separate counsel shall be
paid by the Company or the Selling Shareholders. No indemnifying party
shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with the consent of the indemnifying party or if there be a
final judgment of the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from
and against any loss or liability by reason of such settlement or
judgment.
(e) If the indemnification provided for in this Section 10
shall for any reason be unavailable to or insufficient to hold harmless
an indemnified party under Section 10(a), 10(b) or 10(c) in respect of
any loss, claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other from the offering of the Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other with respect to the statements
or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other
with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of
28
the Stock purchased under this Agreement (before deducting expenses)
received by the Company and the Selling Shareholders, on the one hand,
and the total underwriting discounts received by the Underwriters with
respect to the shares of the Stock purchased under this Agreement, on
the other hand, bear to the total gross proceeds from the offering of
the shares of the Stock under this Agreement, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company,
the Selling Shareholders or the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Shareholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability,
or action in respect thereof, referred to above in this Section shall
be deemed to include, for purposes of this Section 10(e), any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(e), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Stock underwritten by it and
distributed to the public was offered to the public exceeds the amount
of any damages which such Underwriter has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 10(e) are several
in proportion to their respective underwriting obligations and not
joint.
(f) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of
the Stock by the Underwriters set forth on the cover page of, the
legend concerning over-allotments on the inside front cover page of and
the concession and reallowance figures appearing under the caption
"Underwriting" in, the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the
Company by or on behalf of the Underwriters specifically for inclusion
in the Registration Statement and the Prospectus.
29
11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Stock to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Representatives
do not elect to purchase the shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company and the Selling Shareholders to
sell, the Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Shareholders, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 13. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to
this Section 11, purchases Firm Stock which a defaulting Underwriter agreed but
failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Shareholders for damages
caused by its default. If other underwriters are obligated or agree to purchase
the Stock of a defaulting or withdrawing Underwriter, either the Representatives
or the Company may postpone the Delivery Date for up to seven full business days
in order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 9(k) or 9(l), shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
30
13. Reimbursement of Underwriters' Expenses. If (a) the Company or any
Selling Shareholder shall fail to tender the Stock for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of the
Company or the Selling Shareholder(s) to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Shareholder(s)
is not fulfilled, the Company and the Selling Shareholder(s) will reimburse the
U.S. Underwriters for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Underwriters in connection with this
Agreement and the proposed purchase of the Stock, and upon demand the Company
and the Selling Shareholder(s) shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 11 by
reason of the default of one or more Underwriters, neither the Company nor any
Selling Shareholder shall be obligated to reimburse any defaulting Underwriter
on account of those expenses.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Xxxxxx Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 000-000-0000), with a copy, in the case of any notice
pursuant to Section 10(d), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 0 Xxxxx Xxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000;
(b) if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: [_________] (Fax: _________);
(c) if to any Selling Shareholders, shall be delivered or sent
by mail, telex or facsimile transmission to such Selling Shareholder at
the address set forth on Schedule 2 hereto;
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Selling Shareholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Xxxxxx Brothers Inc. on behalf of the Representatives and the Company and the
Underwriters shall be entitled to act and rely upon any request, consent, notice
or agreement given or made on behalf of the Selling Shareholders by the
Custodian.
15. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Selling Shareholders and their respective personal representatives and
successors. This Agreement and the terms and provisions
31
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company and the
Selling Shareholders contained in this Agreement shall also be deemed to be for
the benefit of the person or persons, if any, who control any Underwriter within
the meaning of Section 15 of the Securities Act and (B) the indemnity agreement
of the Underwriters contained in Section 10(c) of this Agreement shall be deemed
to be for the benefit of directors of the Company, officers of the Company who
have signed the Registration Statement and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 15, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations, warranties
and agreements of the Company, the Selling Shareholders and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
17. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
*****
32
If the foregoing correctly sets forth the agreement among the Company,
the Selling Shareholders and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
PEMSTAR INC.
By
------------------------------------
The Selling Shareholders named in
Schedule 2 to this Agreement
By
------------------------------------
Attorney-in-Fact
Accepted:
XXXXXX BROTHERS INC.
FLEETBOSTON XXXXXXXXX XXXXXXXX INC.
XXXXX SECURITIES INC.
CIBC WORLD MARKETS CORP.
FIDELITY CAPITAL MARKETS,
A DIVISION OF NATIONAL FINANCIAL
SERVICES CORPORATION
For themselves and as Representatives
of the several Underwriters named in
Schedule 1 hereto
By XXXXXX BROTHERS INC.
By
--------------------------------
Authorized Representative
33
SCHEDULE 1
Number of
Underwriters Shares
------------ ---------
Xxxxxx Brothers Inc.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
CIBC World Markets Corp.
Fidelity Capital Markets,
A Division of National Financial
Services Corporation
Total
----------
SCHEDULE 2
Number of Shares
Name and address of Selling Shareholders of Option Stock
---------------------------------------- ----------------
Xxxxxxx X. Xxxxx................................. 57,692
Xxxx X. Xxxxxxxx................................. 57,692
Xxxxxx X. Xxxxxx................................. 57,692
Xxxxxx X. Xxxxxx................................. 57,692
Xxxx X. Xxxxxxx.................................. 57,692
Xxxxx X. Xxxxxx.................................. 57,692
Xxxxxxx X. Xxxxxx................................ 33,848
Total............................................
========
Exhibit A
LOCK-UP LETTER AGREEMENT
XXXXXX BROTHERS INC.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
CIBC World Markets Corp.
Fidelity Capital Markets,
A Division of National Financial
Services Corporation
As Representatives of the
several underwriters
c/x XXXXXX BROTHERS INC.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
Pemstar Inc. (the "Company") and that the Underwriters propose to reoffer the
Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., the undersigned will not, directly or indirectly, (1) offer for
sale, sell, pledge, or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Stock (other than the Shares) owned
by the undersigned on the date of execution of this Lock-Up Letter Agreement or
on the date of the completion of the Offering, or (2) enter into any swap or
other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 180 days after
the date of the final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company, the Underwriters and the
shareholders selling shares in the Offering will proceed with the Offering in
reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
[Name of Shareholder]
By:
----------------------------------
Name:
Title:
Dated: _______________
