Exhibit 11
Xxxxxx Scientific International Inc.
Common Stock,
par value $0.01 per share
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Custody Agreement
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Xxxxxx Scientific International Inc.
Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned delivers to you as Custodian herewith one or more
certificates representing shares of the issued and outstanding common stock,
$0.01 par value per share (the "Common Stock"), of Xxxxxx Scientific
International Inc. (the "Company") and/or option agreements exercisable for
shares of Common Stock described on Schedule I to this Custody Agreement (the
certificate and/or option agreements being referred to collectively as the
"Common Certificates"). Each certificate representing shares of Common Stock
delivered herewith shall be delivered in negotiable deliverable form (a) with
signatures guaranteed by an Eligible Guarantor Institution which is a member of
a Medallion Signature Guarantee Program recognized by the Stock Transfer
Association or (b) accompanied by a duly executed stock power or powers
attached as Schedule II, in blank, bearing the signature of the undersigned so
guaranteed. Each option agreement delivered herewith shall be delivered with a
notice of exercise (the "Notice of Exercise"), executed in blank, in the form
attached as Schedule III.
The Common Certificates delivered herewith will represent at least as
many shares of Common Stock as the number of shares of Common Stock indicated
below the signature of the undersigned at the end of this letter, such number
of shares of Common Stock so indicated being the maximum aggregate number of
shares of Common Stock (the "Maximum Number") that the undersigned will agree
to sell to the Underwriters (as defined below) pursuant to the Underwriting
Agreement (as defined below) (including pursuant to any over-allotment option).
The Common Certificates are to be held by you as Custodian for the account of
the undersigned and are to be disposed of by you in accordance with this
Custody Agreement.
Concurrently with the execution and delivery of this Custody
Agreement, the undersigned has executed an irrevocable power of attorney
("Power of Attorney") to Xxxx X. XxXxxxx and Xxxxx X. Xxxxx, or their duly
designated substitutes (individually, an "Attorney" and, collectively, the
"Attorneys"), authorizing the Attorneys, or any one of them, inter alia, to
sell at the applicable Time of Delivery (as defined in the Underwriting
Agreement) from the number of shares of Common Stock held by you hereunder,
that number of shares of Common Stock specified to you in writing by an
Attorney (but not in excess of the Maximum Number) and for that purpose to
enter into and perform an Underwriting Agreement (the "Underwriting
Agreement"), among the Company, the Selling Stockholders (as defined in the
Underwriting
Agreement) and the underwriters (the "Underwriters") for whom Xxxxxxx, Sachs &
Co., Credit Suisse First Boston Corporation, X.X. Xxxxxx Securities Inc.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxx Xxxxxxx & Co.
Incorporated, are acting as representatives (the "Representatives"). The
undersigned has received and carefully reviewed a draft dated January 31, 2002
of the Underwriting Agreement and understands that the draft of the
Underwriting Agreement is subject to completion and further revision before
execution, subject to the limits set forth in the Power of Attorney.
The undersigned agrees to deliver to the Attorneys, or to you, such
additional documentation as the Attorneys, or any one of them, or the Company,
or the Representatives, or you, or any of their respective counsel may
reasonably request to effectuate or confirm compliance with any of the
provisions hereof or of the Underwriting Agreement, all of the foregoing to be
in form and substance satisfactory in all respects to the Attorneys and you.
