Exhibit 1.1
6,500,000 Shares*
PEMSTAR INC.
Common Stock
UNDERWRITING AGREEMENT
August 19, 2003
XXXXXXX & COMPANY, INC.
U.S. BANCORP XXXXX XXXXXXX INC.
c/o Needham & Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Pemstar Inc., a Minnesota corporation (the "Company"), proposes to issue
and sell 6,500,000 shares (the "Firm Shares") of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), to Xxxxxxx & Company, Inc. and to
U.S. Bancorp Xxxxx Xxxxxxx Inc. (collectively, the "Underwriters"). The Company
has also agreed to grant to the Underwriters an option (the "Option") to
purchase up to an additional 975,000 shares of Common Stock, on the terms and
for the purposes set forth in Section 1(b) (the "Option Shares"). The Firm
Shares and the Option Shares are referred to collectively herein as the
"Shares."
The Company confirms as follows its agreement with the Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, (i) the Company agrees to issue and sell the Firm Shares to the
several Underwriters and (ii) each of the Underwriters, severally and not
jointly, agrees to purchase from the Company the respective number of Firm
Shares set forth opposite that Underwriter's name in Schedule I hereto, at the
purchase price of $2.73 for each Firm Share.
(b) Subject to all the terms and conditions of this Agreement, the Company
grants the Option to the several Underwriters to purchase, severally and not
jointly, up to 975,000 Option Shares at the same price per share as the
Underwriters shall pay for the Firm Shares. The Option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this Agreement upon written or telegraphic
notice (the "Option
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* Plus an option to purchase up to an additional 975,000 shares to cover over-
allotments.
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Shares Notice") by the Underwriters to the Company no later than 12:00 noon, New
York City time, at least two and no more than five business days before the date
specified for closing in the Option Shares Notice (the "Option Closing Date"),
setting forth the aggregate number of Option Shares to be purchased and the time
and date for such purchase. On the Option Closing Date, the Company will issue
and sell to the Underwriters the number of Option Shares set forth in the Option
Shares Notice, and each Underwriter will purchase such percentage of the Option
Shares as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Underwriters in such manner as they deem
advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to the
Underwriters against payment of the purchase price by wire transfer payable in
same-day funds to the order of the Company at the office of Xxxxxxx & Company,
Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City
time, on the third (or, if the purchase price set forth in Section 1(b) hereof
is determined after 4:30 p.m., Washington D.C. time, the fourth) business day
following the commencement of the offering contemplated by this Agreement, or at
such time on such other date, not later than seven business days after the date
of this Agreement, as may be agreed upon by the Company and you (such date is
hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
If you so elect, delivery of the Firm Shares may be made by credit through
full fast transfer to the accounts at The Depository Trust Company designated by
you. Certificates evidencing the Shares shall be in definitive form and shall be
registered in such names and in such whole share denominations as the
Underwriters shall request at least two business days prior to the Closing Date
or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps and other transfer taxes, if any, in
connection with the issuance and delivery of the Firm Shares and Option Shares
by the Company to the respective Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any subsequent holder of the
Shares harmless from any and all liabilities with respect to or resulting from
any failure or delay in paying Federal and state stamp and other transfer taxes,
if any, which may be payable or determined to be payable in connection with the
original issuance or sale to such Underwriter of the Shares.
3. Representations and Warranties of the Company. The Company represents,
warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-75284) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
have been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the Commission
and declared effective. The term "Registration Statement" means the registration
statement as amended by the most recent post-effective amendment thereto filed
or deemed filed prior to the execution and delivery of this Agreement at the
time it becomes or became effective (the "Effective Date"), including all
documents incorporated by reference therein, financial statements and all
exhibits and schedules thereto, and includes any registration statement relating
to the offering contemplated by this Agreement and filed pursuant to Rule 462(b)
of the Rules and Regulations. The term "preliminary prospectus" means the
prospectus dated January 4, 2002 (the "Base Prospectus") as supplemented by a
preliminary prospectus supplement relating to the Shares, including the
documents incorporated by reference therein, as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and furnished to the
Underwriters for use in connection with the offering of Shares. The term
"Prospectus" means the Base Prospectus, as supplemented by a prospectus
supplement relating to the Shares, including the documents incorporated by
reference therein, as first filed with the Commission after execution of this
Agreement pursuant to Rule 424(b) of the Rules and Regulations and furnished to
the Underwriters for use in connection with the offering of Shares. Any
reference herein to the
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terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the Effective Date, the date of any
preliminary prospectus or the date of the Prospectus, as the case may be, and
deemed to be incorporated therein by reference.
(b) No order preventing or suspending the use of any preliminary prospectus
has been issued by the Commission, and no stop order suspending the
effectiveness of the Registration Statement (including any related registration
statement filed pursuant to Rule 462(b) under the Act) or any post-effective
amendment thereto has been issued, and no proceeding for that purpose has been
initiated or threatened by the Commission. On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b) at all
times during the period through and including the Closing Date and, if later,
the Option Closing Date and when any further post-effective amendment to the
Registration Statement becomes effective prior to completion of the distribution
of the Shares or any amendment or supplement to the Prospectus is filed with the
Commission prior to completion of the distribution of the Shares, the
Registration Statement and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included in the Prospectus, did and
will comply with all applicable provisions of the Act, the Exchange Act, the
rules and regulations under the Exchange Act (the "Exchange Act Rules and
Regulations"), and the Rules and Regulations and will contain all statements
required to be stated therein in accordance with the Act, the Exchange Act, the
Exchange Act Rules and Regulations, and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective prior to completion of the distribution of the
Shares, no part of the Registration Statement, the Prospectus or any such
amendment or supplement thereto did or will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. At the
Effective Date, the date the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing Date, the Prospectus did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on and
in conformity with information relating to any Underwriter furnished in writing
to the Company by the Underwriters specifically for inclusion in the
Registration Statement, preliminary prospectus or Prospectus or any amendment or
supplement thereto. The Company acknowledges that the statements set forth in
the second and third sentences in the second paragraph and in the eighth, ninth,
tenth and eleventh paragraphs under the heading "Underwriting" in the Prospectus
constitute the only information relating to any Underwriter furnished in writing
to the Company by the Underwriters specifically for inclusion in the
Registration Statement, preliminary prospectus or Prospectus.
