EXHIBIT 1
_________ SHARES
SELECT COMFORT CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
DATED MARCH __, 2003
MARCH __, 2003
Xxxxxx Xxxxxx Partners LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxx-Xxxxxx Capital Group LLC
As Representatives of the several Underwriters
c/o Thomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introduction. Certain shareholders of Select Comfort Corporation, a
Minnesota corporation (the "Company") named in Schedule B hereto (the "SELLING
SHAREHOLDERS") severally propose to sell to the several Underwriters an
aggregate of ____________ shares (the "FIRM SHARES") of the Common Stock, par
value $0.01 per share, of the Company (the "COMMON STOCK"), with each Selling
Shareholder selling the number of shares set forth opposite such Selling
Shareholder's name in Schedule B hereto and, at the election of the
Underwriters, an option to purchase up to XXX additional shares of Common Stock
to cover over-allotments (the "ADDITIONAL SHARES"; the Additional Shares,
together with the Firm Shares, hereinafter collectively referred to as the
"SHARES").
Xxxxxx Xxxxxx Partners LLC, U.S. Bancorp Xxxxx Xxxxxxx Inc., Xxxxx,
Xxxxxxxx & Xxxx, Inc. and Xxxxx-Xxxxxx Capital Group LLC have agreed to act as
representatives of the several Underwriters (in such capacity, the
"REPRESENTATIVES") in connection with the offering and sale of the Shares.
The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-3 (Reg. No.
333-_____), including a prospectus, relating to the Shares. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and all documents incorporated or deemed to be
incorporated by reference therein is hereinafter referred to as the
"REGISTRATION STATEMENT"; the prospectus in the form first used to confirm sales
of Shares is hereinafter referred to as the "PROSPECTUS". If the Company has
filed a registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT"
shall be deemed to include the Rule 462 Registration Statement. All references
in this Agreement to the Registration Statement, the Rule 462 Registration
Statement, a preliminary prospectus, the Prospectus, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX").
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules
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and other information which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
1.1. Effective Registration Statement. The Registration Statement has
become effective; no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending before
or threatened by the Commission.
1.2. Contents of Registration Statement. (i) The Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
1.3. Exchange Act Compliance. The documents incorporated or deemed to
be incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), and, when read together with the other
information in the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the Closing Date and the Option
Closing Date, as the case may be, 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 fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
1.4. Due Incorporation. The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
1.5. Subsidiaries. Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company
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and its subsidiaries, taken as a whole. All of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims. The
subsidiaries listed on Schedule C hereto are the only subsidiaries of the
Company. Except for the subsidiaries, the Company owns no beneficial interest,
directly or indirectly, in any corporation, partnership, joint venture or other
business entity.
1.6. Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
1.7. Description of Capital Stock. The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in the
Prospectus.
1.8. Authorized Stock. The shares of Common Stock (including the Shares
to be sold by the Selling Shareholders) outstanding have been duly authorized
and are validly issued, fully paid and non-assessable. No preemptive rights of
shareholders exist with respect to any of the Shares that have not been
satisfied or waived. Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such subsidiary, (ii) warrants, rights or options to subscribe
for or purchase from the Company or any such subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
1.9. No Conflict. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
contravene any provision of applicable law or the articles of incorporation or
by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as may be required by the Securities Act, the National Association of Securities
Dealers, Inc. (the "NASD") or the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
1.10. Financial Statements. The consolidated financial statements
including the related notes of the Company and its subsidiaries included in the
Registration Statement and Prospectus present fairly the financial position of
such entities as of the dates indicated and the results of operations and cash
flows for such entities for the periods specified, all in conformity with
generally accepted accounting principles applied on a consistent basis. The
financial statement schedules included in the Registration Statement and the
amounts in the Prospectus under the captions "Prospectus Summary--Summary
Consolidated Financial Data" and "Selected Consolidated Financial Data" fairly
present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration Statement
and the Prospectus. The unaudited pro forma financial information (including the
related notes) included in the Prospectus complies as to form in all material
respects with the applicable accounting requirements of the Act and management
of the Company has a reasonable basis for believing and does believe that the
assumptions underlying the pro forma adjustments are reasonable. Such pro forma
adjustments have been properly applied to the historical amounts in the
compilation of the information and
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such information fairly presents, with respect to such entities, the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified.