You are authorized and directed (a) to hold the Common Certificates
deposited with you hereunder in your custody, (b) to deliver to the Company the
Notice of Exercise, if any, on behalf of the undersigned when directed to do so
by the Attorneys and (c) on the applicable Time of Delivery specified in the
Underwriting Agreement and as notified to you by the Company, to take all
necessary action (i) to cause the transfer agent and registrar for the Common
Stock to cause the number of shares of Common Stock to be sold by the
undersigned to be transferred on the books of the Company into such names as
the Attorneys, or any one of them, or the Representatives shall have instructed
you and to exchange the Common Certificates representing such shares for new
certificates for such shares registered in such names and in such denominations
as the Attorneys, or any one of them, or the Representatives shall have
instructed you, (ii) to deliver such new certificates to the Underwriters
against payment for such shares, and give receipt for such payment, and (iii)
when instructed by an Attorney to do so, to remit to the undersigned in
accordance with the payment instructions set forth in Schedule IV hereto the
amount received by you as payment for such shares (net of underwriting
discounts and commissions and expenses payable by the undersigned to the
Company). Promptly after (a) the First Time of Delivery, you shall deliver or
cause to be delivered to the undersigned new certificates (which shall bear
appropriate legends) representing the number of shares of Common Stock (if any)
represented by the Common Certificates deposited herewith that are in excess of
the maximum number of shares (the "Excess Shares") of Common Stock that could
be sold by the undersigned to the Underwriters pursuant to the Underwriting
Agreement, including as a result of the exercise of the over-allotment option,
and (b) the earlier of (i) the Time of Delivery at which all remaining shares
of Common Stock subject to the Underwriting Agreement are purchased by the
Underwriters and (ii) the last time at which the Underwriters are permitted to
exercise their over-allotment option passes, you shall deliver or cause to be
delivered to the undersigned new certificates (which shall bear appropriate
legends) representing the number of shares of Common Stock (if any) represented
by the Common Certificates deposited herewith that are Excess Shares, in the
case of clause (a), or in excess of the number of shares of Common Stock sold
by the undersigned to the Underwriters pursuant to the Underwriting Agreement,
in the case of clause (b).
If the Underwriting Agreement shall not be executed and delivered and
the transactions contemplated thereby consummated on or prior to March 31,
2002, then, upon the written request of the undersigned to you on or after that
date, you are to return to the undersigned or as the undersigned may otherwise
direct the Common Certificates deposited with you hereunder, and this Custody
Agreement shall forthwith terminate.
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Under the terms of the Power of Attorney, the authority conferred
thereby is granted, made and conferred subject to and in consideration of the
interests of the Underwriters and the other Selling Stockholders and, except as
set forth in the preceding paragraph, is coupled with an interest and is
irrevocable and, except as set forth herein or in the Power of Attorney, is not
subject to termination by the undersigned or by operation of law, and the
obligations of the undersigned as a Selling Stockholder under the Underwriting
Agreement similarly are not subject to termination and shall remain in full
force and effect until such date. Accordingly, the Common Certificates
deposited with you hereunder and this Custody Agreement and your authority
hereunder are subject to the interests of the Underwriters, and this Custody
Agreement and your authority hereunder are irrevocable and are not subject to
termination by the undersigned (except as set forth in the preceding paragraph)
or by operation of law, whether by the death or incapacity of the undersigned
(if the undersigned is an individual), the death of any trustee or executor or
the termination of any trust or estate (if the undersigned is a trust or
estate), the dissolution or liquidation of any corporation or partnership (if
the undersigned is a corporation or partnership), or the occurrence of any
other event. If any event referred to in the preceding sentence should occur
before the delivery of the shares of Common Stock to be sold by the undersigned
under the Underwriting Agreement, certificates for such Common Stock shall be
delivered by you on behalf of the undersigned in accordance with the terms and
conditions of the Underwriting Agreement, as specified to you by the Attorneys,
and this Custody Agreement, and action taken by you pursuant to this Custody
Agreement shall be as valid as if such event had not occurred, whether or not
you or the Attorneys, or any one of them, shall have received notice of such
event.
Until payment of the purchase price (net of the underwriting discount
to the Underwriters) for the shares of Common Stock to be sold by the
undersigned to the Underwriters pursuant to the Underwriting Agreement has been
made to you by or for the account of the Underwriters, the undersigned shall
(i) remain the owner of such shares and shall have (to the full extent the
undersigned would otherwise have) the right to vote such shares and all other
shares of Common Stock represented by the Common Certificates deposited with
you hereunder and to receive all dividends and distributions thereon and (ii)
remain entitled to the rights set forth in any option agreement deposited with
you hereunder. Upon payment of the purchase price by the Underwriters, you
shall pay to the undersigned the net proceeds of the sale (net of any expenses
payable by the undersigned to the Company, which expenses you shall pay to the
Company), except that with respect to any option agreement that is being
exercised in connection with this Custody Agreement, you shall pay to the
Company that portion of the purchase price that represents the aggregate
exercise price relating to the shares of Common Stock being sold, plus any
amounts required to satisfy any tax withholding amounts, with the balance of
the proceeds being delivered to the undersigned in accordance with the
instructions in Schedule IV. The Attorneys and the Company will be responsible
for the calculation of any amounts to be delivered to the Company and will
deliver to you a schedule upon which you will be entitled to rely conclusively.
