Exhibit 1
2,700,000 Shares
Steel Technologies Inc.
Common Stock
UNDERWRITING AGREEMENT
, 2004
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CIBC World Markets Corp.
as Representative of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Steel Technologies Inc., a Kentucky corporation (the
"Company") and the persons listed on Schedule II hereto (the "Selling
Shareholders"), propose, subject to the terms and conditions contained herein,
to sell to you and the other underwriters named on Schedule I to this Agreement
(the "Underwriters"), for whom you are acting as Representative (the
"Representative"), an aggregate of 2,700,000 shares (the "Firm Shares") of the
Company's common stock, no par value (the "Common Stock"). Of the 2,700,000 Firm
Shares, 2,500,000 are to be issued and sold by the Company and 200,000 are to be
sold by the Selling Shareholders. The respective amounts of the Firm Shares to
be purchased by each of the several Underwriters are set forth opposite their
names on Schedule I hereto. In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 405,000 shares (the
"Option Shares") of Common Stock from the Company for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The Firm Shares
and the Option Shares are collectively called the "Shares."
The Company has prepared and filed in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a Registration Statement
(as hereinafter defined) on Form S-3 (No. 333-111999), including a preliminary
prospectus relating to the Shares, and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration Statement
(including all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to you. The
term "Preliminary Prospectus" means any preliminary prospectus included at any
time as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules. The term "Registration Statement"
as used in this Agreement means the initial registration
statement (including all exhibits, financial schedules and all documents and
information deemed to be a part of the Registration Statement through
incorporation by reference or otherwise), as amended at the time and on the date
it becomes effective (the "Effective Date"), including the information (if any)
contained in the form of final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and deemed to be part thereof at the time of
effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules. Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act, as of the date of such Preliminary Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and incorporated by reference
in such Preliminary Prospectus or the Prospectus, as the case may be.
The Company and the Selling Shareholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Prospectus, as soon after the Effective Date and the date of
this Agreement as the Representative deems advisable. The Company and the
Selling Shareholders hereby confirm that the Underwriters and dealers have been
authorized to distribute or cause to be distributed each Preliminary Prospectus
and are authorized to distribute the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to the
Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares.
On the basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____
per share (the "Initial Price"), the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of Firm
Shares to be Purchased" from the Company on Schedule I to this
Agreement, subject to adjustment in accordance with Section 9 hereof.
The Selling Shareholders agree to sell to each of the Underwriters, and
each of the Underwriters agree, severally and not jointly, to purchase
from the Selling Shareholders, at the Initial Price, the number of Firm
Shares set forth opposite the name of such Underwriter under the column
"Number of Firm Shares to be Sold" by each Selling Shareholders on
Schedule I to this Agreement, subject to adjustment in accordance with
Section 9 hereof.
(b) The Company hereby grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of the
Option Shares at the Initial Price.
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The number of Option Shares to be purchased by each Underwriter shall
be the same percentage (adjusted by the Representative to eliminate
fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares. Such
option may be exercised only to cover over-allotments in the sales of
the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below),
and from time to time thereafter within 30 days after the date of this
Agreement, in each case upon written, facsimile or telegraphic notice,
or verbal or telephonic notice confirmed by written, facsimile or
telegraphic notice, by the Representative to the Company no later than
12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date or at least two business days before the Option
Shares Closing Date (as defined below), as the case may be, setting
forth the number of Option Shares to be purchased and the time and date
(if other than the Firm Shares Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of CIBC
World Markets Corp., 000 0xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement or at such time on such other
date, not later than ten (10) business days after the date of this
Agreement, as shall be agreed upon by the Company and the
Representative (such time and date of delivery and payment are called
the "Firm Shares Closing Date"). In addition, in the event that any or
all of the Option Shares are purchased by the Underwriters, payment of
the purchase price, and delivery of the certificates, for such Option
Shares shall be made at the above-mentioned offices, or at such other
place as shall be agreed upon by the Representative and the Company, on
each date of delivery as specified in the notice from the
Representative to the Company (such time and date of delivery and
payment are called the "Option Shares Closing Date"). The Firm Shares
Closing Date and any Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Company and the Selling
Shareholders by wire transfer of immediately available funds or by
certified or official bank check or checks payable in New York Clearing
House (same day) funds drawn to the order of the Company and to the
Selling Shareholders for the shares purchased from the Selling
Shareholders, against delivery of the respective certificates to the
Representative for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Representative
shall request at least two full business days before the Firm Shares
Closing Date or, in the case of Option Shares, on the day of notice of
exercise of the option as described in Section 1(b) and shall be
delivered by or on behalf of the Company to the Representative through
the facilities of the Depository Trust Company ("DTC") for the account
of such Underwriter. The Company will cause the certificates
representing the Shares to be made available for checking and
packaging, at such place as is designated by the Representative, on the
full business day before the
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Firm Shares Closing Date (or the Option Shares Closing Date in the case
of the Option Shares).
2. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter as of the date hereof, as of
the Firm Shares Closing Date and as of each Option Shares Closing Date (if any),
as follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any
post-effective amendment to the Registration Statement becomes
effective, the date any supplement or amendment to the Prospectus is
filed with the Commission and each Closing Date, the Registration
Statement and the Prospectus (and any amendment thereof or supplement
thereto) will comply, in all material respects, with the requirements
of the Securities Act and the Rules and the Exchange Act and the rules
and regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the Effective Date and the
other dates referred to above neither the Registration Statement nor
the Prospectus, nor any amendment thereof or supplement thereto, will
contain any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto or
pursuant to Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If
applicable, each Preliminary Prospectus and the Prospectus delivered to
the Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the Prospectus
included in the Registration Statement at the time it became effective.
Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(a) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representative on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus.
With respect to the preceding sentence, the Company acknowledges that
the only information furnished in writing by the Representative on
behalf of the several Underwriters for use in the Registration
Statement or the Prospectus is the statements contained in the [ ] and
[ ] paragraphs under the caption "Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued by the Commission
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and no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules has been or will be made in the manner and within the time period
required by such Rule 424(b).
(c) The documents incorporated by reference in the
Registration Statement and the Prospectus, at the time they became
effective or were filed with the Commission, as the case may be,
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an 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, in the light of the circumstances under
which they were made, not misleading, and any further documents so
filed and incorporated by reference in the Registration Statement and
the Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(d) The financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference in
the Registration Statement and Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, shareholders' equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified; and such financial statements and related schedules
and notes thereto, and the unaudited financial information filed with
the Commission as part of the Registration Statement, have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved. The summary and
selected financial data included in the Prospectus present fairly the
information shown therein as at the respective dates and for the
respective periods specified and have been presented on a basis
consistent with the consolidated financial statements set forth in the
Prospectus and other financial information. The pro forma financial
statements and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have
been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(e) PricewaterhouseCoopers LLP, whose reports are filed with
the Commission as a part of the Registration Statement, are and, during
the periods covered by their reports, were independent public
accountants as required by the Securities Act and the Rules.
(f) The Company and each of its subsidiaries, including each
entity (corporation, partnership, joint venture, association or other
business organization) controlled directly
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or indirectly by the Company, is duly organized, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation or organization in the United States and otherwise. The
Company and each of its subsidiaries is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction
in the United States and otherwise in which the nature of the business
conducted by it or location of the assets or properties owned, leased
or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the
aggregate would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and
its subsidiaries considered as a whole (a "Material Adverse Effect");
and to the Company's knowledge, no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(g) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and
from all governmental or regulatory bodies or any other person or
entity in the United States and otherwise (collectively, the
"Permits"), to own, lease and license its assets and properties and
conduct its business, all of which are valid and in full force and
effect, except where the lack of such Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The Company and
each of its subsidiaries has fulfilled and performed in all material
respects all of its material obligations with respect to such Permits
and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other
material impairment of the rights of the Company thereunder. Except as
may be required under the Securities Act and state and foreign Blue Sky
laws, no other Permits are required to enter into, deliver and perform
this Agreement and to issue and sell the Shares.
(h) The Company and each of its subsidiaries owns or possesses
legally enforceable rights to use all patent, patent rights,
inventions, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how and other
similar rights and proprietary knowledge (collectively, "Intangibles")
necessary for the conduct of its business. Neither the Company nor any
of its subsidiaries has received any notice of, or is not aware of, any
infringement of or conflict with asserted rights of others with respect
to any Intangibles.
(i) The Company and each of its subsidiaries has good and
marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, in each case free
and clear of all liens, encumbrances, claims, security interests and
defects, except such as do not materially affect the value of such
property and do not materially interfere with the use made or proposed
to be made of such property by the Company and its subsidiaries. All
property held under lease by the Company and its subsidiaries is held
by them under valid, existing and enforceable leases, free and clear of
all liens, encumbrances, claims, security interests and defects, except
such as would not have a Material Adverse Effect; (ii) neither the
Company nor any of its subsidiaries has sustained any loss or
interference with its assets, businesses or properties (whether owned
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or leased) from fire, explosion, earthquake, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree
which would have a Material Adverse Effect; and (iii) since the date of
the latest balance sheet included or incorporated by reference in the
Registration Statement and the Prospectus, neither the Company nor its
subsidiaries has (A) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(B) entered into any transaction not in the ordinary course of business
or (C) except for regular semi-annual cash dividends on the Common
Stock in amounts per share that are consistent with past practice,
declared or paid any dividend or made any distribution on any shares of
its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.
(j) There is no document, contract or other agreement required
to be described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required by the Securities Act or Rules. Each
description of a contract, document or other agreement in the
Registration Statement and the Prospectus accurately reflects in all
respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in the
Registration Statement and Prospectus or listed in the Exhibits to the
Registration Statement or incorporated by reference is in full force
and effect and is valid and enforceable by and against the Company or
its subsidiary, as the case may be, in accordance with its terms.
Neither the Company nor any of its subsidiaries, if a subsidiary is a
party, nor to the Company's knowledge, any other party is in default in
the observance or performance of any term or obligation to be performed
by it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any
such case which default or event, individually or in the aggregate,
would have a Material Adverse Effect. No default exists, and no event
has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiary, if a
subsidiary is a party thereto, of any other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
Company or its properties or business or a subsidiary or its properties
or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
(k) The statistical and market-related data included in the
Registration Statement are based on or derived from sources that the
Company believes to be reliable and accurate.
(l) Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its charter or by-laws or other
operative documents or of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of
such violation, individually or in the aggregate, would have a Material
Adverse Effect.
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(m) This Agreement has been duly authorized, executed and
delivered by the Company.
(n) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or provision of,
or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or
waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or
its subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which either the Company or
its subsidiaries or any of their properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or any of its subsidiaries or
violate any provision of the charter or by-laws or of the Company or
the operative documents of any of its subsidiaries, except for such
consents or waivers which have already been obtained and are in full
force and effect.
(o) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable. There are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of
its subsidiaries or any such rights pursuant to its Certificate of
Incorporation or by-laws or any agreement or instrument to or by which
the Company or any of its subsidiaries is a party or bound. The Shares,
when issued and sold pursuant to this Agreement, will be duly and
validly issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any of its subsidiaries or any security
convertible into, or exercisable or exchangeable for, such stock. The
Common Stock and the Shares conform in all material respects to all
statements in relation thereto contained in the Registration Statement
and the Prospectus. All outstanding shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly
issued, and are fully paid and nonassessable and are owned directly by
the Company or by another wholly-owned subsidiary of the Company free
and clear of any security interests, liens, encumbrances, equities or
claims, other than those described in the Prospectus.
(p) No holder of any security of the Company has any right,
which has not been waived, to have any security owned by such holder
included in the Registration Statement or to demand registration of any
security owned by such holder for a period of 90 days after the date of
this Agreement. Each director and executive officer of the Company and
each Selling Shareholder has delivered to the Representative his
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enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit A hereto ("Lock-Up Agreement").
(q) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
by the Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will
constitute a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(r) Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is
any such dispute threatened, which dispute would have a Material
Adverse Effect. The Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
contractors or customers which would have a Material Adverse Effect.
The Company is not aware of any threatened or pending litigation
between the Company or its subsidiaries and any of its executive
officers which, if adversely determined, could have a Material Adverse
Effect and has no reason to believe that such officers will not remain
in the employment of the Company.
(s) No transaction has occurred between or among the Company
and any of its officers or directors, shareholders or any affiliate or
affiliates of any such officer or director or shareholder that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
(t) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock or any security of the Company to
facilitate the sale or resale of any of the Shares.
(u) The Company and each of its subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to be
filed through the date hereof, which returns are true and correct in
all material respects or has received timely extensions thereof, and
has paid all taxes shown on such returns and all assessments received
by it to the extent that the same are material and have become due.
There are no tax audits or investigations pending, which if adversely
determined would have a Material Adverse Effect; nor are there any
material proposed additional tax assessments against the Company or any
of its subsidiaries.
(v) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market System.
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(w) The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock
under the Exchange Act or the quotation of the Common Stock on the
Nasdaq National Market, nor has the Company received any notification
that the Commission or the Nasdaq National Market is contemplating
terminating such registration or quotation.
(x) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each
of its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences; the chief executive officer and the chief financial
officer of the Company have made all certifications required by the
Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") and any related
rules and regulations promulgated by the Commission, and the statements
contained in any such certification are complete and correct; the
Company maintains "disclosure controls and procedures" (as defined in
Rule 13a-14(c) under the Exchange Act); the Company is otherwise in
compliance in all material respects with all applicable effective
provisions of the Xxxxxxxx-Xxxxx Act and is actively taking steps to
ensure that it will be in compliance with other applicable provisions
of the Xxxxxxxx-Xxxxx Act upon the effectiveness of such provisions.
(y) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the
transactions described in the Prospectus; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or the Company's or its subsidiaries' respective
businesses, assets, employees, officers and directors are in full force
and effect; the Company and each of its subsidiaries are in compliance
with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that is not materially greater than the current
cost. Neither the Company nor any of its subsidiaries has been denied
any insurance coverage which it has sought or for which it has applied.
(z) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed
by the Company (except such additional steps as may be required by the
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National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
(aa) There are no affiliations with any member firm of the
NASD among the Company's officers, directors or, to the best of the
knowledge of the Company, any five percent or greater shareholder of
the Company, except as set forth in the Registration Statement or
otherwise disclosed in writing to the Representative.
(bb) (i) Each of the Company and each of its subsidiaries is
in compliance in all material respects with all rules, laws and
regulation relating to the use, treatment, storage and disposal of
toxic substances and protection of health or the environment
("Environmental Law") which are applicable to its business; (ii)
neither the Company nor its subsidiaries has received any notice from
any governmental authority or third party of an asserted claim under
Environmental Laws; (iii) each of the Company and each of its
subsidiaries has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval; (iv) to the Company's knowledge, no facts
currently exist that will require the Company or any of its
subsidiaries to make future material capital expenditures to comply
with Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq.) or otherwise designated as a
contaminated site under applicable state or local law. Neither the
Company nor any of its subsidiaries has been named as a "potentially
responsible party" under the CERCLA 1980.
(cc) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which the Company identifies and evaluates associated costs
and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company
has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a Material Adverse Effect.
(dd) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof
as described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(ee) The Company or any other person associated with or acting
on behalf of the Company including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries, has not,
directly or indirectly, while acting on behalf of the Company or its
subsidiaries (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) made any
11
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(ff) The operations of the Company and its subsidiaries are
and have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency
(collectively, the "Money Laundering Laws") and no action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its subsidiaries
with respect to the Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.
(gg) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department ("OFAC"); and the
Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds
to any subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.
(hh) Except as described in the Prospectus or in the documents
incorporated by reference into 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
options plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(ii) The Company has fulfilled its obligations, if any, under
the minimum funding standards of Section 302 of the U.S. Employee
Retirement Income Security Act of 1974 ("ERISA") and the regulations
and published interpretations thereunder with respect to each "plan" as
defined in Section 3(3) of ERISA and such regulations and published
interpretations in which its employees are eligible to participate and
each such plan is in compliance in all material respects with the
presently applicable provisions of ERISA and such regulations and
published interpretations. No "Reportable Event" (as defined in 12
ERISA) has occurred with respect to any "Pension Plan" (as defined in
ERISA) for which the Company could have any liability.
(jj) Each of the Company, its directors and officers has not
distributed and will not distribute prior to the later of (i) the Firm
Shares Closing Date, or the Option Shares Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary
12
Prospectus, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Securities Act.
3. Representations and Warranties of the Selling
Shareholders. Each of the Selling Shareholders hereby represents and warrants to
each Underwriter as of the date hereof, as of the Firm Shares Closing Date as
follows:
(a) Each Selling Shareholder has caused certificates for the
number of Shares to be sold by such Selling Shareholder hereunder to be
delivered to _______________ (the "Custodian"), endorsed in blank or
with blank stock powers duly executed, with a signature appropriately
guaranteed, such certificates to be held in custody by the Custodian
for delivery, pursuant to the provisions of this Agreement and an
agreement dated ____________ among the Custodian and the Selling
Shareholder substantially in the form attached hereto as Exhibit B (the
"Custody Agreement").
(b) Each Selling Shareholder has granted an irrevocable power
of attorney substantially in the form attached hereto as Exhibit C (the
"Power of Attorney") to the person named therein, on behalf of each
such Selling Shareholder, to execute and deliver this Agreement and any
other document necessary or desirable in connection with the
transactions contemplated hereby and to deliver the shares to be sold
by each Selling Shareholder pursuant hereto.
(c) This Agreement, the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement have each been duly authorized,
executed and delivered by or on behalf of each Selling Shareholder and,
assuming due authorization, execution and delivery by the other parties
thereto, constitutes the valid and legally binding agreement of each
Selling Shareholder, enforceable against each such Selling Shareholder
in accordance with its terms.
(d) The execution and delivery by each Selling Shareholder of
this Agreement and the performance by each Selling Shareholder of its
obligations under this Agreement, including the sale and delivery of
the Shares to be sold by each such Selling Shareholder and the
consummation of the transactions contemplated herein and compliance by
each Selling Shareholder with its obligations hereunder, do not and
will not, whether with our without the giving of notice or the passage
of time or both, (i) violate or contravene any applicable law, statute,
regulation, or filing or any agreement or other instrument binding upon
any Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over any Selling
Shareholder, (ii) conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the shares to be sold by any Selling Shareholder or
any property or assets of any Selling Shareholder pursuant to the terms
of any agreement or instrument to which any Selling Shareholder is a
party or by which any Selling Shareholder may be bound or to which any
of the property or assets of any Selling Shareholder is subject or
(iii) require any consent, approval, authorization or order of or
registration or filing with any court or governmental agency or body
having jurisdiction over it, except such as may be required by the Blue
Sky laws of the various states in
13
connection with the offer and sale of the Shares which have been or
will be effected in accordance with this Agreement.
(e) Each Selling Shareholder has, and on the Firm Shares
Closing Date will have, valid and marketable title to the Shares to be
sold by such Selling Shareholder free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation,
any restriction on transfer, except as otherwise described in the
Registration Statement and Prospectus.
(f) Each Selling Shareholder has, and on the Firm Shares
Closing Date will have, full legal right, power and authority, and any
approval required by law, to sell, assign, transfer and deliver the
Shares to be sold by such Selling Shareholder in the manner provided by
this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by
each Selling Shareholder pursuant to this Agreement, assuming each
Underwriter has no notice of any adverse claim, the several
Underwriters will receive valid and marketable title to such Shares
free and clear of any lien, claim, mortgage, pledge, security interest
or other encumbrance.
(h) All information relating to each Selling Shareholder
furnished in writing by such Selling Shareholder expressly for use in
the Registration Statement and Prospectus is, and on each Closing Date
will be, true, correct, and complete, and does not, and on each Closing
Date will not, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information not
misleading.
(i) Each Selling Shareholder has reviewed the Registration
Statement and Prospectus and, although such Selling Shareholder has not
independently verified the accuracy or completeness of all the
information contained therein, nothing has come to the attention of
such Selling Shareholder that would lead such Selling Shareholder to
believe that (i) on the Effective Date, the Registration Statement
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein in order to make the
statements made therein not misleading and (ii) on the Effective Date
the Prospectus contained and, on each Closing Date contains, no untrue
statement of a material fact or omitted or omits to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, misleading.
(j) The sale of Shares by each Selling Shareholder pursuant to
this Agreement is not prompted by such Selling Shareholder's knowledge
of any material information concerning the Company or any of its
subsidiaries which is not set forth in the Prospectus.
(k) No Selling Shareholder has taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Shares.
14
(l) No Selling Shareholder has actual knowledge that any
representation or warranty of the Company set forth in Section 2 above
is untrue or inaccurate in any material respect.
(m) The representations and warranties of each Selling
Shareholder in the Custody Agreement are and on each Closing Date will
be, true and correct.
4. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representative and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Commission and the
Representative. If the Company has elected to rely upon Rule 430A, Rule
430A information previously omitted from the effective Registration
Statement pursuant to Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed
time period and the Company shall have provided evidence satisfactory
to the Underwriters of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed and
declared effective in accordance with the requirements of Rule 430A. If
the Company has elected to rely upon Rule 434, a term sheet shall have
been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period.
(c) The representations and warranties of the Company and the
Selling Shareholders contained in this Agreement and in the
certificates delivered pursuant to Section 4(d) shall be true and
correct when made and on and as of each Closing Date as if made on such
date. The Company and the Selling Shareholders shall have performed all
covenants and agreements and satisfied all the conditions contained in
this Agreement required to be performed or satisfied by them at or
before such Closing Date.
(d) The Representative shall have received on each Closing
Date a certificate, addressed to the Representative and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial officer or chief accounting officer of the Company to
the effect that: (i) the representations, warranties and agreements of
the Company in this Agreement were true and correct when made and are
true and correct as of such Closing Date; (ii) the Company has
performed all covenants and agreements and satisfied all conditions
contained herein; (iii) they have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the
Effective
15
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, in light of the circumstances under which they were
made, not misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or otherwise
required an amendment to the Registration Statement or the Prospectus;
and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and, to their knowledge, no proceedings for
that purpose have been instituted or are pending under the Securities
Act.
(e) On the date of the Prospectus prior to the execution of
this Agreement and also on the Closing Date, the Chief Financial
Officer or other senior financial officer of the Company shall have
furnished to the Representative a certificate in form and substance
satisfactory to the Representative as to the accuracy of certain
numbers contained in the Prospectus, which numbers shall be set forth
in a schedule attached to such certificate.
(f) The Representative shall have received on each Closing
Date a certificate, addressed to the Representative and dated such
Closing Date, of each Selling Stockholder, to the effect that: (i) the
representations, warranties and agreements of such Selling Shareholder
in this Agreement were true and correct when made and are true and
correct as of such Closing Date; (ii) such Selling Shareholder has
performed all covenants and agreements and satisfied all conditions
contained herein; and (iii) such Selling Shareholder has carefully
examined the Registration Statement and the Prospectus and, in the
opinion of such Selling Shareholder, (A) with respect to the
information relating to such Selling Shareholder, 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, in light of the circumstances under which they were
made, not misleading, and (B) since the Effective Date no event has
occurred with respect to such Selling Shareholder which should have
been set forth in a supplement or otherwise required an amendment to
the Registration Statement or the Prospectus.
(g) The Representative shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
PriceWaterhouseCoopers LLP addressed to the Representative and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representative
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) The Representative shall have received on each Closing
Date from Xxxxxx & Xxxxxxxx, PLLC, counsel for the Company, an opinion,
addressed to the Representative and dated such Closing Date, in form
and substance reasonably satisfactory to the Representative.
(i) The Representative shall have received on the Firm Shares
Closing Date from Xxxxxx & Xxxxxxxx, PLLC, counsel for the Selling
Shareholders, an opinion, addressed to
16
the Representative and dated such Closing Date, in form and substance
reasonably satisfactory to the Representative.
(j) The Representative shall have received on each Closing
Date from Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, counsel for the
Representative, an opinion, addressed to the Representative and dated
such Closing Date, in form and substance satisfactory to the
Representative.
(k) All proceedings taken in connection with the sale of the
Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representative,
and their counsel and the Underwriters shall have received from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP a favorable opinion, addressed
to the Representative and dated such Closing Date, with respect to the
Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representative may reasonably request, and the
Company shall have furnished to Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(l) The Representative shall have received copies of the
Lock-up Agreements executed by each entity or person listed on Schedule
III hereto.
(m) The Shares shall have been approved for quotation on the
Nasdaq National Market.
(n) The Company and each Selling Shareholder shall have
furnished or caused to be furnished to the Representative such further
certificates or documents as the Representative shall have reasonably
requested.
5. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to
cause the Registration Statement, if not effective at the time
of execution of this Agreement, and any amendments thereto, to
become effective as promptly as possible. The Company shall
prepare the Prospectus in a form approved by the
Representative and file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the
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 the Rules.
(ii) The Company shall promptly advise the
Representative in writing (A) when any post-effective
amendment to the Registration Statement shall have become
effective or any supplement to the Prospectus shall have been
filed, (B) of any request by the Commission for any amendment
of the Registration Statement or the Prospectus or for any
additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or
suspending the use of
17
any preliminary prospectus or the institution or threatening
of any proceeding for that purpose and (D) of the receipt by
the Company of any notification with respect to the suspension
of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus or any document incorporated by reference in the
Registration Statement unless the Company has furnished the
Representative a copy for its review prior to filing and shall
not file any such proposed amendment or supplement to which
the Representative reasonably object. The Company shall use
its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating
to the Shares is required to be delivered under the Securities
Act and the Rules, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii)
of this Section 5(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
effect such compliance.
(iv) The Company shall make generally available
to its security holders and to the Representative as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90 days
if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the
Company, covering such 12-month period, which shall satisfy
the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(v) The Company shall furnish to the
Representative and counsel for the Underwriters, without
charge, signed copies of the Registration Statement (including
all exhibits thereto and amendments thereof) and to each other
Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as
delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of
any preliminary prospectus and the Prospectus and any
amendments thereof and supplements thereto as the
Representative may reasonably request. If applicable, the
copies of the Registration Statement and Prospectus and each
amendment and supplement thereto furnished to the Underwriters
will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to
the extent permitted by Regulation S-T.
18
(vi) The Company shall cooperate with the
Representative and their counsel in endeavoring to qualify the
Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representative may
designate and shall maintain such qualifications in effect so
long as required for the distribution of the Shares; provided,
however, that the Company shall not be required in connection
therewith, as a condition thereof, to qualify as a foreign
corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as
doing business in any jurisdiction.
(vii) The Company, during the period when the
Prospectus is required to be delivered under the Securities
Act and the Rules or the Exchange Act, will file all reports
and other documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act within
the time periods required by the Exchange Act and the
regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC
World Markets Corp., for a period of 90 days after the date of
this Agreement, the Company and each of its individual
directors and executive officers shall not issue, sell or
register with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable
for equity securities of the Company), except for the issuance
of the Shares pursuant to the Registration Statement and the
issuance of shares pursuant to the Company's existing stock
option plan or bonus plan as described in the Registration
Statement and the Prospectus. In the event that during this
period, (A) any shares are issued pursuant to the Company's
existing stock option plan or bonus plan that are exercisable
during such 90 day period or (B) any registration is effected
on Form S-8 or on any successor form relating to shares that
are exercisable during such 90 period, the Company shall
obtain the written agreement of such grantee or purchaser or
holder of such registered securities that, for a period of 90
days after the date of this Agreement, such person will not,
without the prior written consent of CIBC World Markets Corp.,
offer for sale, sell, distribute, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, or
exercise any registration rights with respect to, any shares
of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common
Stock) owned by such person.
(ix) On or before completion of this offering,
the Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including
any required registration under the Exchange Act).
(x) Prior to the Closing Date, the Company will
issue no press release or other communications directly or
indirectly and hold no press conference with respect to the
Company, the condition, financial or otherwise, or the
earnings, business affairs or business prospects of any of
them, or the offering of the Shares without the prior written
consent of the Representative unless in the
19
judgment of the Company and its counsel, and after
notification to the Representative, such press release or
communication is required by law.
(xi) The Company will apply the net proceeds from
the offering of the Shares in the manner set forth under "Use
of Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representative, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of
the obligations of the Company under this Agreement including those
relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements
to the Registration Statement and the Prospectus and any document
incorporated by reference therein, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration
or qualification of the Shares for offer and sale under the securities
or Blue Sky laws of the various jurisdictions referred to in Section
5(a)(vi), including the reasonable fees and disbursements of counsel
for the Underwriters in connection with such registration and
qualification and the preparation, printing, distribution and shipment
of preliminary and supplementary Blue Sky memoranda; (iv) the
furnishing (including costs of shipping and mailing) to the
Representative and to the Underwriters of copies of each preliminary
prospectus, the Prospectus and all amendments or supplements to the
Prospectus, and of the several documents required by this Section to be
so furnished, as may be reasonably requested for use in connection with
the offering and sale of the Shares by the Underwriters or by dealers
to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriters in
connection with such review; (vi) inclusion of the Shares for quotation
on the Nasdaq National Market; and (vii) all transfer taxes, if any,
with respect to the sale and delivery of the Shares by the Company to
the Underwriters. Subject to the provisions of Section 8, the
Underwriters agree to pay, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the performance of the obligations of the
Underwriters under this Agreement not payable by the Company pursuant
to the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
(c) The Selling Shareholders, jointly and severally, will pay
all expenses incident to the performance of their respective
obligations under, and the consummation of the transactions
contemplated by, this Agreement, including (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale
of the Shares to the Underwriters, and their transfer between the
Underwriters pursuant to an agreement between such Underwriters, and
(ii) the fees and disbursements of their respective counsel and
accountants.
20
6. Indemnification.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which
they, or any of them, may become subject under the Securities Act, the
Exchange Act or other Federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are 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 any
amendment thereof or supplement thereto, or in any Blue Sky application
or other information or other documents executed by the Company filed
in any state or other jurisdiction to qualify any or all of the Shares
under the securities laws thereof (any such application, document or
information being hereinafter referred to as a "Blue Sky Application")
or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages or liabilities arising from the sale of the
Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus,
or such amendment or supplement thereto, or in any Blue Sky Application
in reliance upon and in conformity with information furnished in
writing to the Company by the Representative on behalf of any
Underwriter specifically for use therein. Notwithstanding the
foregoing, the liability of the Selling Shareholders pursuant to the
provisions of this Section 6(a) shall be limited to an amount equal to
the aggregate net proceeds received by such Selling Shareholders from
the sale of the Shares sold by the Selling Shareholders hereunder. This
indemnity agreement will be in addition to any liability which the
Company and Selling Shareholders may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, the Selling Shareholders and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each director of the Company, and each
officer of the Company who signs the Registration Statement, against
any losses, claims, damages or liabilities to which such party may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus,
the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in any preliminary prospectus, the Registration Statement or
the Prospectus or any
21
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Underwriter
through the Representative expressly for use therein; provided,
however, that the obligation of each Underwriter to indemnify the
Company (including any controlling person, director or officer thereof)
or the Selling Shareholders shall be limited to the net proceeds
received by the Company of the Selling Shareholders from such
Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of
all papers served. No indemnification provided for in Section 6(a) or
6(b) shall be available to any party who shall fail to give notice as
provided in this Section 6(c) if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the omission
so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to
any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or
other expenses, except as provided below and except for the reasonable
costs of investigation subsequently incurred by such indemnified party
in connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have been advised by counsel
that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying
party (in which case the indemnifying parties shall not have the right
to direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the
fees and expenses of counsel shall be at the expense of the
indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, and proceeding or claim effected
without its written consent, which consent shall not be unreasonably
withheld or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in Section 6(a) or 6(b) is due in accordance with its terms but for any
reason is unavailable to or insufficient to hold harmless an
indemnified party in respect to any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party
shall contribute to the
22
aggregate losses, liabilities, claims, damages and expenses (including
any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claims asserted, but after deducting any
contribution received by any person entitled hereunder to contribution
from any person who may be liable for contribution) incurred by such
indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand
from the offering of the Shares pursuant to this Agreement or, if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Selling Shareholders
on the one hand and the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 7, (i) no
Underwriter (except as may be provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of
the amount by which the total price at which the shares underwritten by
it and distributed to the public were offered to the public exceeds the
amount of damages which such underwriter has otherwise been required to
pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission; and (ii) no Selling Shareholders shall be
required to contribute any amount in excess of the aggregate net
proceeds of the sale of Shares received by the Selling Shareholders. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any,
who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company or any
Selling Shareholders within the meaning of the Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company or any Selling Shareholders, as
the case may be. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
Section 7, notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve
23
the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under
this Section 7. No party shall be liable for contribution with respect
to any action, suit, proceeding or claim settled without its written
consent. The Underwriter's obligations to contribute pursuant to this
Section 7 are several in proportion to their respective underwriting
commitments and not joint. The provisions of this Section 7 shall not
affect any agreement among the Company and the Selling Shareholders
with respect to contribution.
8. Termination.
(a) This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representative by
notifying the Company and the Selling Shareholders at any time at or
before a Closing Date in the absolute discretion of the Representative
if: (i) there has occurred any material adverse change in the
securities markets or any event, act or occurrence that has materially
disrupted, or in the opinion of the Representative, will in the future
materially disrupt, the securities markets or there shall be such a
material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of
the Representative, inadvisable or impracticable to market the Shares
or enforce contracts for the sale of the Shares; (ii) there has
occurred any outbreak or material escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in the judgment of the
Representative, inadvisable or impracticable to market the Shares or
enforce contracts for the sale of the Shares; (iii) trading in the
Shares or any securities of the Company has been suspended or
materially limited by the Commission or trading generally on the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. or the
Nasdaq National Market has been suspended or materially limited, or
minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been required,
by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc., or
any other governmental or regulatory authority; or (iv) a banking
moratorium has been declared by any state or Federal authority; or (v)
in the judgment of the Representative, there has been, since the time
of execution of this Agreement or since the respective dates as of
which information is given in the Prospectus, any material adverse
change in the assets, properties, condition, financial or otherwise, or
in the results of operations, business affairs or business prospects of
the Company and its subsidiaries considered as a whole, whether or not
arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Shareholders shall be
under any liability to any Underwriter, and no Underwriter shall be
under any liability to the Company or a Selling Shareholders, except
that (y) if this Agreement is terminated by the Representative or the
Underwriters because of any failure, refusal or inability on the part
of the Company or the Selling Shareholders to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including
the reasonable fees and disbursements of their counsel) incurred by
them in connection with the proposed purchase and sale of the Shares or
in contemplation of
24
performing their obligations hereunder and (z) no Underwriter who shall
have failed or refused to purchase the Shares agreed to be purchased by
it under this Agreement, without some reason sufficient hereunder to
justify cancellation or termination of its obligations under this
Agreement, shall be relieved of liability to the Company, the Selling
Shareholders or to the other Underwriters for damages occasioned by its
failure or refusal.
9. Substitution of Underwriters. If any Underwriter shall
default in its obligation to purchase on any Closing Date the Shares agreed to
be purchased hereunder on such Closing Date, the Representative shall have the
right, within 36 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase such Shares
on the terms contained herein. If, however, the Representative shall not have
completed such arrangements within such 36-hour period, then the Company shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to the Underwriters to purchase such
Shares on such terms. If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by the
Representative and the Company as provided above, the aggregate number of Shares
which remains unpurchased on such Closing Date does not exceed one-eleventh of
the aggregate number of all the Shares that all the Underwriters are obligated
to purchase on such date, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such date and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share (based on
the number of Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default. In any such case, either the
Representative or the Company and the Selling Shareholders shall have the right
to postpone the applicable Closing Date for a period of not more than seven days
in order to effect any necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or Prospectus
or any other documents), and the Company agrees to file promptly any amendments
to the Registration Statement or the Prospectus which in the opinion of the
Company and the Underwriters and their counsel may thereby be made necessary.
If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by the Representative
and the Company as provided above, the aggregate number of such Shares which
remains unpurchased exceeds 10% of the aggregate number of all the Shares to be
purchased at such date, then this Agreement, or, with respect to a Closing Date
which occurs after the First Closing Date, the obligations of the Underwriters
to purchase and of the Company or the Selling Shareholders, as the case may be,
to sell the Option Shares to be purchased and sold on such date, shall
terminate, without liability on the part of any non-defaulting Underwriter to
the Company or the Selling Shareholders, and without liability on the part of
the Company or the Selling Shareholders, except as provided in Sections 5(b), 6,
7 and 8. The provisions of this Section 9 shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section 9 with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.
25
10. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company, Selling
Shareholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or the Company or the
Selling Shareholders or any of their respective officers, directors or
controlling persons referred to in Sections 6 and 7 hereof, and shall survive
delivery of and payment for the Shares. In addition, the provisions of Sections
5(b), 6, 7 and 8 shall survive the termination or cancellation of this
Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Representative, c/o CIBC World Markets Corp., 000 0xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: ________, with a copy to
Xxxxx X. Xxxxxxxxxxx, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (b) if to the Company, to its agent for
service as such agent's address appears on the cover page of the Registration
Statement with a copy to C. Xxxxx Xxxxxxx, Jr., Xxxxxx & Xxxxxxxx, PLLC, 000
Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 and (c) if to the
Selling Shareholders to __________ with a copy to __________.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
26
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
Steel Technologies Inc.
By
----------------------------------------
Title:
Xxxxxx X. Xxx
By
----------------------------------------
Title:
Xxxxxxxx X. Xxx
By
----------------------------------------
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
-----------------------------------
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed hereto.
By CIBC WORLD MARKETS CORP.
By
------------------------------------
Title:
27
SCHEDULE I
Other Underwriters
Number of
Firm Shares to
Name be Purchased
---- ------------
CIBC World Markets Corp.
McDonald Investments Inc.
SunTrust Xxxxxxxx Xxxxxxxx
BB&T Capital Markets
-----------------------------------
-----------------
Total 2,700,000
Sch I - 1
SCHEDULE II
Number of
Firm Shares
Name of Selling Shareholders to be Sold
---------------------------- ----------
Xxxxxx X. Xxx 150,000
Xxxxxxxx X. Xxx 50,000
-------------------------------
---------------
Total 200,000
Sch II - 1
SCHEDULE III
Lock-up Signatories
Sch III - 1
Exhibit A
FORM OF LOCK-UP AGREEMENT
January 20, 2004
CIBC World Markets Corp.
As Representative of the Several Underwriters
c/o CIBC World Markets Corp.
CIBC World Markets
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Re: Public Offering of Common Stock of
Gentlemen:
The undersigned, a holder of common stock ("Common Stock") or
rights to acquire Common Stock, of Steel Technologies Inc. (the "Company")
understands that the Company intends to file a Registration Statement on Form
S-3 (the "Registration Statement") with the Securities and Exchange Commission
(the "Commission") on or about January 20, 2004 for the registration of
approximately 3,105,000 shares of Common Stock (including 405,000 shares subject
to an over-allotment option on the part of the Underwriters) (the "Offering").
The undersigned further understands that you are contemplating entering into an
Underwriting Agreement with the Company in connection with the Offering.
In order to induce the Company, you and the other Underwriters
to enter into the Underwriting Agreement and to proceed with the Offering, the
undersigned agrees, for the benefit of the Company, you and the other
Underwriters, that should the Offering be effected the undersigned will not,
without your prior written consent, directly or indirectly, make any offer,
sale, assignment, transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of any Common Stock beneficially owned (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by
the undersigned on the date hereof or hereafter acquired for a period of 90 days
subsequent to the date of the Underwriting Agreement, other than Common Stock to
be sold in the Offering or transferred as a gift or gifts (provided that any
donee thereof agrees in writing to be bound by the terms hereof).
The undersigned, whether or not participating in the Offering,
confirms that he, she or it understands that the Underwriters and the Company
will rely upon the representations set forth in this agreement in proceeding
with the Offering. This agreement shall be binding on the undersigned and his,
her or its respective successors, heirs, personal representatives and assigns.
The undersigned agrees and consents to the entry of stop transfer instructions
with the
A-1
Company's transfer agent against the transfer of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock held
by the undersigned except in compliance with this agreement.
Very truly yours,
Dated:
-----------------------------------
Signature
Printed Name and Title (if applicable)
A-2
Exhibit B
FORM OF CUSTODY AGREEMENT
for sale of shares of common stock,
no par value, of Steel Technologies Inc.
(the "Custodian")
---------------------------
[Address]
Attention: [ ]
Ladies and Gentlemen:
There are delivered to you herewith certificate(s)
representing shares of Common Stock, no par value ("Common Stock"), of Steel
Technologies Inc., a Kentucky corporation (the "Company") as set forth at the
end of this letter on the page entitled "CERTIFICATE(S) DEPOSITED." Each of the
certificates so delivered is accompanied by an executed assignment form duly
endorsed for transfer and is in negotiable form bearing the signature of the
undersigned [guaranteed by a commercial bank or trust company having an office
or a correspondent in New York City, New York or by a member firm of the New
York, American or Pacific Stock Exchange.] The certificate(s) are to be held by
you as Custodian for the account of the undersigned and are to be disposed of by
you in accordance with this Custody Agreement (this "Custody Agreement").
If the undersigned is (i) acting as trustee or in any
fiduciary or representative capacity, the undersigned has also delivered duly
certified copies of each trust agreement, will, letters testamentary or other
instrument pursuant to which the undersigned is authorized to act as an Selling
Shareholders (as defined herein); (ii) a corporation, the undersigned has also
delivered duly certified resolutions of its board of directors authorizing it to
enter into this Custody Agreement, the Underwriting Agreement (as defined
herein) and the Power of Attorney (as defined herein) and duly certified copies
of such corporation's by-laws, certificate of incorporation or other
organizational documents; or (iii) a partnership, the undersigned has also
delivered extracts of any applicable provisions of its partnership agreement
(and applicable provisions of the organizational documents or partnership
agreement(s) of the general partner(s) of such partnership) authorizing such
partnership to enter into this Custody Agreement, the Underwriting Agreement and
the Power of Attorney.
The undersigned agrees to deliver such additional
documentation as you, the Attorneys (as defined herein), the Company or the
Representative (as defined herein) or any of their respective counsel may
reasonably request to effectuate or confirm compliance with any of the
provisions hereof or of the Power of Attorney or the Underwriting Agreement, all
of the foregoing to be in form and substance satisfactory in all respects to the
party requesting such documentation.
Concurrently with the execution and delivery of this Custody
Agreement, the undersigned has executed a power of attorney (the "Power of
Attorney") irrevocably appointing
B-1
__________ and _______________, each with full power and authority to act alone
in any matter thereunder and with full power of substitution, the true and
lawful attorneys-in-fact of the undersigned (individually, an "Attorney" and
collectively, the "Attorneys"), with full power and authority in the name of,
for and on behalf of, the undersigned with respect to all matters arising in
connection with the sale of the Common Stock by the undersigned including, but
not limited to entering into and performing an underwriting agreement (the
"Underwriting Agreement") among the Company, certain shareholders of the Company
including the undersigned (the "Selling Shareholders") and CIBC World Markets
Corp. as representative (the "Representative") of the several underwriters to be
named in Schedule I to the Underwriting Agreement (the "Underwriters"). The
total number of shares of Common Stock to be sold by the undersigned to the
Underwriters and set forth opposite the name of the undersigned in Schedule II
to the Underwriting Agreement is hereinafter referred to as the "Shares."
You are authorized and directed to hold the certificate(s)
deposited with you hereunder in your custody and, subject to the instructions of
the Attorneys, (i) to take all necessary action to cause the Shares to be
transferred on the books of the Company into such names as the Representative,
on behalf of the several Underwriters, shall have instructed, including
surrendering the certificate(s) representing the Shares to the transfer agent
for the Common Stock for cancellation, in exchange for new certificate(s) for
shares of Common Stock registered in such names and in such denominations as the
Representative shall have instructed; (ii) to deliver such new certificate(s) to
the Representative, for the accounts of the several Underwriters, against
payment for such Shares at the purchase price per Share specified in the
Underwriting Agreement and to give receipt for such payment; (iii) to deposit
the same to your account as Custodian and draw upon such account to pay such
transfer taxes, if any, payable in connection with the transfer of the Shares to
the Underwriters ("Transfer Taxes") as you may be instructed to pay by the
Attorneys; (iv) to transmit to the undersigned in the manner set forth under
"Manner of Payment" below, within 24 hours of receiving instructions from the
Attorneys to do so, the excess, if any (the "Net Proceeds"), of the amount
received by you as payment for the Shares over the Transfer Taxes, if any. The
amount of such Net Proceeds is to be paid in the manner requested by the
undersigned at the end of this Custody Agreement or in such manner as you, in
accordance with the terms hereof, shall deem appropriate. Upon receipt of
instructions from the Attorneys, you shall also return to the undersigned, new
certificate(s) representing the excess, if any, of the number of shares of
Common Stock represented by the certificate(s) deposited with you hereunder over
the number of Shares sold by the undersigned to the Underwriters.
Under the terms of the Power of Attorney, the authority
conferred thereby is granted and conferred subject to and in consideration of
the interests of the Attorneys, the several Underwriters, the Company and the
other Selling Shareholders (as defined in the Underwriting Agreement) and is
irrevocable and not subject to withdrawal or termination by any act of the
undersigned or by operation of law, whether by the death or incapacity of the
undersigned (or either or any of the undersigned) or by the occurrence of any
other event or events (including, without limitation, the termination of any
trust or estate for which the undersigned is acting as fiduciary or fiduciaries,
the death or incapacity of one or more trustees, guardians, executors or
administrators under such trust or estate or the merger, consolidation,
dissolution or liquidation of any corporation or partnership) (any of the
foregoing being hereinafter referred to as an "Event"). Accordingly, the
certificate(s) deposited with you hereunder and this Custody
B-2
Agreement and your authority hereunder are subject to and in consideration of
the interests of the several Underwriters, the Company, the Attorneys and the
other Selling Shareholders, and this Custody Agreement and your authority
hereunder[,prior to __________] are irrevocable and are not subject to
withdrawal or termination by the occurrence of any Event. If an Event shall
occur after the execution hereof but before the delivery of the Shares to the
Underwriters, then certificate(s) representing such Shares will be delivered by
you to the Underwriters on behalf of the undersigned in accordance with the
terms and conditions of the Underwriting Agreement and this Custody Agreement
and any actions taken by you pursuant to this Custody Agreement shall be as
valid as if such Event had not occurred, regardless of whether or not you, the
Attorneys, the Underwriters or any one of them, shall have received notice of
such Event.
Notwithstanding any of the foregoing provisions, if the
Underwriting Agreement shall not have been executed and delivered prior
to___________, then, upon the written request of the undersigned to you
(accompanied by written notice of termination of the Power of Attorney addressed
to each of the Attorneys) on or after that date, you are to return to the
undersigned, all certificate(s), together with any stock powers, delivered
herewith.
Until payment of the purchase price for the Shares has been
made to you by or for the account of the several Underwriters, the undersigned
shall remain the owner of all shares of Common Stock represented by the
certificate(s) deposited with you hereunder and shall have the right to vote
such shares and all other securities, if any, represented by such certificate(s)
and to receive all dividends and distributions thereon, except the right to
retain custody and dispose of such shares, which is subject to the rights of the
Custodian under this Custody Agreement, the Attorneys under the Power of
Attorney and the Underwriters under the Underwriting Agreement. The Underwriters
shall not acquire the power or the right to direct the investment of the Shares
by virtue of this Custody Agreement until the consideration therefor is paid
pursuant to the Underwriting Agreement.
You shall be entitled to act and rely upon any statement,
request, notice or instruction respecting this Custody Agreement given to you by
the Attorneys, or any one of them. Any Attorney has the authority to instruct
you on irregularities or discrepancies in the certificates representing shares
of Common Stock and any accompanying documents.
In taking any action requested or directed by the
Representative under the terms of this Custody Agreement, you will be entitled
to rely upon a writing signed by a Vice President, Senior Vice President,
Managing Director, Counsel, Assistant General Counsel or General Counsel of CIBC
World Markets Corp.
It is understood that you assume no responsibility or
liability to any person other than to deal with the certificate(s) deposited
with you hereunder and the proceeds from the sale of all or a portion of the
securities represented thereby in accordance with the provisions of this Custody
Agreement. The undersigned agrees to indemnify you for and to hold you free from
and harmless against any and all loss, claim, damage, liability or expense
incurred by you arising out of or in connection with acting as Custodian
hereunder, as well as the cost and expense of defending against any claim of
liability hereunder, which is not due to your own gross negligence or willful
misconduct.
B-3
The representations and warranties of the undersigned set
forth in the Underwriting Agreement are hereby incorporated by reference herein
and the undersigned represents and warrants that such representations and
warranties are true and correct on the date hereof as if made on the date
hereof. The representations, warranties and agreements contained herein, as well
as those contained in the Underwriting Agreement, are made for the benefit of,
and may be relied upon by, you, the other Selling Shareholders, the Attorneys,
the Company, Xxxxxx & Xxxxxxxx, PLLC, the Underwriters and Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP and their representatives, agents and counsel. These
representations, warranties and agreements shall remain operative and in full
force and effect, and shall survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any of the persons listed in the preceding sentence,
(ii) acceptance of the Shares and payment for them under the Underwriting
Agreement and (iii) termination of this Custody Agreement.
This Custody Agreement shall be binding upon the undersigned
and the heirs, legal representatives, distributees, successors and assigns of
the undersigned.
This Custody Agreement may be signed in counterparts which
together shall constitute one and the same agreement.
This Custody Agreement shall be governed by the laws of the
State of New York without regard to the conflicts of laws principles thereof.
Please acknowledge your acceptance hereof as Custodian, and
receipt of the certificate(s) deposited with you hereunder, by executing and
returning the enclosed copy hereof to the undersigned in care of [names of
Attorneys].
Dated: , ____
------------
Very truly yours,
By:
-------------------------------
Name:
Title:
B-4
Print Name(s) and Address of Selling
Shareholder(s) and Name and Title of
any Person Signing as Agent or
Fiduciary:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Taxpayer I.D.:
----------------
Telephone:
----------------
B-5
Instruction: If you are an individual and are married, your spouse is required
to complete this form:
SPOUSAL CONSENT
I am the spouse of _____________________________ . On behalf
of myself, my heirs and legatees, I hereby join in and consent to the terms of
the foregoing Custody Agreement and agree to the sale of the shares of Common
Stock of Steel Technologies Inc., registered in the name of my spouse or
otherwise registered, which my spouse proposes to sell pursuant to the
Underwriting Agreement (as defined therein).
Dated: ,
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(Signature of Spouse)
B-6
Instruction: Complete each column as to certificate(s) to be deposited with the
Custodian.
CERTIFICATE(S) DEPOSITED
Stock Maximum Number of Shares
Certificate of Common Stock to be Sold
No. from Certificate
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TOTAL:
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B-7
Instruction: Indicate how you wish to receive payment for the shares of Common
Stock sold to the Underwriters. Please note that if you are selling shares of
Common Stock registered in the name of a corporation or other association or a
trust, payment will be made only to the corporation or other association or
trust. A wire transfer can be made only to an account standing in exactly the
same name as the person or entity, including the corporation or other
association or trust, that is the registered owner of the Common Stock being
sold.
MANNER OF PAYMENT
I request that payment of the net proceeds from the sale of
the shares of Common Stock of the Company to be sold by me pursuant to the
Underwriting Agreement be made in the following manner (CHECK ONE):
CHECK made payable to:
to be sent to the following address:
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Phone: ( )
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Please send by (check one):
First class mail
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Federal Express
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Federal Express account number
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or transfer to the following account:
Account No.
Bank See attached wire transfer instructions
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(name)
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(address)
ABA No
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Phone: ( )
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Other (please specify)
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B-8
CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
_____________, as Custodian, acknowledges acceptance of the
duties of the Custodian under the foregoing Custody Agreement and receipt of the
certificate(s) referred therein.
Dated: ,
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[Custodian]
By:
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Name:
Title:
DO NOT DETACH FROM CUSTODY AGREEMENT
B-9
Exhibit C
SELLING SHAREHOLDERS'
IRREVOCABLE POWER OF ATTORNEY
for sale of shares of common stock,
no par value, of Steel Technologies Inc.
[name of Attorney 1]
[name of Attorney 2]
[Address]
Ladies and Gentlemen:
The undersigned shareholder and certain other holders of
common stock of Steel Technologies Inc._(the "Company") (such holders and the
undersigned being hereinafter sometimes collectively referred to as the "Selling
Shareholders"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with the Company and CIBC World Markets Corp., as
representative (the "Representative") of the several underwriters to be named in
Schedule I to the Underwriting Agreement (the "Underwriters"). The Selling
Shareholders propose to sell to the Underwriters pursuant to the Underwriting
Agreement certain authorized and issued shares of the common stock, no par
value, of the Company (the "Common Stock") owned by them. It is understood that
at this time there is no commitment on the part of the Underwriters to purchase
any shares of Common Stock and no assurance that the Underwriting Agreement will
be entered into by the Company or the Underwriters.
The undersigned hereby irrevocably constitutes and appoints
__________ and __________ each with full power and authority to act alone in any
matter hereunder and with full power of substitution, the true and lawful
attorneys-in-fact of the undersigned (individually an "Attorney" and
collectively the "Attorneys"), with full power and authority in the name of, for
and on behalf of, the undersigned with respect to all matters arising in
connection with the sale of Common Stock by the undersigned including, but not
limited to, the power and authority on behalf of the undersigned to take any and
all of the following actions:
1. To sell, assign, transfer and deliver to the several
Underwriters up to the number of shares of Common Stock set forth on the
signature page hereof, such shares of Common Stock to be represented by
certificate(s) deposited by the undersigned pursuant to the Custody Agreement
(the "Custody Agreement") between the undersigned and _________________, as
Custodian (the "Custodian"), at a purchase price per share, after deducting
underwriting discounts and commissions, to be paid by the Underwriters, as the
Attorneys, in their sole discretion, shall determine, but at the same price per
share at which the Company and all other Selling Shareholders sell Common Stock
to the Underwriters;
2. To determine the number of shares of Common Stock to be
sold by the undersigned to the Underwriters, which number shall be no greater
but may be fewer than the corresponding numbers set forth on the signature page
hereof (such total number of shares of
Common Stock as is finally determined by the Attorneys and set forth opposite
the name of the undersigned in Schedule II to the Underwriting Agreement is
hereinafter referred to as the "Shares");
3. To execute, deliver and perform the Underwriting Agreement
in customary form with such customary representations, warranties and covenants
as the Attorneys, in their sole discretion, may deem appropriate, with full
power to make such amendments to the Underwriting Agreement as the Attorneys, in
their sole discretion, may deem advisable;
4. On behalf of the undersigned, to make the representations
and warranties and enter into the agreements contained in the Underwriting
Agreement (including, without limitation, entering into the "lock-up"
agreements);
5. (a) To instruct the Custodian on all matters pertaining to
the sale of the Shares and the delivery of certificates therefor, including: (i)
the transfer of the Shares on the books of the Company in order to effect the
sale of the Shares (including designating the name or names in which new
certificate(s) for Shares are to be issued and the denominations thereof), (ii)
the delivery to or for the account of the Underwriters of the certificate(s) for
the Shares against receipt by the Custodian of the purchase price to be paid
therefor, (iii) the payment, out of the proceeds (net of underwriting discounts
and commissions) from the sale of the Shares by the undersigned to the
Underwriters, of any expense incurred in accordance with paragraph 6 which is
not payable by the Company and any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters ("Transfer Taxes") and (iv) the
transmission to the undersigned of the proceeds, if any, from the sale of the
Shares (after deducting all amounts payable by the undersigned pursuant to
clause (iii) above) and the return to the undersigned, of new certificate(s)
representing the excess, if any, of the number of shares of Common Stock
represented by certificate(s) deposited with the Custodian over the number of
Shares sold to the Underwriters; and (b) to amend the Custody Agreement and any
related documents in such manner as the Attorneys may determine to be not
materially adverse to the undersigned.
6. To incur or authorize the incurrence of any necessary or
appropriate expense in connection with the sale of the Shares and to determine
the amount of any Transfer Taxes;
7. To take any and all steps deemed necessary or desirable by
the Attorneys in connection with the registration of the Shares under the
Securities Act of 1933, as amended (the "Act"), the Securities Exchange Act of
1934, as amended, and the securities or "blue sky" laws of various states and
jurisdictions, including, without limitation, the giving, making or filing of
such undertakings, consents to service of process and representations and
agreements and the taking of such other steps as the Attorneys may deem
necessary or desirable;
8. To retain legal counsel to represent the undersigned in
connection with any and all matters referred to herein (which counsel may, but
need not be, counsel for the Company);
9. To make, execute, acknowledge and deliver all such other
contracts, stock powers, orders, receipts, notices, instructions, certificates,
letters and other writings, including, without limitation, communications with
the Securities and Exchange Commission state
securities commissions and the National Association of Securities Dealers, Inc.
("NASD"), and in general to do all things and to take all actions which the
Attorneys, in their sole discretion, may consider necessary or desirable in
connection with the sale of Shares to the Underwriters and the public offering
thereof, as fully as could the undersigned if personally present and acting;
10. If necessary, to endorse (in blank or otherwise) on behalf
of the undersigned the certificate(s) representing the Shares, or a stock power
or powers attached to such certificate(s); and
11. To sign such other certificates, documents and agreements
and take any and all other actions as the Attorneys may deem necessary or
desirable in connection with the consummation of the transactions contemplated
by the Underwriting Agreement, the Custody Agreement and this Power of Attorney.
Each Attorney may act alone in exercising the rights and
powers conferred on the Attorneys in this Power of Attorney, and the act of any
Attorney shall be the act of the Attorneys. Each Attorney is hereby empowered to
determine in his or her sole discretion the time or times when, the purpose for
and the manner in which any power herein conferred upon him or her shall be
exercised, and the conditions, provisions or covenants of any instrument or
document which may be executed by him or her pursuant hereto.
The undersigned acknowledges receipt of a copy of Amendment
No. 1 to the Registration Statement on Form S-3 (the "Registration Statement")
relating to the offering of the Shares and the other shares of Common Stock
(together, the "Offered Shares") to be sold by the Selling Shareholders and a
copy of the draft form of the Underwriting Agreement dated_________. The
undersigned has reviewed the Registration Statement and the form of the
Underwriting Agreement and understands the obligations and agreements of the
undersigned set forth in the Underwriting Agreement. All representations and
warranties of the Selling Shareholders in the Underwriting Agreement with
respect to the undersigned will be as of the date of the execution of the
Underwriting Agreement, the Closing Dates (as determined in accordance with the
Underwriting Agreement), true and correct. All such representations and
warranties will, as provided in the Underwriting Agreement, survive the
termination of the Underwriting Agreement and the delivery of and payment for
the Shares.
Upon the execution and delivery of the Underwriting Agreement
by the Attorneys on behalf of the Selling Shareholders, the undersigned agrees
to be bound by and to perform each and every covenant and agreement contained
therein of the undersigned as a Selling Shareholders.
The undersigned agrees, if so requested, to provide an opinion
of counsel, addressed to Xxxxxx & Xxxxxxxx, PLLC, which opinion shall expressly
permit reliance thereon by Xxxxxx & Xxxxxxxx, PLLC, setting forth such matters
as Xxxxxx & Xxxxxxxx, PLLC may reasonably request in rendering its opinion
pursuant to the Underwriting Agreement and such other documentation as the
Attorneys, the Company, the Representative or any of their respective counsel
may request to effectuate any of the provisions hereof or of the Underwriting
Agreement, all of the foregoing to be in form and substance satisfactory in all
respects to the party requesting such documentation.
This Power of Attorney and all authority conferred hereby are
granted and conferred subject to and in consideration of the interests of the
Attorneys, the several Underwriters, the Company and the other Selling
Shareholders who may become parties to the Underwriting Agreement, and for the
purposes of completing the transactions contemplated by the Underwriting
Agreement and this Power of Attorney.
This Power of Attorney is an agency coupled with an interest
and all authority conferred hereby shall be irrevocable, and shall not be
withdrawn or terminated by any act of the undersigned or by operation of law,
whether by the death or incapacity of the undersigned (or either or any of the
undersigned) or by the occurrence of any other event or events (including,
without limitation, the termination of any trust or estate for which the
undersigned is acting as a fiduciary or fiduciaries, the death or incapacity of
one or more trustees, guardians, executors or administrators under such trust or
estate or the merger, consolidation, dissolution or liquidation of any
corporation or partnership) (any of the foregoing being hereinafter referred to
as an "Event"). If an Event shall occur after the execution hereof but before
completion of the transactions contemplated by the Underwriting Agreement or
this Power of Attorney, then certificate(s) representing the Shares will be
delivered to the Underwriters by or on behalf of the undersigned in accordance
with the terms and conditions of the Underwriting Agreement and the Custody
Agreement and any actions taken hereunder by the Attorneys shall be as valid as
if such Event had not occurred regardless of whether or not the Custodian, the
Attorneys, the Underwriters, or any one of them, shall have received notice of
such Event.
Notwithstanding any of the foregoing provisions, if the
Underwriting Agreement shall not have been executed and delivered prior to
_________ then, upon the written notice of the undersigned on or after that date
to the Attorneys, this Power of Attorney shall terminate subject, however, to
all lawful action done or performed pursuant hereto prior to the receipt of
actual notice.
It is understood that the Attorneys assume no responsibility
or liability to any person other than to deal with the certificate(s) for shares
of Common Stock deposited with the Custodian pursuant to the Custody Agreement
and the proceeds from the sale of the Shares in accordance with the provisions
hereof. The Attorneys make no representations with respect to and shall have no
responsibility for the Registration Statement or the Prospectus nor, except as
herein expressly provided, for any aspect of the offering of Common Stock, and
the Attorneys shall not be liable for any error of judgment or for any act done
or omitted or for any mistake of fact or law except for the Attorneys' own gross
negligence or willful misconduct. The undersigned agrees to indemnify the
Attorneys for and to hold the Attorneys, jointly and severally, free from and
harmless against any and all loss, claim, damage, liability or expense incurred
by or on behalf of the Attorneys, or any of them, arising out of or in
connection with acting as Attorneys under this Power of Attorney, as well as the
cost and expense of defending against any claim of liability hereunder, which is
not due to the Attorneys' own gross negligence or willful misconduct. The
undersigned agrees that the Attorneys may consult with counsel of their choice
(which may but need not be counsel for the Company) and the Attorneys shall have
full and complete authorization and protection for any action taken or suffered
by the Attorneys, or any of them hereunder, in good faith and in accordance with
the opinion of such counsel.
It is understood that the purchase price per share of Common
Stock to be paid in connection with the offering contemplated by the Prospectus
and the Underwriting Agreement could be higher or lower than the price per share
of Common Stock as of the date hereof.
It is understood that the Attorneys shall serve entirely
without compensation.
This Power of Attorney shall be binding upon the undersigned
and the heirs, legal representatives, distributees, successors and assigns of
the undersigned.
This Power of Attorney shall be governed by the laws of the
State of New York without regard to the conflicts of laws principles thereof.
Witness the due execution of the foregoing Power of Attorney as of the date
written below.
Maximum Number of Shares of
Common Stock to be Sold by Selling
Shareholder(s):
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Very truly yours,
By:
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Name:
Title:
DATED: ,
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Print Name and Address of Selling
Shareholder(s) and Name and Title of any
Person Signing as Agent or Fiduciary:
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Telephone: ( )
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Facsimile: ( )
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ACKNOWLEDGMENT
State of )
) ss.
County of )
_________On this the _____ day of ________ ______ before me
personally appeared _____________________________ who acknowledged the signing
of the foregoing instrument and that the same is the free act and deed of such
person (and if such person is signing on behalf of a corporation, partnership or
trust that the same is the free act and deed of such corporation, partnership or
trust and that such person is duly authorized to sign the foregoing instrument).
WITNESS my hand and official seal.
Notary's Signature