1.11. No Material Adverse Change. There has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
1.12. Legal Proceedings; Contracts; Exhibits. There are no legal or
governmental proceedings pending or, to the best knowledge of the Company,
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described, or any statutes, regulations, contracts or
other documents that are required to be described or incorporated by reference
in the Registration Statement or the Prospectus or to be filed or incorporated
by reference as exhibits to the Registration Statement that are not described or
filed or incorporated as required.
1.13. Compliance with Securities Act. The Company meets the
requirements for use of Form S-3 under the Securities Act. Each preliminary
prospectus filed as part of the registration statement as originally filed or as
part of any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder.
1.14. Not an Investment Company. The Company is not and, after giving
effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
1.15. Compliance with Laws. The Company and its subsidiaries (i) are in
compliance in all material respects with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance in all material respects with any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
1.16. No Environmental Costs. There are no costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) which would, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
1.17. No Registration Rights. There are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the Registration
Statement other
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than as described in the Registration Statement and as have been waived in
writing in connection with the offering contemplated hereby.
1.18. Absence of Material Changes. Subsequent to the respective dates
as of which information is given in the Registration Statement and the
Prospectus, (1) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (2) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (3) there has not been any material change
in the capital stock, short-term debt or long-term debt of the Company and its
subsidiaries, except in each case as described in the Prospectus.
1.19. Compliance with Xxxxxxxx-Xxxxx. The Company is in compliance in
all material respects with all applicable provisions of the Xxxxxxxx-Xxxxx Act
of 2002 (the "Xxxxxxxx-Xxxxx Act") that are effective.
1.20 Good Title to Properties. The Company and its subsidiaries own no
real property and have good and marketable title to all personal property owned
by them which are material to the business of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
1.21. Intellectual Property Rights. The Company and its subsidiaries
own or possess, or can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse affect on
the Company and its subsidiaries, taken as a whole.
1.22. No Labor Disputes. No material labor dispute with the employees
of the Company or any of its subsidiaries exists, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing, threatened
or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
1.23. Insurance. The Company and its subsidiaries are insured by the
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any of its subsidiaries has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
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1.24. Governmental Permits. The Company and its subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
business, except where the failure to possess such certificates, authorizations
and permits would not result in a material adverse effect on the Company and its
subsidiaries, taken as a whole, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
1.25 Accounting Controls. To the knowledge of the Company, KPMG LLP,
the accounting firm which has certified the financial statements filed with or
incorporated by reference in and as a part of the Registration Statement, is an
independent public accounting firm within the meaning of the 1933 Act and the
1933 Act Rules and Regulations and such accountants are not in violation of the
auditor independence requirements of the Xxxxxxxx-Xxxxx Act. Each of the Company
and its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are executed in
accordance with management's general or specific authorizations; (2)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only in
accordance with management's authorization; and (4) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
1.26. Listing of Common Stock. The Common Stock is registered pursuant
to Section 12(g) of the Exchange Act and is listed on the Nasdaq National
Market, and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq National Market, nor has the
Company received any notification that the Commission or the NASD is
contemplating terminating such registration or listing.
1.27. No Price Stabilization or Manipulation. The Company and it
subsidiaries have not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
any prohibited stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
2. Representations and Warranties of the Selling Shareholders. Each of
the Selling Shareholders represents and warrants to and agrees with each of the
Underwriters that:
2.1. Due Authorization. This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder and is a
valid and binding agreement of such Selling Shareholder, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
2.2. Selling Shareholder Documents. The Custody Agreement signed by
such Selling Shareholder and ___________, as Custodian, relating to the deposit
of the Shares to be sold by such Selling Shareholder (the "CUSTODY AGREEMENT")
and the Power of Attorney appointing certain individuals as such Selling
Shareholder's attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the "POWER
OF ATTORNEY") have been duly authorized, executed and delivered by such Selling
Shareholder and are valid and binding agreements of such Selling Shareholder
enforceable in accordance with their respective terms, except as rights to
indemnification
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thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles.
2.3. No Conflict. The execution and delivery by such Selling
Shareholder of, and the performance by such Selling Shareholder of its
obligations under, this Agreement, the Custody Agreement and the Power of
Attorney will not contravene any provision of applicable law, or the articles of
incorporation, or by-laws, or other organizational documents of such Selling
Shareholder (if such Selling Shareholder is not an individual), or any agreement
or other instrument binding upon such Selling Shareholder or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over
such Selling Shareholder, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under this Agreement,
the Custody Agreement or the Power of Attorney of such Selling Shareholder,
except such as may be required by the Securities Act, the NASD or the securities
or Blue Sky laws of the various states in connection with the offer and sale of
the Shares.
2.4. Good Title to Shares. Such Selling Shareholder has, and on each
Closing Date will have, valid title to the Shares to be sold by such Selling
Shareholder and the legal right and power, and all authorization and approval
required by law, to enter into this Agreement, the Custody Agreement and the
Power of Attorney and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder.
2.5. Delivery of Common Shares. Delivery of the Shares to be sold by
such Selling Shareholder pursuant to this Agreement will pass title to such
Shares free and clear of any security interests, claims, liens, equities and
other encumbrances.
2.6. No Registration Rights. Such Selling Shareholder does not have any
registration or other similar rights to have any equity or debt securities
registered for sale by the Company under the Registration Statement or included
in the offering contemplated by this Agreement, other than as described in the
Registration Statement and as have been waived in writing in connection with the
offering contemplated hereby.
2.7. No Price Stabilization or Manipulation. Such Selling Shareholder
has not taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in any prohibited
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
2.8. Disclosure by Selling Shareholder in Registration Statement. Such
portion of the Registration Statement comprised of the table and the notes
thereto under the caption "Principal and Selling Shareholders" in the form
supplied to the Selling Shareholder, insofar as such portion specifically
related to the Selling Shareholder, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3. Purchase and Sale Agreements.
3.1. Firm Shares. Each Selling Shareholder, severally and not jointly,
hereby agrees to sell to the several Underwriters, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from such Selling Shareholder at $______ a share (the "PURCHASE PRICE")
the number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same
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proportion to the number of Firm Shares to be sold by such Selling Shareholder
as the number of Firm Shares set forth in Schedule A hereto opposite the name of
such Underwriter bears to the total number of Firm Shares.
3.2. Additional Shares. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
the Selling Shareholders agree to grant to the Underwriters a one-time option to
purchase up to _______________ Additional Shares at the Purchase Price, for the
sole purpose of covering over-allotments in the sale of Firm Shares. The maximum
number of Additional Shares to be sold by each Selling Shareholder is set forth
on Schedule B hereto. If you, on behalf of the Underwriters, elect to exercise
such option, you shall so notify the Company in writing not later than thirty
(30) days after the date of this Agreement, which notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on
which such shares are to be purchased. Such date may be the same as the Closing
Date (as defined below) but not earlier than the Closing Date nor later than ten
(10) business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If the
Underwriters exercise this option in whole or in part, each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Shares (subject
to such adjustments to eliminate fractional shares as you may determine) that
bears the same proportion to the total number of Additional Shares to be
purchased as the number of Firm Shares set forth in Schedule A hereto opposite
the name of such Underwriter bears to the total number of Firm Shares.
3.3. Market Standoff Provision. The Company and each Selling
Shareholder hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxx Partners, it will not, during the period ending 90 days after the date of
the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, (B) the
issuance by the Company of shares of Common Stock upon the exercise of options
or warrants or the conversion of any security or note outstanding on the date
hereof of which the Underwriters have been advised in writing and which is
described in the Prospectus, (C) the issuance of shares of Common Stock or grant
of options or other incentive awards pursuant to the Company's 1997 Stock
Incentive Plan, as amended and restated, the Company's 1999 Employee Stock
Purchase Plan, or the Company's Profit Sharing and 401(k) Plan or (D)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares. In addition, each Selling Shareholder,
agrees that, without the prior written consent of Xxxxxx Xxxxxx Partners, it
will not, during the period ending 90 days after the date of the Prospectus,
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
3.4. Terms of Public Offering. The Selling Shareholders are advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Sellers
are further advised by you that the Shares are to be offered to the public
initially at $___ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $____ a
share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $____ a share, to any
Underwriter or to certain other dealers.
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4. Payment and Delivery.
4.1. Firm Shares. Payment for the Firm Shares to be sold by each
Selling Shareholder shall be made to such Selling Shareholder in immediately
available funds against delivery of such Firm Shares for the respective accounts
of the several Underwriters at ____ a.m., New York City time, on ____________,
2003,1 or at such other time on the same or such other date, not later than
_________, 2003,2 as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "CLOSING DATE".
4.2. Additional Shares. Payment for any Additional Shares shall be made
to each Selling Shareholder in immediately available funds in New York City
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at ____ a.m., New York City time, on the date specified in
the notice described in Section 3(b) or at such other time on the same or on
such other date, in any event not later than _______, 2003,3 as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "OPTION CLOSING DATE".
4.3. Delivery of Certificates. Certificates for the Firm Shares and
Additional Shares shall be in definitive form and registered in such names and
in such denominations as you shall request in writing not later than one (1)
full business day prior to the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and Additional Shares
shall be delivered to you on the Closing Date or the Option Closing Date, as the
case may be, for the respective accounts of the several Underwriters, with any
transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
5. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
5.1. Furnish Copies of Registration Statement and Prospectus. To
furnish to you, without charge, five signed copies of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto) and to
furnish to you in New York City, without charge, prior to 10:00 a.m. New York
City time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 5.3 below, as many copies of the
Prospectus and any supplements and amendments thereto (including any documents
incorporated or deemed incorporated by reference therein or to the Registration
Statement as you may reasonably request).
5.2. Notification of Amendments or Supplements. Before amending or
supplementing the Registration Statement or the Prospectus (including any
amendment or supplement through incorporation by reference of any report filed
under the Exchange Act), to furnish to you a copy of each such proposed
--------
1 [Three (3) business days (T+3) or, in the event the offering is priced after
4:30 p.m. Eastern Time (and T+4 settlement is deemed to apply to secondary
sales), four (4) business days after the date of the Underwriting Agreement.]
2 [Five (5) business days after the date inserted in accordance with note 1
above.]
3 [Ten (10) business days after the expiration of the over-allotment option.]
9
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such rule.
5.3. Filings of Amendments or Supplements. If, during such period after
the first date of the public offering of the Shares the Prospectus is required
by law to be delivered in connection with sales by an Underwriter or dealer (the
"PROSPECTUS DELIVERY PERIOD"), any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish to
the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus,
as amended or supplemented, will comply with law.
5.4. Blue Sky Laws. To endeavor to qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
5.5. Earnings Statement. To make generally available to its
securityholders as soon as practicable, but in any event not later than eighteen
(18) months after the effective date of the Registration Statement (as defined
in Rule 158(c) under the Securities Act), an earnings statement of the Company
and its subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the rules and regulations thereunder (including, at the
option of the Company, Rule 158).
5.6. Transfer Agent. The Company shall maintain, at its expense, a
registrar and transfer agent for the Common Stock.
5.7. Periodic Reporting Obligations. During the Prospectus Delivery
Period, the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under the
Exchange Act.
5.8. Exchange Act Compliance. During the Prospectus Delivery Period,
the Company will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Age in the manner and within
the time periods required by the Exchange Act.
5.9. Xxxxxxxx-Xxxxx Controls and Procedures. The Company and its
subsidiaries will maintain such controls and other procedures, including without
limitation those required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and
the applicable regulations thereunder, that are reasonably designed to ensure
that material information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported within the time periods specified in the Commission's rules and
forms, including without limitation, controls and procedures reasonably designed
to ensure that material information required to be disclosed by the Company in
the reports that it files or submits under the 1934 Act is accumulated and
communicated to the Company's management, including its Chief Executive Officer
and its Principal Financial Officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure, to ensure
that material information relating to Company, including its subsidiaries, is
made known to them by others within those entities.
10
5.10. Xxxxxxxx-Xxxxx Compliance. The Company and its subsidiaries will
comply, in all material respects, with all effective applicable provisions of
the Xxxxxxxx-Xxxxx Act.
6. Conditions to the Underwriters' Obligations. The obligations of the
Selling Shareholders to sell the Shares to the several Underwriters and the
several obligations of the Underwriters to purchase and pay for the Shares on
the Closing Date are subject to the following conditions:
6.1. Effective Registration Statement. The Registration Statement shall
have become effective not later than [__________] (New York City time) on the
date hereof.
6.2. Rule 462 Registration Statement. If the Company elects to rely
upon Rule 462(b), the Company shall file a Rule 462 Registration Statement with
the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C.
time, on the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462 Registration
Statement or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the Securities Act.
6.3. Prospectus Filed with Commission. The Company shall have filed the
Prospectus with the Commission (including the information required by Rule 430A
under the Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective.
6.4. No Stop Order. No stop order suspending the effectiveness of the
Registration Statement, any Rule 462 Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission.
6.5. No NASD Objection. The NASD shall have raised no unresolved
objection to the fairness and reasonableness of the underwriting terms and
arrangements.
6.6. No Material Adverse Change. There shall not have occurred any
change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement) that, in your reasonable judgment, is material and
adverse and that makes it, in your reasonable judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus.
6.7. Officer's Certificate. The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and signed by the Chief
Executive Officer or President of the Company, to the effect set forth in
Sections 6.4 and 6.6 above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
6.8. Opinion of Company Counsel. The Underwriters shall have received
on the Closing Date an opinion of Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP, counsel for
the Company, dated the Closing Date, the form of which is attached hereto as
Exhibit A. The opinion shall be rendered to the Underwriters at the request of
the Company and shall so state therein.
11
6.9. Opinion of Selling Shareholders' Counsel. The Underwriters shall
have received on the Closing Date an opinion of Faegre & Xxxxxx LLP, counsel for
the Selling Shareholders, dated the Closing Date, the form of which is attached
hereto as Exhibit B. The opinion shall be rendered to the Underwriters at the
request of the Selling Shareholders and shall so state therein.
6.10. Opinion of Underwriters' Counsel. The Underwriters shall have
received on the Closing Date an opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP , counsel
for the Underwriters, dated the Closing Date, covering the matters referred to
in Exhibit A, paragraphs (vi), (vii), (ix) (but only as to the statements in the
Prospectus under "Description of Capital Stock" and "Underwriters") and (xii).
With respect to paragraph (xii) of Exhibit A, such counsel may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
6.11. Accountant's Comfort Letter. The Underwriters shall have
received, on each of the date hereof and the Closing Date, a letter dated the
date hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from KPMG LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus; provided that the letter delivered on the Closing
Date shall use a "cut-off date" not earlier than the date hereof.
6.12. Lock-Up Agreements. The "lock-up" agreements, each substantially
in the form of Exhibit C hereto, between you and certain shareholders, officers
and directors of the Company, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
6.13. Selling Shareholders' Certificate. The Underwriters shall have
received on the Closing Date a certificate, dated the Closing Date and signed by
the Attorney-in-Fact of each Selling Shareholder, to the effect that the
representations and warranties of the Selling Shareholders contained in this
Agreement are true and correct as of the Closing Date and that the Selling
Shareholders have complied with all of the agreements and satisfied all of the
conditions on their part to be performed or satisfied hereunder on or before the
Closing Date.
6.14. Selling Shareholder Documents. On the date hereof, the Company
and the Selling Shareholders shall have furnished for review by the
Representatives copies of the Powers of Attorney and Custody Agreements executed
by each of the Selling Shareholders and such further information, certificates
and documents as the Representatives may reasonably request.
6.15. Additional Documents. On the Closing Date, the Representatives
and counsel for the Underwriters shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction of each of the above conditions
on or prior to the Option Closing Date and to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
12
7. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its and the
Selling Shareholders' obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel, the Company's accountants
and a single counsel for the Selling Shareholders in connection with the
registration and delivery of the Shares under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Shares under state securities laws, if
any, and all expenses in connection with the qualification of the Shares for
offer and sale under state securities laws as contemplated by Section 5(d)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or legal investment memorandum, if any (iv) all
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of the
offering of the Shares by the NASD, (v) all fees and expenses incident to
listing the Shares on the Nasdaq National Market, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any
transfer agent, registrar or depositary, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, (ix) all expenses in connection with any offer and sale of the Shares
outside of the United States, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with offers and
sales outside of the United States, and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8 entitled "Indemnity
and Contribution", and Section 12, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel and any
advertising expenses connected with any offers they may make.
8. Indemnity and Contribution.
8.1. Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except (i) insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein and (ii) that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage or
liability purchased Shares, or any person controlling such Underwriter, if
copies of the Prospectus were
13
timely delivered to the Underwriter pursuant to Section 5 and a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or expense.
8.2. Indemnification of the Underwriters by the Selling Shareholders.
Each Selling Shareholder agrees, severally and not jointly, to indemnify and
hold harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
8.3. Indemnification by the Underwriters. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, the
Selling Shareholders, the directors of the Company, the officers of the Company
who sign the Registration Statement and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
8.4. Indemnification Procedures. In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 8, such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable
14
for (i) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, (ii) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Selling Shareholders and all persons, if any, who control any
Selling Shareholder within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxx
Partners. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholders and such control persons of any Selling Shareholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Shareholders under the Powers of Attorney. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff (after all appeals have been
exhausted), the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
8.5. Limitation of Selling Shareholder Liability. The liability of each
Selling Shareholder under the indemnity and contribution provisions of this
Section 8 shall be limited, in the aggregate, to an amount equal to the public
offering price of the Shares sold by such Selling Shareholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
The Company and the Selling Shareholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
8.6. Contribution Agreement. To the extent the indemnification provided
for in this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 8.4 above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8.4 above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses)
15
received by the Selling Shareholders and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover of the Prospectus, bear to the aggregate Public Offering Price of
the Shares. The relative fault of the Company, the Selling Shareholders and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Shareholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint. The
Selling Shareholders' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective number of Shares they have
sold hereunder, and not joint. No party shall be liable for contribution with
respect to any settlement of any losses, claims, damages or liabilities if such
settlement was effected by the party seeking contribution without the
contributing party's prior written consent. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of paragraph 8.4
above, the indemnifying party agrees that is shall be liable for any settlement
of any proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement.
8.7. Contribution Amounts. The Company, the Selling Shareholders and
the Underwriters agree that it would not be just or equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in Section 8.6. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
8.8. Survival of Provisions. The indemnity and contribution provisions
contained in this Section 8 and the representations, warranties and other
statements of the Company and the Selling Shareholders contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
9. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company and the Selling Shareholders if (a) after the
execution and delivery of this Agreement and
16
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
or California shall have been declared by either federal or New York or
California state authorities or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in your reasonable judgment, is material and adverse, (v) in the
judgment of the Representatives, there shall have occurred any material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, taken as a whole, or (vi) there shall be any failure or refusal on
the part of the Company or any Selling Shareholder to comply with the terms or
to fulfill any of the conditions of this Agreement or the Company or any Selling
Shareholder shall for any reason be unable to perform its obligations under this
Agreement, and (b) in the case of any of the events specified in clauses
10(a)(i) through 10(a)(vi), such event, individually or together with any other
such event, makes it, in your judgment, impracticable to market the Shares on
the terms and in the manner contemplated in the Prospectus.
11. Defaulting Underwriters. If, on the Closing Date or the Option
Closing Date, as the case may be, any one or more of the Underwriters shall fail
or refuse to purchase Shares that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate number of the Shares to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the number of Firm Shares set forth opposite their respective names in
Schedule A bears to the aggregate number of Firm Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions as
you may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 11 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you, the Company and the Selling Shareholders for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Shareholders. In any such
case either you or the relevant Selling Shareholders shall have the right to
postpone the Closing Date, but in no event for longer than seven (7) days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
12. Reimbursement of Underwriters' Expenses. If this Agreement shall be
terminated by the Underwriters, or any of them, pursuant to Section 10(a)(ii),
10(a)(v) or 10(a)(vi) hereof, the Company will reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
17
themselves for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
13. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
14. Headings; Table of Contents. The headings of the sections of this
Agreement and the table of contents have been inserted for convenience of
reference only and shall not be deemed a part of this Agreement.
15. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Representatives:
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: _____________________
with a copy to:
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Select Comfort Corporation
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Senior Vice President
and General Counsel
with a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx, LLP
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
If to the Selling Stockholders:
[Custodian]
[address]
18
Facsimile: [___________]
Attention: [___________]
with a copy to:
Faegre & Xxxxxx LLP
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
16. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 11 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 8, and in each case their respective
successors, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
17. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
19. Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("RELATED PROCEEDINGS") may be instituted in the federal courts of the
United States of America located in the City and County of San Francisco or the
courts of the State of California, in each case located in the City and County
of San Francisco (collectively, the "SPECIFIED COURTS"), and each party
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"RELATED JUDGMENT"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party's address set forth above shall be
effective service of process for any suit, action or other proceeding brought in
any such court. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.
20. Failure of the Selling Shareholders to Sell and Deliver Shares. If
one or more of the Selling Shareholders shall fail to sell and deliver to the
Underwriters the Shares to be sold and delivered by such Selling Shareholders at
the Closing Date pursuant to this Agreement, and the remaining Selling
Shareholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Shares
19
to be sold by them hereunder to the total number of Shares to be sold by all
Selling Shareholders as set forth in Schedule B, then the Underwriters may at
their option, by written notice from the Representatives to the Company and the
Selling Shareholders, either (i) terminate this Agreement without any liability
on the part of any Underwriter or, except as provided in Sections 7, 8 and 12
hereof, the Company or the Selling Shareholders, or (ii) purchase the Shares
which the other Selling Shareholders have agreed to sell and deliver in
accordance with the terms hereof. If one or more of the Selling Shareholders
shall fail to sell and deliver to the Underwriters the Shares to be sold and
delivered by such Selling Shareholders pursuant to this Agreement at the Closing
Date or the Option Closing Date, then the Underwriters (and any Selling
Shareholder which increases the number of Shares to be sold by it) shall have
the right, by written notice from the Representatives to the Company and the
Selling Shareholders (or from such Selling Shareholder to the Representatives
and the Company), to postpone the Closing Date or the Option Closing Date, as
the case may be, but in no event for longer than seven (7) days in order that
the required changes, if any, to the Registration Statement and the Prospectus
or any other documents or arrangements may be effected.
21. Entire Agreement. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.
22. Amendments. This Agreement may only be amended or modified in
writing, signed by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit.
23. Sophisticated Parties. Each of the parties hereto acknowledges that
it is a sophisticated business person who or which was adequately represented by
counsel during negotiations regarding the provisions hereof, including, without
limitation, the indemnification and contribution provisions of Section 8, and is
fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Section 8 hereto fairly allocate the risks
in light of the ability of the parties to investigate the Company, its affairs
and its business in order to assure that adequate disclosure has been made in
the Registration Statement, any preliminary prospectus and the Prospectus (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
[Remainder of page intentionally left blank]
20
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
SELECT COMFORT CORPORATION
By:_________________________________________
Name:
Title:
The Selling Shareholders
named in Schedule B hereto,
acting severally
By:_________________________________________
Attorney-in-Fact
Accepted as of the date hereof
Xxxxxx Xxxxxx Partners LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxx-Xxxxxx Capital Group, LLC
Acting severally on behalf
of themselves and as representatives
of the several Underwriters named
in Schedule A hereto.
By: Xxxxxx Xxxxxx Partners LLC
By:_____________________________
Name:
Title:
21
SCHEDULE A
UNDERWRITER NUMBER OF FIRM
SHARES
TO BE PURCHASED
---------------
Xxxxxx Xxxxxx Partners LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxx-Xxxxxx Capital Group LLC
Total
SCHEDULE B
NUMBER OF FIRM MAXIMUM NUMBER
SHARES OF ADDITIONAL SHARES
SELLING SHAREHOLDER TO BE SOLD TO BE SOLD
------------------- --------------- --------------------
St. Xxxx Companies
Renaissance US Growth & Income
Trust PLC
BFS US Special Opportunities
Trust PLC
Total
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
____________, 2003
Xxxxxx Xxxxxx Partners LLC
U.S. Bancorp Xxxxx Xxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxx-Xxxxxx Capital Group, Inc.
As Representatives of the several Underwriters
c/o Thomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: LOCK-UP AGREEMENT (THE "AGREEMENT")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock, par value $________ per share (the "COMMON STOCK"), of Select
Comfort Corporation, a Minnesota Corporation (the "COMPANY"). The undersigned
understands that you, as representatives (the "REPRESENTATIVES"), propose to
enter into an Underwriting Agreement on behalf of the several Underwriters named
in Schedule A to such agreement (collectively, the "UNDERWRITERS"), with the
Company and certain Selling Shareholders providing for a public offering of the
Common Stock of the Company pursuant to a Registration Statement on Form S-3 to
be filed with the Securities and Exchange Commission (the "OFFERING"). The
undersigned recognizes that the Offering will be of benefit to the undersigned
and will benefit the Company. The undersigned acknowledges that you and the
other Underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company and such Selling
Shareholders with respect to the Offering.
To induce the Underwriters that may participate in the Offering to
continue their efforts in connection with the Offering, the undersigned hereby
agrees that, without the prior written consent of Xxxxxx Xxxxxx Partners (which
consent may be withheld in its sole discretion), it will not, during the period
commencing on the date hereof and ending 90 days after the date of the final
prospectus relating to the Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. In addition, the undersigned agrees that, without the prior
written consent of Xxxxxx Xxxxxx Partners (which consent may be withheld in its
sole discretion), it will not, during the period commencing on the date hereof
and ending 90 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. With respect to the Offering, the undersigned waives any registration
rights relating to registration under the
Securities Act of any Common Stock owned either of record or beneficially by the
undersigned, including any rights to receive notice of the Offering.
The foregoing restrictions are expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a sale or disposition of the
Common Stock even if such Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer shares of
Common Stock (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein, (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, (iii) to the Underwriters
pursuant to the Underwriting Agreement, or (iv) in transactions relating to
shares of Common Stock acquired by the undersigned in open market transactions
after the completion of the Offering. For purposes of this Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. In addition, notwithstanding the foregoing, if the
undersigned is a corporation, business trust, association, limited liability
company, partnership, limited liability partnership or other entity
(collectively, the "Entities" or individually, the "Entity"), the undersigned
may transfer the capital stock of the Company to any Entity which is directly or
indirectly controlled by, or is under common control with the undersigned;
provided, however, that in any such case, it shall be a condition to the
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock except in
accordance with this Agreement, and provided further that any such transfer
shall not involve a disposition for value.
The undersigned understands that whether or not the Offering actually
occurs depends on a number of factors, including stock market conditions. The
Offering will only be made pursuant to an Underwriting Agreement, the terms of
which are subject to negotiation among the Company and the Underwriters.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Very truly yours,
_____________________________________
(Name)
_____________________________________
(Address)
SCHEDULES
---------
A List of Underwriters
B List of Selling Shareholders
EXHIBITS
--------
A Form of Legal Opinion of Company Counsel
B Form of Legal Opinion of Selling Shareholders' Counsel
C Form of Lock-Up Agreement