You shall be entitled to act and rely upon any statement, request,
notice or instructions respecting this Custody Agreement given to you by the
Attorneys, or any one of them or the Representatives; provided, however, that
you shall not be entitled to act on any statement or notice to you with respect
to any Time of Delivery under the Underwriting Agreement, or with respect to
the termination of the Underwriting Agreement, or advising that the
Underwriting Agreement has not been executed and delivered, unless such
statement or notice shall have been confirmed in writing to you by the
Representatives.
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It is understood that you assume no responsibility or liability to any
person other than to administer the Common Certificates deposited with you
hereunder and the proceeds from the sale of the shares of Common Stock
represented thereby in accordance with the provisions of this Custody
Agreement. It is understood that you shall serve without compensation.
The undersigned has carefully reviewed the representations,
warranties, statements and agreements to be made by the undersigned as a
Selling Stockholder in the Underwriting Agreement and this Custody Agreement
and does hereby represent, warrant and agree that (a) such representations,
warranties, statements and agreements insofar as they relate to the
undersigned, are and will be true and correct as of the date hereof and as of
the date of the Underwriting Agreement and will be true and correct at all
times through the applicable Time of Delivery specified in the Underwriting
Agreement at which the undersigned is selling shares of Common Stock and (b)
such agreements, insofar as they relate to the undersigned, have (where
applicable) been and will be complied with as of the date hereof and as of the
date of the Underwriting Agreement and will be complied with on and after the
applicable Time of Delivery.
The foregoing representations, warranties and agreements and those
contained in the Underwriting Agreement are made for the benefit of, and may be
relied upon by, the Underwriters, the Custodian (in its capacity as such), and
agents and counsel of each of the foregoing.
No party may assign any of its rights or obligations under this
Custody Agreement without the written consent of all the other parties, which
consent may be withheld in the reasonable discretion of the party whose consent
is sought.
This Custody Agreement may be modified only by a written amendment
signed by all the parties hereto, and no waiver of any provision hereof shall
be effective unless expressed in a writing signed by the party to be charged.
All notices, instructions, reports and other communications to be
given or made under this Custody Agreement shall be deemed given or made upon
receipt and shall be sent by first-class mail, postage prepaid or, if given by
telephone or facsimile, shall immediately be confirmed by first-class mail,
postage prepaid:
(a) to the Custodian at:
Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. XxXxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) to the undersigned at the address set forth on the
signature page hereto.
(c) to the Attorneys at:
Xxxxxx Scientific International Inc.
Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Custodian undertakes to perform only such duties as are expressly
set forth herein.
The Custodian may rely and shall be protected in acting or refraining
from acting upon any written notice, instruction or request furnished to it
hereunder and reasonably believed by it to be genuine and to have been signed
or presented by the proper party or parties. The Custodian shall be under no
duty to inquire into or investigate the validity, accuracy or content of any
such document. The Custodian shall have no duty to solicit any payments which
may be due it hereunder.
The Custodian shall not be liable for any action taken or omitted by
it in good faith unless it is the result of the Custodian's gross negligence or
willful misconduct. The Custodian may consult with counsel of its own choice
and shall have full and complete authorization and protection for any action
taken or omitted by it hereunder in good faith and in accordance with the
written opinion of such counsel.
The Custodian may voluntarily resign and be discharged from its duties
or obligations hereunder by giving seven days' notice in writing of such
resignation. The Custodian may resign and be discharged from its duties or
obligations hereunder, if such resignation and discharge is required by law or
court order, by giving notice in writing of such resignation specifying a date
when such resignation shall take effect.
The undersigned each hereby agrees to indemnify the Custodian for, and
hold it harmless against any loss, liability or expense arising out of or in
connection with this Custody Agreement and carrying out its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Custodian has been guilty of gross
negligence or willful misconduct. Anything in this Custody Agreement to the
contrary notwithstanding, in no event shall the Custodian be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Custodian has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The liability of the undersigned pursuant to this paragraph shall not
exceed the product of the number of shares of Common Stock sold by the
undersigned and the public offering price for the Common Stock.