(c) The documents that are incorporated by reference in the preliminary
prospectus and the Prospectus or from which information is so incorporated by
reference, when they became or become effective or were or are filed with the
Commission, as the case may be, complied or will comply in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
Rules and Regulations or the Exchange Act Rules and Regulations, as applicable;
and any documents so filed and incorporated by reference subsequent to the
Effective Date and prior to completion of the distribution of the Shares shall,
when they are filed with the Commission, comply in all material respects with
the requirements of the Act or the Exchange Act, as applicable, and the Rules
and Regulations or the Exchange Act Rules and Regulations, as applicable.
(d) The Company does not own, and at the Closing Date and, if later, the
Option Closing Date, will not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or have any
equity interest in any corporation, firm, partnership, joint venture,
association or other entity, other than the subsidiaries listed in Exhibit 21.1
to the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2003 (the "Subsidiaries"). The Company and each of its Subsidiaries is, and at
the Closing Date and, if later, the Option Closing Date, will be, a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Company and each of its Subsidiaries has, and
at the Closing Date and, if later, the Option Closing Date, will have, full
power and authority to conduct all the activities conducted by it, to own or
lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company and each
of its Subsidiaries is, and at the Closing Date and, if later, the Option
Closing Date, will be, duly licensed or qualified to do business and in good
standing as a foreign corporation in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased
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by it makes such license or qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not materially and
adversely affect the business, properties, condition (financial or other) or
results of operations of the Company and its Subsidiaries taken as a whole (such
effect is referred to herein as a "Material Adverse Effect"). All of the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued and are fully paid and nonassessable, and owned by the
Company except for Pemstar Thailand Limited, of which the Company owns 99.99% of
the outstanding capital stock and Pemstar de Mexico, S.A. de C.V., of which the
Company owns 99.99% of the outstanding capital stock, and all of the outstanding
shares of capital stock of each Subsidiary owned by the Company are free and
clear of all claims, liens, charges and encumbrances; there are no securities
outstanding that are convertible into or exercisable or exchangeable for capital
stock of any Subsidiary. The Company is not, and at the Closing Date and, if
later, the Option Closing Date, will not be, engaged in any discussions or a
party to any agreement or understanding, written or oral, regarding the
acquisition of an interest in any corporation, firm, partnership, joint venture,
association or other entity where such discussions, agreements or understandings
would require amendment to the Registration Statement pursuant to applicable
securities laws. Complete and correct copies of the articles of incorporation
and of the by-laws of the Company and each of its Subsidiaries and all
amendments thereto have been delivered to the Underwriters, and no changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Option Closing Date.
(e) All of the outstanding shares of capital stock of the Company have been
duly authorized, validly issued and are fully paid and nonassessable and were
issued in compliance with all applicable state and federal securities laws; the
Shares have been duly authorized and when issued and paid for as contemplated
herein will be validly issued, fully paid and nonassessable; no preemptive or
similar rights exist with respect to any of the Shares or the issue and sale
thereof. The description of the capital stock of the Company in the Registration
Statement and the Prospectus is, and at the Closing Date and, if later, the
Option Closing Date, will be, complete and accurate in all respects. Except as
set forth in the Prospectus, the Company does not have outstanding, and at the
Closing Date and, if later, the Option Closing Date, will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of capital stock, or any such warrants, convertible
securities or obligations. No further approval or authority of shareholders or
the Board of Directors of the Company will be required for the issuance and sale
of the Shares as contemplated herein.
(f) The financial statements and schedules included or incorporated by
reference in the Registration Statement or the Prospectus present fairly the
financial condition of the Company and its consolidated Subsidiaries as of the
respective dates thereof and the results of operations and cash flows of the
Company and its consolidated Subsidiaries for the respective periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. No other financial statements or schedules of the
Company are required by the Act, the Exchange Act, the Exchange Act Rules and
Regulations or the Rules and Regulations to be included in the Registration
Statement or the Prospectus. Ernst & Young LLP (the "Accountants"), who have
reported on such financial statements and schedules, are not in violation of the
auditor independence requirements of the Exchange Act Rules and Regulations and
the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act"), and, to the Company's
knowledge after reasonable diligence, are independent accountants with respect
to the Company as required by the Act and the Rules and Regulations. The summary
consolidated financial and statistical data included in the Registration
Statement present fairly the information shown therein and have been compiled on
a basis consistent with the audited financial statements presented in the
Registration Statement.
(g) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus and prior to or on the Closing
Date and, if later, the Option Closing Date, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (i) there has not
been and will not have been any change in the capitalization of the Company
(other than in connection with the exercise of options to purchase the Company's
Common Stock granted pursuant to the Company's stock option plans from the
shares reserved therefor as described in the Registration Statement), or any
material adverse change in the business, properties, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, arising for any reason whatsoever, (ii) neither the Company nor any of
its Subsidiaries has incurred nor will any of them incur, except in the ordinary
course of business as described in the Prospectus, any material liabilities or
obligations, direct or contingent, nor has the Company or any of its
Subsidiaries entered into nor will it enter into, except in the
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ordinary course of business as described in the Prospectus, any material
transactions other than pursuant to this Agreement and the transactions referred
to herein and (iii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock.
(h) The Company is not, will not become as a result of the transactions
contemplated hereby, and will not conduct its business in a manner that would
cause it to become, an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the Prospectus,
there are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company, or any of its Subsidiaries
or any of its or their officers in their capacity as such, nor any basis
therefor, before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding could have a Material Adverse Effect.
(j) The Company and each Subsidiary has, and at the Closing Date and, if
later, the Option Closing Date, will have, performed all the obligations
required to be performed by it, and is not, and at the Closing Date, and, if
later, the Option Closing Date, will not be, in default, under any contract or
other instrument to which it is a party or by which its property is bound or
affected, which default could have a Material Adverse Effect. To the knowledge
of the Company, no other party under any contract or other instrument to which
it or any of its Subsidiaries is a party is in default in any respect
thereunder, which default could have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is, and at the Closing Date and, if later,
the Option Closing Date, will not be, in violation of any provision of its
certificate or articles of organization or by-laws or other organizational
documents.
(k) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part contemplated herein,
except such as have been obtained under the Act or the Rules and Regulations and
such as may be required under state securities or Blue Sky laws or the by-laws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase and distribution by the Underwriters of the
Shares.
(l) The Company has full corporate power and authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with the terms hereof, except as
to (i) rights to indemnity and contribution hereunder, which may be limited
under applicable law, (ii) bankruptcy and laws relating to the rights and
remedies of creditors generally and (iii) the availability of equitable
remedies. The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate or articles of
incorporation or by-laws of the Company or any of its Subsidiaries, any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of its or their properties is bound or affected, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the business or properties of
the Company or any of its Subsidiaries.
(m) The Company and its Subsidiaries have good and marketable title to all
properties and assets described in the Prospectus as owned by them, free and
clear of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material to the business of the Company
and its Subsidiaries taken as a whole, except for properties and assets disposed
of in the ordinary course of business. The Company and its Subsidiaries have
valid, subsisting and enforceable leases for the properties described in the
Prospectus as leased by them. The Company and its Subsidiaries own or lease all
such properties as are necessary to their operations as now conducted or as
proposed to be conducted, except where the failure to so own or lease would not
have a Material Adverse Effect.
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(n) There is no document, contract, permit or instrument of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required. All such contracts to which the Company or any of its
Subsidiaries is a party have been duly authorized, executed and delivered by the
Company or such Subsidiary, constitute valid and binding agreements of the
Company or such Subsidiary and are enforceable against and by the Company or
such Subsidiary in accordance with the terms thereof except as to bankruptcy and
laws relating to the rights and remedies of creditors generally and the
availability of equitable remedies.
(o) No statement, representation, warranty or covenant made by the Company
in this Agreement or made in any certificate or document required by Section 4
of this Agreement to be delivered to the Underwriters was or will be, when made,
inaccurate, untrue or incorrect.
(p) The Company has not distributed and will not distribute prior to the
later of (i) the Closing Date or, if later, the Option 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
prospectuses, the Prospectus, the Registration Statement and other materials, if
any, permitted by the Act and the Rules and Regulations. Neither the Company nor
any of its directors, officers or controlling persons has taken, directly or
indirectly, any action designed, or which might reasonably be expected, to cause
or result, under the Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(q) No holder of securities of the Company has rights to the registration
of any securities of the Company because of the filing of the Registration
Statement, which rights have not been waived by the holder thereof as of the
date hereof.
(r) The common stock (including the Shares) 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 National Association of
Securities Dealers, Inc. is contemplating terminating such registration or
listing. The Company has filed a notification to list the Shares on the Nasdaq
National Market.
(s) Except as disclosed in or specifically contemplated by the Prospectus
(i) the Company has and its Subsidiaries have sufficient trademarks, trade
names, patents, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as now conducted, and to
the Company's knowledge, none of the foregoing intellectual property rights
owned or licensed by the Company is invalid or unenforceable, (ii) the Company
has no knowledge of any infringement by it or any of its Subsidiaries of
trademarks, trade name rights, patents, patent rights, mask work rights,
copyrights, licenses, trade secrets or other similar rights of others, where
such infringement could have a Material Adverse Effect, (iii) the Company is not
aware of any infringement, misappropriation or violation by others of, or
conflict by others with rights of the Company with respect to, any of the
foregoing intellectual property rights, and (iv) there is no claim being made
against the Company or any of its Subsidiaries, or to the Company's knowledge,
any employee of the Company or any of its Subsidiaries, regarding trademark,
trade name, patent, mask work, copyright, license, trade secret or other
infringement which could have a Material Adverse Effect.
(t) The Company and each of its Subsidiaries has filed all federal, state,
local and foreign income tax returns which have been required to be filed and
has paid all taxes and assessments received by it to the extent that such taxes
or assessments have become due, other than any taxes being contested in good
faith. Neither the Company nor any of its Subsidiaries has any tax deficiency
which has been or, to the knowledge of the Company, might be asserted or
threatened against it which could have a Material Adverse Effect.
(u) The Company or its Subsidiaries owns or possesses all authorizations,
approvals, orders, licenses, registrations, other certificates and permits of
and from all governmental regulatory officials and bodies, necessary to conduct
their respective businesses as contemplated in the Prospectus, except where the
failure to own or possess all such authorizations, approvals, orders, licenses,
registrations, other certificates and permits would not have a Material Adverse
Effect. There is no proceeding pending or, to the knowledge of the Company,
threatened (or any
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basis therefor known to the Company) which may cause any such authorization,
approval, order, license, registration, certificate or permit to be revoked,
withdrawn, cancelled, suspended or not renewed; and the Company and each of its
Subsidiaries is conducting its business in compliance with all laws, rules and
regulations applicable thereto (including, without limitation, all applicable
federal, state, provincial, local and foreign environmental laws and
regulations) except where such noncompliance would not have a Material Adverse
Effect.
(v) The Company and each of its Subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for their businesses,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and its Subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(w) Neither the Company nor any of its Subsidiaries has nor, to the
Company's knowledge, any of its or their respective employees or agents at any
time during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(x) The Company 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 authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(y) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement or the consummation
of the transaction contemplated hereby.
(z) Neither the Company nor, to the knowledge of the Company, any of its
affiliates is presently doing business with the government of Cuba or with any
person or affiliate located in Cuba.
(aa) The Company is in compliance in all material respects with all
applicable provisions of the Xxxxxxxx-Xxxxx Act and related Rules and
Regulations of the Commission that are effective.
(bb) The Company has established and maintains disclosure control and
procedures (as defined in Rules 13a-15e under the Exchange Act) and such
disclosure controls and procedures are effective in timely alerting the
Company's chief executive officer and chief financial officer to material
information relating to the Company, including its subsidiaries, required to be
included in the Company's periodic filings with the Commission. The Company has
utilized such disclosure controls and procedures in preparing and evaluating the
disclosures in the Registration Statement and Prospectus. There have been no
significant changes in internal controls over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) since the date of the most recent
evaluation of the Company's disclosure controls and procedures.
4. Agreements of the Company. The Company covenants and agrees with the
several Underwriters as follows:
(a) Immediately following the execution of this Agreement, the Company will
prepare, in a form approved by the Underwriters, a prospectus supplement (the
"Prospectus Supplement") containing the public offering price and other selling
terms of the Shares, the plan of distribution thereof and such other information
as may be required by the Act and the Rules and Regulations and will file the
Prospectus Supplement with the Commission pursuant to and in accordance with
Rule 424(b) within the time period required by Rule 424(b). The Company will not
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Underwriters within a reasonable period of time prior to the filing thereof and
the Underwriters shall not have objected thereto in good faith.
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(b) The Company will notify the Underwriters promptly, and will confirm
such advice in writing, (i) when any post-effective amendment to the
Registration Statement becomes effective, (ii) of any request by the Commission
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (iv) of
the happening of any event during the period mentioned in the second sentence of
Section 4(e) that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in the light of the circumstances in which they are made,
not misleading and (v) of receipt by the Company or any representative or
attorney of the Company of any other communication from the Commission relating
to the Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company elects to rely upon Rule 462(b) under the Act,
the Company shall file a registration statement under Rule 462(b) 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 such Rule 462(b) registration
statement or give irrevocable instructions for the payment of such fee pursuant
to the Rules and Regulations.
(c) The Company will furnish to each Underwriter and counsel for the
Underwriters, without charge, one signed copy of each of the Registration
Statement and of any pre- or post-effective amendment thereto.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) From time to time, the Company will deliver to each of the
Underwriters, without charge, as many copies of the Prospectus or any amendment
or supplement thereto as the Underwriters may reasonably request. The Company
consents to the use of the Prospectus or any amendment or supplement thereto by
the several Underwriters and by all dealers to whom the Shares may be sold, both
in connection with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur which
in the judgment of the Company or counsel to the Underwriters should be set
forth in the Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto, and will deliver to each of the Underwriters, without charge,
such number of copies of such supplement or amendment to the Prospectus as the
Underwriters may reasonably request. The Company will not file any document
under the Exchange Act or the Exchange Act Rules and Regulations before the
termination of the offering of the Shares by the Underwriters, if such document
would be deemed to be incorporated by reference into the Prospectus, that is not
approved by the Underwriters after reasonable notice thereof, which approval
shall not be unreasonably withheld or delayed in a manner that causes the
Company to not be in compliance with its obligations in respect of the Exchange
Act or the Exchange Act Rules and Regulations.
(f) Prior to any public offering of the Shares, the Company will cooperate
with the Underwriters and counsel to the Underwriters in connection with the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Underwriters may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject.
(g) The Company will, so long as and to the extent required under the Rules
and Regulations, furnish to its shareholders after the end of each fiscal year
an annual report (including a balance sheet and statements of income,
shareholders' equity and cash flow of the Company and its consolidated
Subsidiaries, if any, certified by independent public accountants) and, after
the end of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the Effective Date of the Registration
Statement), consolidated summary financial information of the Company and its
Subsidiaries, if any, for such quarter in reasonable detail. The Company shall
be deemed to have met its obligations pursuant to this Section 4(g) upon the
timely filing of its
8
Quarterly Reports on Form 10-Q and Annual Report on Form 10-K with the
Commission, provided such reports are publicly available on the Commission's
XXXXX database.
(h) During the period of five years commencing on the Effective Date, the
Company will furnish to the Underwriters who may so request copies of such
financial statements and other periodic and special reports as the Company may
from time to time distribute generally to the holders of any class of its
capital stock, and will furnish to each Underwriter who may so request a copy of
each annual or other report it shall be required to file with the Commission.
The Company shall be deemed to have met its obligations pursuant to this Section
4(h) upon the timely filing of such information with the Commission, provided
such reports are publicly available on the Commission's XXXXX database.
(i) The Company will make generally available to holders of its securities
as soon as may be practicable but in no event later than the Availability Date
(as defined below) an earning statement (which need not be audited but shall be
in reasonable detail) covering a period of 12 months commencing after the
Effective Date which will satisfy the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations). For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes such Effective
Date, except that if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(j) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay or reimburse
if paid by the Underwriters all costs and expenses incident to the performance
of the obligations of the Company under this Agreement and in connection with
the transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits to it, each preliminary prospectus,
Prospectus and any amendment or supplement to the Registration Statement or
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement Among Underwriters,
any Selected Dealer Agreements, any Underwriters' Questionnaires, any
Underwriters' Powers of Attorney, and any invitation letters to prospective
Underwriters, (iv) furnishing (including costs of shipping and mailing) such
copies of the Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may be 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 listing of the Shares on the
NNM, (vi) any filings required to be made by the Underwriters with the NASD, and
the fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (vii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (viii) fees, disbursements and other charges of counsel to the
Company (but not those of counsel for the Underwriters, except as otherwise
provided herein) and (ix) the transfer agent for the Shares.
(k) The Company will not at any time, directly or indirectly, take any
action designed or which might reasonably be expected to cause or result in, or
which will constitute, stabilization of the price of the shares of Common Stock
to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and sale of
the Shares to be sold by the Company in the manner set forth in the Prospectus
under "Use of Proceeds."
(m) During the period beginning from the date hereof and continuing to and
including the date 90 days after the date of the Prospectus Supplement, without
the prior written consent of Xxxxxxx & Company, Inc., the Company will not (1)
offer, sell, contract to sell, pledge, grant options, warrants or rights to
purchase, or otherwise dispose of any equity securities of the Company or any
other securities convertible into or exchangeable for its Common Stock or other
equity security (other than pursuant to employee stock option or purchase plans
disclosed in the Prospectus or pursuant to the conversion of convertible
securities or the exercise of warrants in each case outstanding on the date of
this Agreement), or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise.
9
(n) During the period of 90 days after the date of the Prospectus
Supplement, the Company will not, without the prior written consent of Xxxxxxx &
Company, Inc., grant options to purchase shares of Common Stock at a price less
than the fair market value thereof at the time of grant; provided that the
Company may grant options to purchase shares of Common Stock pursuant to the
employee stock purchase plan disclosed in the Prospectus. During the period of
90 days after the date of the Prospectus Supplement, the Company will not file
with the Commission or cause to become effective any registration statement
relating to any securities of the Company, other than registration statements on
Form S-8, without the prior written consent of Xxxxxxx & Company, Inc., which
consent shall not be unreasonably withheld.
(o) The Company will cause each of its officers, directors and certain
shareholders designated by the Underwriters to, enter into lock-up agreements
with the Underwriters to the effect that they will not, without the prior
written consent of Xxxxxxx & Company, Inc., sell, contract to sell or otherwise
dispose of any shares of Common Stock or rights to acquire such shares according
to the terms set forth in Schedule II hereto. The Company will enforce the terms
of each lock-up agreement and issue stop-transfer instructions to the transfer
agent for the common stock with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the applicable
lock-up agreement.
(p) Other than as contemplated by this Agreement, the Company will not
incur any liability for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
(q) The Company will file with the Commission such periodic and special
reports as required by the Rules and Regulations during the period from the date
hereof through and including the completion of the distribution of the Shares.
(r) During the period from the date hereof through and including the
completion of the distribution of the Shares, 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 designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms, including
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer and its principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure, to ensure that material
information relating to Company, including its subsidiaries, is made known to
them by others within those entities.
(s) During the period from the date hereof through and including the
completion of the distribution of the Shares, the Company and its subsidiaries
will comply with all effective applicable provisions of the Xxxxxxxx-Xxxxx Act.
5. Conditions of the Obligations of the Underwriters. The obligations of
each Underwriter hereunder are subject to the following conditions:
(a) The Prospectus, as amended and supplemented, shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the Rules and Regulations and in accordance with
Section 4(a) hereof. If the Company has elected to rely upon Rule 462(b), the
registration statement filed under Rule 462(b) shall have become effective by
10:00 P.M., Washington, D.C. time, on the date of this Agreement.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied
10
with to the satisfaction of the staff of the Commission or such authorities,
(iv) after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to the Underwriters and the Underwriters do not object thereto
in good faith, and (v) the Underwriters shall have received certificates, dated
the Closing Date and, if later, the Option Closing Date and signed by the Chief
Executive Officer and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii) of this paragraph.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, properties,
management, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, in each case other than as
described in or contemplated by the Registration Statement and the Prospectus,
and (ii) the Company shall not have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not
described in the Registration Statement and the Prospectus, if in the judgment
of the Underwriters any such development makes it impracticable or inadvisable
to consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company, any of its Subsidiaries, or
any of its or their officers or directors in their capacities as such, before or
by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would, in
the judgment of the Underwriters, materially and adversely affect the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
(e) Each of the representations and warranties of the Company contained
herein shall be true and correct in all material respects at the Closing Date
and, with respect to the Option Shares, at the Option Closing Date, and all
covenants and agreements contained herein to be performed on the part of the
Company and all conditions contained herein to be fulfilled or complied with by
the Company at or prior to the Closing Date and, with respect to the Option
Shares, at or prior to the Option Closing Date, shall have been duly performed,
fulfilled or complied with.
(f) The Underwriters shall have received an opinion, dated the Closing Date
and, with respect to the Option Shares, the Option Closing Date, satisfactory in
form and substance to the Underwriters and counsel for the Underwriters from
Xxxxxx & Xxxxxxx LLP, counsel to the Company, with respect to the following
matters:
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; has
full corporate power and authority to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and Prospectus; and is duly qualified to do business and is in
good standing as a foreign corporation in all jurisdictions within the
United States in which the nature of the activities conducted by it or the
location of the assets owned or leased by it makes such qualification
necessary, except where the failure to be so qualified would not have a
Material Adverse Effect.
(ii) All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued and are fully paid and
nonassessable;
(iii) The specimen certificate evidencing the Common Stock filed as
an exhibit to the Registration Statement is in due and proper form under
Minnesota law, the Shares have been duly authorized and, upon issuance,
delivery and payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and nonassessable; and no preemptive or similar
rights exist with respect to any of the Shares or the issue and sale
thereof.
(iv) All of the outstanding shares of capital stock of each
Subsidiary are owned by the Company except for Pemstar Thailand Limited, of
which the Company owns 99.99% of the outstanding
11
capital stock and Pemstar de Mexico, S.A. de C.V., of which the Company
owns 99.99% of the outstanding capital stock.
(v) The authorized and outstanding capital stock of the Company is as
set forth in the Registration Statement and the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement or pursuant to reservations,
agreements, employee benefit plans or the exercise of convertible
securities, options or warrants referred to in the Prospectus). The
description of the capital stock of the Company in the Registration
Statement and the Prospectus conforms in all material respects to the terms
thereof.
(vi) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
Subsidiaries is a party or to which any of their respective properties is
subject that are required to be described in the Registration Statement or
the Prospectus but are not so described.
(vii) No consent, approval, authorization or order of, and no notice
to or filing with, any court or governmental agency or body is required for
the consummation by the Company of the transactions on its part
contemplated under this Agreement, except such as have been obtained or
made under the Act or the Rules and Regulations and such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the
NASD in connection with the purchase and distribution by the Underwriters
of the Shares (as to which counsel need express no opinion).
(viii) The Company has corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The execution and delivery of this Agreement, the compliance by
the Company with all of the terms hereof and the consummation of the
transactions contemplated hereby does not contravene any provision of
applicable law or the Articles of Incorporation or By-Laws of the Company
or any of its Subsidiaries, and to such counsel's knowledge will not result
in the creation or imposition of any lien, charge or encumbrance upon any
of the assets of the Company or any of its Subsidiaries pursuant to the
terms and provisions of, result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or give any party a
right to terminate any of its obligations under, or result in the
acceleration of any obligation under, any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other
agreement or instrument filed by the Company as an exhibit under the
Exchange Act and the Exchange Act Rules and Regulations and incorporated by
reference into the Prospectus to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries,
or any of their respective properties is bound or affected, or violate or
conflict with (i) any judgment, ruling, decree or order known to such
counsel or (ii) any statute, rule or regulation of any court or other
governmental agency or body, applicable to the business or properties of
the Company or any of its Subsidiaries (except for state securities or Blue
Sky laws and the by-laws and rules of the NASD, as to which such counsel
need express no opinion).
(x) The descriptions in the Registration Statement and Prospectus of
statutes, regulations, legal and governmental proceedings, contracts and
other documents are accurate and fairly present, in all material respects,
the information required to be shown; and such counsel does not know of any
statutes, regulations, legal or government proceedings or contracts or
other documents required to be described in the Prospectus or included as
exhibits to the Registration Statement or any current or periodic report
incorporated in the Prospectus that are not described or included as
required.
(xi) The statements under the captions "Risk Factors -- Provisions in
our charter documents and Minnesota law may delay or prevent an unsolicited
takeover effort to acquire our company, which could inhibit your ability to
receive an acquisition premium for your shares" and "Description of Common
Stock," in the Prospectus, and under the captions "Executive Compensation
-- Employment Contracts for Executive Officers, and -- Change in Control
Arrangements," and "Certain Relationships and Related
12
Transactions -- Loans to Executive Officers" in the Company's Definitive
Proxy Statement for the 2003 Annual Meeting of Shareholders insofar as the
statements constitute a summary of documents referred to therein or matters
of law, are accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to such
documents and matters (provided, however, that such counsel may rely on
representations of the Company with respect to the factual matters
contained in such statements, and provided further that such counsel shall
state that nothing has come to the attention of such counsel which leads
them to believe that such representations are not true and correct in all
material respects).
(xii) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended.
(xiii) The Shares have been duly authorized for listing on the NNM,
subject to notice of issuance.
(xiv) To such counsel's knowledge, no holder of securities of the
Company has rights, which have not been waived or satisfied, to require the
register with the Commission shares of Common Stock or other securities, as
part of the offering contemplated hereby.
(xv) The Registration Statement has become effective under the Act,
and to such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for that
purpose has been instituted or is pending, threatened or contemplated.
(xvi) The Registration Statement and the Prospectus comply as to form
in all material respects with the requirements of the Act and the Rules and
Regulations (other than the financial statements, schedules and other
financial data contained or incorporated by reference in the Registration
Statement or the Prospectus, as to which such counsel need express no
opinion). The conditions for use of Form S-3, set forth in the General
Instructions thereto, have been satisfied.
(xvii) The documents incorporated by reference in the Prospectus
(other than the financial statements, schedules and other financial data
contained therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act and the Exchange Act
Rules and Regulations.
In rendering such opinion, such counsel may rely upon as to matters of
local law on opinions of counsel satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, provided that the opinion of
counsel to the Company shall state that they are doing so, that they have no
reason to believe that they and the Underwriters are not entitled to rely on
such opinions and that copies of such opinions are to be attached to the
opinion.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated as of the applicable Closing
Date, in form and substance satisfactory to the Underwriters, to the effect that
such counsel has participated in the preparation of the Registration Statement
and Prospectus and has no reason to believe that, as of the Effective Date the
Registration Statement, or any amendment or supplement thereto, (other than the
financial statements, schedules and other financial data contained or
incorporated by reference therein or omitted therefrom, as to which such counsel
need make no statement) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, or any
amendment or supplement thereto, as of its date and the Closing Date and, if
later, the Option Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (other than the financial statements, schedules and other
financial data contained or incorporated by reference therein or omitted
therefrom, as to which such counsel need make no statement).
13
(g) The Underwriters shall have received an opinion, dated the Closing Date
and the Option Closing Date, from Faegre & Xxxxxx, LLP, counsel to the
Underwriters, with respect to the Registration Statement, the Prospectus and
this Agreement, which opinion shall be satisfactory in all respects to the
Underwriters.
(h) Concurrently with the execution and delivery of this Agreement, the
Accountants shall have furnished to the Underwriters a letter, dated the date of
its delivery, addressed to the Underwriters and in form and substance
satisfactory to the Underwriters, confirming that they are independent
accountants with respect to the Company and its Subsidiaries as required by the
Act and the Exchange Act and the Rules and Regulations and with respect to
certain financial and other statistical and numerical information contained or
incorporated by reference in the Registration Statement. At the Closing Date
and, as to the Option Shares, the Option Closing Date, the Accountants shall
have furnished to the Underwriters a letter, dated the date of its delivery,
which shall confirm, on the basis of a review in accordance with the procedures
set forth in the letter from the Accountants, that nothing has come to their
attention during the period from the date of the letter referred to in the prior
sentence to a date (specified in the letter) not more than three days prior to
the Closing Date and the Option Closing Date, as the case may be, which would
require any change in their letter dated the date hereof if it were required to
be dated and delivered at the Closing Date and the Option Closing Date.
(i) Concurrently with the execution and delivery of this Agreement and at
the Closing Date and, as to the Option Shares, the Option Closing Date, there
shall be furnished to the Underwriters a certificate, dated the date of its
delivery, signed by each of the Chief Executive Officer and the Chief Financial
Officer of the Company, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus) and (A) as of the date of such certificate, such documents are
true and correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not untrue or misleading and (B) in the case of the
certificate delivered at the Closing Date and the Option Closing Date,
since the Effective Date no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading.
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct.
(iii) Each of the covenants required to be performed by the Company
herein on or prior to the date of such certificate has been duly, timely
and fully performed and each condition herein required to be satisfied or
fulfilled on or prior to the date of such certificate has been duly, timely
and fully satisfied or fulfilled.
(j) On or prior to the Closing Date, the Underwriters shall have received
the executed agreements referred to in Section 4(o).
(k) The Shares shall be qualified for sale in such jurisdictions as the
Underwriters may reasonably request and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
or the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall have been duly authorized
for listing on the NNM upon official notice of issuance.
(m) The Company shall have furnished to the Underwriters such certificates,
in addition to those specifically mentioned herein, as the Underwriters may have
reasonably requested as to the accuracy and completeness at the Closing Date and
the Option Closing Date of any statement in the Registration Statement or the
Prospectus, as to the accuracy at the Closing Date and the Option Closing Date
of the representations and warranties of the Company herein, as to the
performance by the Company of its obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Underwriters.
14
6. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, liabilities, expenses and damages (including any and all investigative,
legal and other expenses reasonably 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 Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on 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 or supplement to the Registration
Statement or the Prospectus, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading in the light of the circumstances in which
they were made, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained herein
or any failure of the Company to perform its obligations hereunder or under law
in connection with the transactions contemplated hereby; provided, however, that
(i) the Company will not be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Shares in the public
offering to any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Underwriters, expressly for inclusion in the Registration
Statement, the preliminary prospectus or the Prospectus and (ii) the Company
will not be liable to any Underwriter, the directors, officers, employees or
agents of such Underwriter or any person controlling such Underwriter with
respect to any loss, claim, liability, expense, or damage arising out of or
based on any untrue statement or omission or alleged untrue statement or
omission or alleged omission to state a material fact in the preliminary
prospectus which is corrected in the Prospectus if the person asserting any such
loss, claim, liability, charge or damage purchased Shares from such Underwriter
but was not sent or given a copy of the Prospectus at or prior to the written
confirmation of the sale of such Shares to such person and if copies of the
Prospectus were timely delivered to such Underwriter pursuant to Section 4
hereof. This indemnity agreement will be in addition to any liability that the
Company might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who signs the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Underwriter, as set forth in
Section 6(a), but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
such Underwriter, expressly for use in the Registration Statement, the
preliminary prospectus or the Prospectus. This indemnity will be in addition to
any liability that each Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 6 shall, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 6, notify each such
indemnifying party in writing of the commencement of such action, enclosing with
such notice a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 6 unless,
and only to the extent that, such omission results in the loss of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the
15
indemnified party has been authorized in writing by the indemnifying party, (ii)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time for all
such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action 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 (i) includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an indemnified party. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld or
delayed).
(d) If the indemnification provided for in this Section 6 is applicable in
accordance with its terms but for any reason is held to be unavailable to or
insufficient (other than to the extent provided above for failure to give notice
if the indemnifying party is materially prejudiced thereby) to hold harmless an
indemnified party under paragraphs (a), (b) and (c) of this Section 6 in respect
of any losses, claims, liabilities, expenses and damages referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company
from persons other than the Underwriters, such as persons who control the
Company within the meaning of the Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for
contribution) by such indemnified party as a result of such losses, claims,
liabilities, expenses and damages in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand. The relative benefits received by the Company,
on the one hand, and the Underwriters, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other hand, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 6(d) shall be deemed to include, for
purposes of this Section 6(d), 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 6(d), no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 6(d) are several in proportion to their respective
16
underwriting obligations and not joint. For purposes of this Section 6(d), any
person who controls a party to this Agreement within the meaning of the Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against any such party in respect of which a claim for
contribution may be made under this Section 6(d), will notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 6(d). No party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this Section 6
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of the Underwriters, (ii) acceptance of
any of the Shares and payment therefor or (iii) any termination of this
Agreement.
7. Reimbursement of Certain Expenses. In addition to its other obligations
under Section 6(a) of this Agreement, the Company hereby agrees to reimburse on
a quarterly basis the Underwriters for all reasonable legal and other expenses
incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon, in
whole or in part, any statement or omission or alleged statement or omission, or
any inaccuracy in the representations and warranties of the Company contained
herein or failure of the Company to perform its or their respective obligations
hereunder or under law, all as described in Section 6(a), notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the obligations under this Section 7 and the possibility that such payment might
later be held to be improper; provided, however, that, to the extent any such
payment is ultimately held to be improper, the persons receiving such payments
shall promptly refund them.
8. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company from the Underwriters, without liability on the part of
any Underwriter to the Company if, prior to delivery and payment for the Firm
Shares or Option Shares, as the case may be, in the sole judgment of the
Underwriters, (i) trading in any of the equity securities of the Company shall
have been suspended by the Commission or by the NNM, (ii) trading in securities
generally on the New York Stock Exchange or the NNM shall have been suspended or
limited or minimum or maximum prices shall have been generally established on
such exchange or market, or additional material governmental restrictions, not
in force on the date of this Agreement, shall have been imposed upon trading in
securities generally by such exchange or market, by order of the Commission or
any court or other governmental authority, the New York Stock Exchange or the
NNM, (iii) a general banking moratorium shall have been declared by Federal, New
York State or Minnesota authorities or (iv) change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or escalation of hostilities or
other calamity or crisis shall have occurred, the effect of which is such as to
make it, in the sole judgment of the Underwriters, impracticable or inadvisable
to proceed with completion of the public offering or the delivery of and payment
for the Shares.
If this Agreement is terminated pursuant to Section 9 hereof, the Company
shall not be under any liability to any Underwriter except as provided in
Sections 4(j), 6 and 7 hereof; but, if for any other reason the purchase of the
Shares by the Underwriters is not consummated or if for any reason the Company
shall be unable to perform its obligations hereunder, the Company will reimburse
the several Underwriters for all out-of-pocket expenses (including the fees,
disbursements and other charges of counsel to the Underwriters) incurred by them
in connection with the offering of the Shares.
9. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares which it or they have
agreed to purchase hereunder, and the aggregate number of Firm 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 Firm Shares, the other
Underwriters shall be obligated, severally, to purchase the Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase, in the proportions which the number of Firm Shares which they have
respectively agreed to purchase pursuant to Section 1 bears to the aggregate
number of Firm Shares which all such non-defaulting Underwriters have so agreed
to
17
purchase, or in such other proportions as the Underwriters may specify; provided
that in no event shall the maximum number of Firm Shares which any Underwriter
has become obligated to purchase pursuant to Section 1 be increased pursuant to
this Section 9 by more than one-ninth of such number of Firm Shares without the
prior written consent of such Underwriter. In any such case either the
Underwriters or the Company shall have the right to postpone the Closing Date,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. If any Underwriter or Underwriters
shall fail or refuse to purchase any Firm Shares and the aggregate number of
Firm Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase exceeds one-tenth of the aggregate number of the Firm
Shares and arrangements satisfactory to the non-defaulting Underwriter and the
Company for the purchase of such Firm Shares are not made within 48 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Company for the purchase or sale of any
Shares under this Agreement. Any action taken pursuant to this Section 9 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 0000
Xxxxxxxxxx Xxxxx X.X., Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Chief Executive
Officer, with a copy to Xxxxxxx X. Xxxxx, Esq., Xxxxxx & Xxxxxxx LLP, 00 Xxxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000, or (b) if to the
Underwriters, at the offices of Xxxxxxx & Company, Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department, with a copy to
Xxxxxxx X. Xxxx, Esq., Faegre & Xxxxxx, LLP, 2200 Xxxxx Fargo Center, 00 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000. Any such notice shall be effective
only upon receipt. Any notice under such Section 8 or 9 may be made by
telecopier or telephone, but if so made shall be subsequently confirmed in
writing.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, and the controlling persons, directors and officers
referred to in Section 6, 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" as used in this Agreement shall
not include a purchaser, as such purchaser, of Shares from any of the several
Underwriters.
Any action required or permitted to be made by the Underwriters under this
Agreement may be taken by them jointly or by Xxxxxxx & Company, Inc.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
18
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby waive any right they may have
to a trial by jury in respect of any claim based upon or arising out of this
Agreement or the transactions contemplated hereby.
Please confirm that the foregoing correctly sets forth the agreement among
the Company and the several Underwriters.
Very truly yours,
PEMSTAR INC.
By: /s/ Xx Xxxxxxx
-------------------------------
Title: Chief Executive Officer
Confirmed as of the date
first above mentioned:
XXXXXXX & COMPANY, INC.
U.S. BANCORP XXXXX XXXXXXX INC.
By: XXXXXXX & COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Title: Principal
19
SCHEDULE I
UNDERWRITERS
Number of
Firm
Shares
Underwriters to be Purchased
------------ ---------------
Xxxxxxx & Company, Inc. ............................... 3,250,000
U.S. Bancorp Xxxxx Xxxxxxx Inc. ....................... 3,250,000
---------
Total ...................................... 6,500,000
=========
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SCHEDULE II
FORM OF LOCK-UP AGREEMENT
[AND DIRECTORS, OFFICERS AND SHAREHOLDERS
OF THE COMPANY WHO SHALL SIGN SUCH AGREEMENT]
The undersigned is a holder of securities of Pemstar, Inc., a Minnesota
corporation (the "Company"), and wishes to facilitate the public offering of
shares of the Common Stock (the "Common Stock") of the Company (the "Offering").
The undersigned recognizes that such Offering will be of benefit to the
undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby agrees that
he, she or it will not, without the prior written approval of Xxxxxxx & Company,
Inc., acting on its own behalf and/or on behalf of other representatives of the
underwriters, directly or indirectly, sell, contract to sell, make any short
sale, pledge, or otherwise dispose of, or enter into any hedging transaction
that is likely to result in a transfer of, any shares of Common Stock, options
to acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock of the Company which he, she or it may own, or
purchased in the public trading market, for a period commencing as of the date
hereof and ending on the date which is ninety (90) days after the date of the
final Prospectus Supplement relating to the Offering. The undersigned 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. The undersigned further confirms that the agreements of the
undersigned are irrevocable and shall be binding upon the undersigned's heirs,
legal representatives, successors and assigns. The undersigned agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of securities held by the undersigned except in
compliance with this Agreement. Notwithstanding the foregoing, the undersigned
may sell or otherwise transfer shares of Common Stock as a bona fide gift or
gifts, provided that the undersigned provides prior written notice of such gift
or gifts to you and the donee or donees (as the case may be) agree to be bound
by the restrictions set forth herein.
This Agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns.
-----------------------------------------
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