The duties and responsibilities of the Custodian hereunder shall be
determined solely by the express provisions of this Custody Agreement and no
other or further duties or responsibilities shall be implied. The Custodian
shall not have any liability under, nor duty to inquire into the terms and
provisions of any agreement or instructions, other than outlined in this
Custody Agreement.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
THIS CUSTODY AGREEMENT SHALL BE DEEMED UNDER SEAL AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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Please acknowledge your acceptance hereof as Custodian and receipt of
the Common Certificates deposited with you hereunder by executing and returning
to the undersigned the enclosed copy hereof.
Dated: February 4, 2002
Very truly yours,
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[Print Full Name of Selling Stockholder]
A. If Selling Stockholder is an individual:
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(Signature)
Address:
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The maximum number of shares of Common Stock to be sold pursuant to the
Underwriting Agreement:
____________ shares
The number of shares of Common Stock delivered herewith:
____________ shares
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Schedule I
Please complete each column as to certificates and option agreements deposited
with the Custodian
CERTIFICATES DEPOSITED
Number of Shares of
Common Stock
to be sold from each
Certificate
Number of Shares or Option Agreement
of Common Stock (if less than all
Option Represented by Shares represented
Stock Certificate Agreement Each Certificate or thereby are to be
Number Date Option Agreement sold)1
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TOTAL: ______________ ____________
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1 If no indication is made as to the certificates from which shares to be sold
shall be allocated, then selection will be made at the Custodian's discretion.
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Schedule II
Instruction: Date, execute and have your signature guaranteed.* DO NOT fill in
the Transferee or the number of Shares.
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
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________________(______________)Common Shares, $0.01 par value per share, of
Xxxxxx Scientific International Inc., a corporation organized under the laws of
the State of Delaware, and does hereby irrevocably constitute and appoint Xxxx
X. XxXxxxx and Xxxxx X. Xxxxx, and each of them, his Attorneys-in-Fact to
transfer said shares on the books of said shares on the books of said
corporation, each with full power to act alone, including full power of
substitution in the premises.
Dated: February 4, 2002
Signature:
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Name:
Signature guaranteed by*:
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* The signature must be guaranteed by a bank, broker, dealer or other eligible
guarantor institution that is a member of a signature guarantee medallion
program.
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Schedule III
NOTICE OF EXERCISE
In connection with the public offering of the shares of Common Stock of Xxxxxx
Scientific International Inc., the undersigned hereby elects to exercise an
option to purchase ________ shares of Common Stock, $0.01 par value per share,
of the Company at a price of $______ per share of Common Stock, which shares of
Common Stock shall be sold in the public offering subject to the terms of the
Power of Attorney and Custody Agreement of which this Schedule III is a part
and the Underwriting Agreement. This notice is given in accordance with the
terms of my Stock Option Agreement dated ______________, a signed copy of which
is attached.
In payment of the aggregate exercise price, the undersigned has instructed the
Representatives of the Underwriters to irrevocably to pay the exercise price
with the proceeds from the sale of shares of Common Stock subject to the Option
Agreement.
In the event that not all of the shares of Common Stock pursuant to the stock
option being exercised herewith are being sold in the public offering, please
issue the certificate or certificates for such remaining shares in:
______ my name __________________________________
(please print clearly)
OR
______ my name and __________________________________
as joint tenants (please print clearly)
(Check and complete applicable line)
Sincerely,
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--
Name:
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--
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--
Mailing Address
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-- Social Security Number, if applicable
(Note: The signature must be guaranteed by a bank, broker, dealer or other
eligible guarantor institution that is a member of a signature guarantee
medallion program.)
Signature guaranteed by:
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Name:
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Schedule IV
Instruction: Indicate how you wish to receive payment for the shares of Common
Stock sold
MANNER OF PAYMENT
The undersigned requests that payment for the shares of Common Stock to be sold
by the undersigned pursuant to the Underwriting Agreement be made in the
following manner (CHECK ONE):
[ ] CHECK made payable to the order of:
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to be sent to the following address:
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Telephone:
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[ ] WIRE TRANSFER to the following account:
Account No.
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Bank Name:
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Bank Address:
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Contact at Bank:
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Telephone:
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[ ] OTHER (please specify):
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CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
Xxxxxx Scientific International Inc., as Custodian, acknowledges
acceptance of the duties of the Custodian under the foregoing Custody Agreement
and receipt of the following Common Certificates and Option Agreements:
Cert. No. of Shares of Common Stock
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Option Agreements (list each one with dates)
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Dated: February 4, 2002
Xxxxxx Scientific International Inc., as Custodian
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Name:
Title:
