EXHIBIT 1.1
DRAFT 10/17/96
XXXXXXXX BROS. CONSTRUCTION, INC.
$3,000,000 SENIOR SUBORDINATED DEBENTURES
UNDERWRITING AGREEMENT
Minneapolis, Minnesota
October ___, 1996
Xxxxxx & Xxxxxxxxx Financial, Inc.
Offerman & Company
c/x Xxxxxx & Xxxxxxxxx Financial, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
1. Introductory. Xxxxxxxx Bros. Construction, Inc., a Minnesota corporation
(the "Company"), proposes to issue and sell up to $3,000,000 aggregate principal
amount of its Senior Subordinated Debentures as described in the Registration
Statement referred to below. Said $3,000,000 principal amount is referred to
herein as the "Debentures." The Debentures will be issued pursuant to an
Indenture (the "Indenture") dated as of October ___, 1996 between the Company
and National City Bank of Minneapolis, National Association, as Trustee (the
"Trustee").
The Company hereby confirms its agreement with you, Xxxxxx & Xxxxxxxxx
Financial, Inc. and Offerman & Company, as underwriters (the "Underwriters") to
offer and sell the Debentures on a "best efforts" basis without any minimum upon
the terms and conditions herein.
The Company hereby agrees with the Underwriters as follows:
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Underwriters that:
(i) A registration statement on Form S-1 (File No. 333- ),
including a form of prospectus, relating to the Debentures has
been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (collectively, the "Act"; all
references herein to specific rules are rules promulgated under
the Act) has been filed with the Commission and either (A) has
been declared effective under the Act and is not proposed to be
amended or (B) is proposed to be amended by amendment or
post-effective amendment. If the Company does not propose to amend
such registration statement and if any post-effective amendment to
such registration statement has been filed with the Commission
prior to the execution and delivery of this Agreement, the most
recent such amendment has been declared effective by the
Commission. For purposes of this Agreement, "Effective Time" means
(A) if the Company has advised you that it does not propose to
amend such registration statement, the date and time as of which
such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the
Commission, or (B) if the Company has advised you that it proposes
to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such
registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is declared
effective by the Commission. "Effective Date" means the date of
the Effective Time. Such Registration Statement, as amended at the
Effective Time, including all information (if any) deemed to be a
part of such registration statement as of the Effective Time
pursuant to Rule 430A(b), is hereinafter referred to as the
"Registration Statement," and the form of prospectus relating to
the Debentures, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) or (if no such filing is required)
as included in the Registration Statement, is hereinafter referred
to as the "Prospectus."
(ii) The Commission has not issued any order preventing or
suspending the use of the Prospectus. If the Effective Time is
prior to the execution and delivery of this Agreement: (A) on the
Effective Date, the Registration Statement and the Prospectus
conformed in all respects to the requirements of the Act and did
not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances under which they were made, and (B) on the date of
this Agreement, and at all times subsequent thereto up to and
including the Final Closing Date as defined below, the
Registration Statement conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b), the Registration Statement and
the Prospectus will conform, in all respects to the requirements
of the Act, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and at all
times subsequent thereto up to and including the Final Closing
Date as defined below. If the Effective Time is subsequent to the
execution and delivery of this Agreement: on the Effective Date,
and at all times subsequent thereto up to and including the Final
Closing Date as defined below, the Registration Statement and the
Prospectus will conform in all respects to the requirements of the
Act, and neither of such documents will include any untrue
statement of a material fact or will omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
under which they were made. The two preceding sentences do not
apply to statements in or omissions from the Registration
Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by the Underwriters
or their counsel specifically for use therein.
(iii) The Company and its wholly-owned subsidiary, Brush Masters,
Inc., which constitutes its only active subsidiary (the
"Subsidiary"), together with Xxxxxxxx Bros. Mortgage Company and
Xxxxxxxx Bros. of Stillwater, Inc., which are wholly-owned
inactive subsidiaries, have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
respective states of incorporation, with full power and authority,
corporate and otherwise, to own their properties and conduct their
business as described in the Prospectus. The Company and the
Subsidiary have never been qualified as foreign corporations and
have transacted business only in the State of Minnesota.
(iv) All of the shares of capital stock of the Subsidiary have
been duly and validly authorized and issued, are fully paid and
nonassessable and are owned by the Company, free and clear of any
security interest, lien or restriction. Except for the Subsidiary,
the Company owns no securities of any other entity and nor does
the Subsidiary have any subsidiaries or own any securities of any
other entity.
(v) The authorized and issued indebtedness of the Company and
of the Subsidiary is correctly set forth in the Prospectus, as of
the dates indicated. There are no outstanding loans or advances or
guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of the
members of the families of any of them expect as are described in
the Prospectus. The capitalization of the Company as of the date
indicated is as set forth under the caption "Capitalization" in
the Prospectus. The issued and outstanding shares of capital stock
of the Company have been duly and validly authorized and issued,
are fully paid and nonassessable and were issued in compliance
with all federal and state securities laws. There are no other
classes of capital stock, authorized or outstanding, except as
described in the Prospectus. The Company has no outstanding
options, warrants or other rights to purchase shares of its
capital stock outstanding. The indebtedness of the Company and of
the Subsidiary has been duly authorized. None of the outstanding
shares of capital stock of the Company was issued in violation of
preemptive rights of any stockholder of the Company.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with
its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws or equitable principles affecting the enforcement of
creditors' rights generally and except as rights to indemnity
hereunder may be limited by applicable securities laws, including
the Act and the rules and regulations thereunder.
(vii) The Company has the power and authority to execute and
deliver the Indenture and to carry out the terms thereof, and has
the power to authorize, issue and sell the Debentures on the terms
and conditions set forth in this Agreement and in the Indenture.
The Indenture has been duly and validly authorized, executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable in accordance with its terms
except as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws or
equitable principles affecting enforcement of creditors' rights
generally. The Indenture is not required to be qualified under the
Trust Indenture Act of 1939, as amended. The Debentures have been
duly and validly authorized by the Company and, when executed by
the Company and authenticated by the Trustee in accordance with
the provisions of the Indenture and delivered and paid for
pursuant to this Agreement, the Debentures will have been duly and
validly executed, issued and delivered by the Company and will
constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture.
(viii) The Debentures and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus.
The certificates for the Debentures to be delivered hereunder are
in due and proper form as provided for by the Indenture.
(ix) There are no contracts or other documents required to be
described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as
required. Contracts and documents so described in the Prospectus
are in full force and effect on the date hereof and through the
Final Closing Date. All descriptions of such contracts and
documents in the Prospectus are correct in all material respects.
Neither the Company nor the Subsidiary nor, to the best knowledge
of the Company, any other party, is in breach of or default under
any of such contracts.
(x) Neither the issue and sale of the Debentures, the
performance of this Agreement or the Indenture, nor the
consummation of the transactions contemplated herein and therein
will conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument or agreement to which
the Company or any Subsidiary is a party or by which any of them
may be bound, or to which any of the property or assets of any of
them is subject; nor will such action result in any violation of
the provisions of the Articles of Incorporation or bylaws of the
Company or any Subsidiary or any applicable law, order, rule or
regulation or administrative or court decree, writ or injunction
of any governmental authority, court or arbitration having
jurisdiction over the Company or its property or assets except
those as to which the Company has obtained a waiver. No consent,
approval, authorization or other order of any court, regulatory
body, administrative agency, other governmental body or any
self-regulatory agency having jurisdiction over the Company or its
property or assets is required for the execution and delivery and
performance of this Agreement or the Indenture or the consummation
of the transactions and performance contemplated herein or therein
or in the Prospectus, except such as will be or have been obtained
under the Act and except as may be required under applicable blue
sky laws or the rules and regulations of the National Association
of Securities Dealers, Inc. in connection with the purchase and
distribution of the Debentures by you.
(xi) The accountants who have expressed their opinions with
respect to certain financial statements and schedules included or
incorporated by reference in the Registration Statement are
independent accountants as required by the Act.
(xii) The consolidated financial statements of the Company,
together with the notes thereto, included in the Registration
Statement present fairly the consolidated financial position of
the Company and its consolidated subsidiaries as of the respective
dates of such financial statements, and the consolidated results
of operations, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries for the respective periods
covered thereby. Such financial statements and related notes have
been prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods involved
and comply in all material respects with the requirements of the
Act. The selected financial data set forth in the Prospectus
present fairly the information set forth therein and have been
compiled on a basis consistent with that of the audited
consolidated financial statements included in the Registration
Statement. The supporting schedules included in the Registration
Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required
to be included in the Registration Statement or Prospectus.
(xiii) A copy of the Company's Articles of Incorporation and
bylaws, both amended to date, have been provided to Underwriters'
counsel, and neither has been subsequently amended or restated as
of the date of this Agreement. Neither the Company nor any
Subsidiary is in violation of its Articles of Incorporation or
bylaws or other governing instruments or in default under any
administrative or court decree, or in default with respect to any
material provision of any lease, loan agreement, indenture,
franchise, license, permit or other contractual obligation to
which it is a party or by which it may be bound, or to which any
of the property or assets of the Company or any Subsidiary is
subject. There does not exist any state of facts which constitutes
an event of default as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of
default.
(xiv) Except as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any
Subsidiary is a party or of which any property of the Company or
any Subsidiary is the subject which, if determined adversely to
the Company or to any Subsidiary, would individually or in the
aggregate result in a material change in the condition (financial
or otherwise), business, prospects or results of operations of the
Company and the Subsidiary taken as a whole or might materially
and adversely affect the consummation of the transactions
contemplated by this Agreement or the repayment of the Debentures;
and to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
others.
(xv) There are no holders of securities of the Company having
rights to registration thereof or preemptive rights with respect
to the Debentures, except as disclosed in the Prospectus. The
Debentures will be issued free and clear of all liens,
encumbrances, claims, security interests, restrictions on transfer
and other defects of title.
(xvi) The Company and the Subsidiary have good and marketable
title to all the properties and assets reflected as owned by the
Company and the Subsidiary in the financial statements hereinabove
described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those
arising in the ordinary course of business in the development of
lots and the construction of homes as described in the Prospectus
and which do not interfere in any material respect with the use of
such property or the conduct of the business of the Company or the
subsidiary. Except as described in the Prospectus, the Company and
the Subsidiary hold their leased properties under valid and
binding leases which are in full force and effect. Neither the
Company nor any Subsidiary has any notice of any claim adverse to
the rights of the Company or any Subsidiary under any such leases
or affecting or questioning the rights of the Company or any
Subsidiary to the continued possession of the leased premises.
(xvii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any of the
Debentures.
(xviii) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and
except as otherwise stated or contemplated in the Prospectus, (A)
neither the Company nor any Subsidiary has incurred any material
liabilities or obligations, direct or contingent, nor entered into
any material transactions not in the ordinary course of business,
(B) there has not been any material adverse change in the
condition, financial or otherwise, results of operations,
earnings, business affairs or business prospects nor any material
change in the capital stock, short-term debt or long-term debt
(including capitalized lease obligations)of the Company or any
Subsidiary, (C) there has not been any material transaction
entered into by the Company or any Subsidiary, (D) except as
described in the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on
any class of its capital stock, (E) there has not been any
material loss or damage, which is not adequately insured, to the
property of Company or any Subsidiary (considered as a whole), or
(F) there has not been any bonus payment made inconsistent with
the restrictions on the Bonus Plan described in the Indenture, and
(G) there has not been and will not have been any event which
constitutes a default under the provisions of the Indenture
without regard to any notice requirements with respect thereto
contained in the Indenture.
(xix) The Company and the Subsidiary maintain insurance, which
is in full force and effect, of the types and in the amounts
adequate for their businesses and similar in type and amount to
the insurance coverage maintained by similar companies and
businesses, and in accordance with the provisions of the
Indenture.
(xx) To the best of the Company's knowledge, the Company and the
Subsidiary own and possess all right, title and interest in and
to, or have duly licensed from third parties, all trademarks,
copyrights, inventions, know-how (including trade secrets and
other unpatented or unpatentable proprietary or confidential
information, systems or procedures) and other proprietary rights
("Trade Rights") presently employed by any of them in connection
with the business now operated by them. Neither the Company nor
any Subsidiary has received any notice of infringement,
misappropriation or conflict from any third party as to such Trade
Rights which has not been resolved or disposed of, and neither the
Company nor any Subsidiary, to the best of the Company's
knowledge, has infringed, misappropriated or otherwise conflicted
with material Trade Rights of any third parties.
(xxi) The Company and the Subsidiary own, possess or have
obtained all material governmental licenses, permits,
certificates, consents, orders, approvals, permits and other
authorizations from the state, federal, court or other regulatory
authorities necessary to own or lease, as the case may be, and to
operate their properties and to carry on their respective business
as presently conducted and as contemplated by the Prospectus, and
neither the Company nor any Subsidiary has received any notice of
proceedings which have been instituted (or to the Company's
knowledge, threatened) relating to the revocation, limitation or
modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations. The business of the
Company and the Subsidiary is being conducted in all material
respects with any applicable federal, state, local or foreign law,
ordinance, rule, regulation, judgment, decree, injunction or order
or requirement of any court or other governmental entity. Neither
the Company nor the Subsidiary and no officer, director,
shareholder or agent of such company has been authorized to
receive or make, and is not receiving or making, any bribe,
kickback, or other illegal payment with respect to the business
conducted by such company.
(xxii) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the best knowledge of the Company, is
imminent which might reasonably be expected to materially
adversely affect the condition, financial or otherwise, results of
operations, earnings, business affairs or business prospects of
the Company and the Subsidiary, taken as a whole. To the best
knowledge of the Company, no members of senior management
presently intend to leave the Company or any Subsidiary.
(xxiii) All United States federal income tax returns required by
law to be filed by or on behalf of the Company and the Subsidiary
have been filed and all taxes shown by such returns or otherwise
assessed which are due and payable as of or prior to the date
hereof have been paid, except assessments against which appeals
have been or will be promptly taken and as to which adequate
reserves have been provided in order to comply with GAAP. All
other tax returns that are required to have been filed by or on
behalf of the Company and the Subsidiary pursuant to applicable
foreign, state, local or other law have been filed, and the
Company and the Subsidiary have paid all taxes due as of or prior
to the date hereof pursuant to such returns or pursuant to any
assessment received by them, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves
have been provided. The charges, accruals and reserves on the
books of the Company and the Subsidiary in respect of any income
and corporation tax liability (or for any payments to be made in
respect of any tax sharing agreements or arrangements) for any
years not finally determined are adequate to meet any assessments
or reassessments for additional income tax for any years not
finally determined.
(xxiv) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term as defined in the
Investment Company Act of 1940, as amended.
(xxv) No broker, finder, consultant or other person or entity is
entitled to any brokerage, finder's or other fee or commission in
connection with the issuance and sale of the Debentures, except as
may be provided to the Underwriters by the express terms of this
Agreement and there is no outstanding or threatened claim for
services in the nature of a "finder's fee" with respect to such
financing; and the Company agrees to indemnify and hold the
Underwriters harmless from and against any claims, losses,
judgments or expenses resulting from any finder's fees payable in
connection herewith.
(xxvi) The Company has not sold any securities in violation of
Section 5(a) of the Act.
(xxvii) The conditions for use of a registration statement on Form
S-1 set forth in the General Instructions to Form S-1 have been
satisfied with respect to the Company and the Registration
Statement.
(xxviii) The statistical information in the Prospectus which is
derived from the Company's financial records has been accurately
derived therefrom and, as set forth, is not in conflict with other
information known to the Company.
(xxix) All descriptions in the Registration Statement or
Prospectus of statutes, regulations, legal or governmental
proceedings, the Indenture, the Debentures, or other contracts or
other documents are accurate in all material respects and fairly
present the information shown.
(xxx) The Company has not distributed and will not distribute any
prospectus or any other offering material in connection with the
offering and sale of the Debentures other than the Prospectus or
other materials permitted by the act to be distributed by the
Company and consented to by the Underwriters.
(xxxi) Taken as a whole, the Company maintains a system of
internal accounting controls sufficient to provide that:
(A) transactions are executed in accordance with
management's general or specific authorization;
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets;
(C) access to assets is permitted only in accordance
with management's general or specific authorization; and
(D) the recorded accountability for assets is compared
with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(xxxii) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in or which has
constituted or which might reasonably be expected to constitute
the stabilization or manipulation of the price of any outstanding
securities of the Company (including the Debentures) to facilitate
the sale or resale of the Debentures.
(xxxiii) On each Closing Date all transfer or other taxes, if any
(other than income taxes), which are required to be paid in
connection with the sale or transfer of the Debentures will have
been fully paid or provided for by the Company and all laws
imposing such taxes will have been fully complied with.
(xxxiv) Each acceptance by the Company of an offer for the
purchase of Debentures and each issuance of Debentures shall be
deemed an affirmation of the Company that the representations and
warranties contained herein are true and correct at the time of
such acceptance or of such issuance, in each case as though
expressly made at that time.
(b) Any certificate signed by any officer of the Company and delivered
to the Underwriters or to counsel for the Underwriters pursuant to this
Agreement shall be deemed a representation and warranty by the Company to
the Underwriters as to the matters covered thereby.
3. Representations and Warranties of the Underwriters.
Each Underwriter hereby represents and warrants to the Company as
follows:
(a) It is a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD").
(b) It is duly licensed and a registered broker-dealer in good
standing under the Securities Exchange Act of 1934 and under the
appropriate laws and regulations of Minnesota and each of the states in
which offers, offers for sale, or sales of the Debentures will be made by
it, and no proceedings have been initiated or to the best of its
knowledge threatened to suspend such license or membership.
(c) It has the power and authority to execute and deliver this
Agreement and to carry out its terms. This Agreement has been duly
authorized, executed and delivered by it and is a valid and binding
obligation of it, enforceable in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state
securities laws and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws and
subject to general principles of equity, and shall not constitute or
result in any material breach or violation of any of the terms,
provisions or conditions of, or constitute a material default under any
federal, state or local statute, law or regulation applicable to it or
any material contract commitment, instrument or document to which it is a
party or by which it is bound, its articles of incorporation or bylaws,
or any order, arbitration award, judgment, decree, rule or regulation of
any court or governmental agency or body having jurisdiction over it or
its activities; and except for registration under the Act and applicable
state securities or blue sky laws for the sale of Debentures, and
compliance with the rules of the NASD, no consent, approval,
authorization or order of any court or governmental agency or body is
required for the consummation of the transactions contemplated hereby.
4. Offer and Sale of Debentures.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Company appoints you as the Underwriters to offer and sell the
Debentures, on a "best efforts," "no minimum" basis for the period
referred to in paragraph 4(c) hereof, and the Underwriters accept such
appointment and agree to use their best efforts to sell the Debentures
for the Company, without a firm commitment by the Underwriters to
purchase any Debentures, and that you and your "Selected Dealers" (as
hereinafter defined) shall be required to take and pay for only such
Debentures as are sold to the public or as you or your Selected Dealers
otherwise commit to purchase by written confirmation, subject in each
case to applicable closing conditions as herein set forth.
(b) The Underwriters shall offer and sell the Debentures for the
Company upon the terms and conditions set forth in the Prospectus, as the
same may be amended or supplemented from time to time. The purchase price
for the Debentures shall be par plus accrued interest in accordance with
the Indenture. Upon the closing of the sale of any of the Debentures, you
shall receive an amount equal to six percent (6%) of the principal amount
(not including accrued interest) as commission for the sale, and an
amount equal to three percent (3%) of the purchase price as an
underwriting management fee.
(c) Your appointment as Underwriters shall be exclusive and not
subject to termination by the Company for a period of six months after
the Effective Time. Upon the expiration of the foregoing period, this
Agreement shall remain in effect, unless the Company thereafter
terminates your appointment, which it may do at any time after such
expiration, upon written notice given to the Underwriters as provided
herein.
(d) You may appoint dealers ("Selected Dealers") which are members in
good standing of the National Association of Securities Dealers, Inc. to
offer and sell the Debentures and, in connection with such appointment,
may allow concessions to such Selected Dealers from the public offering
price of the Debentures in such amount as you may deem appropriate.
(e) Debentures purchased from the Company in accordance with this
Agreement shall be confirmed by you, as principal, to the Company at the
purchase price set forth in paragraph 4(b) above. Resales of such
Debentures shall be confirmed by you, as principal, to the public at the
Price to Public set forth in the Prospectus, or any amendment thereof or
supplement thereto, or to Selected Dealers at such Price to Public less
the applicable Selected Dealer's concession, all subject to the
respective Closings hereinafter referred to.
5. Payment and Delivery. On the basis of the representations, warranties and
agreements, but subject to the terms and conditions, set forth in this
Agreement, payment of the purchase price for, and delivery of, the Debentures
sold as contemplated hereunder shall be made as follows:
(a) You shall promptly confirm to the Company the principal amount of
the Debentures which have been "sold" within the meaning of paragraph
5(d).
(b) Delivery of the Debentures against payment therefor shall be made
before 2:00 p.m., local Minneapolis, Minnesota time at a mutually agreed
upon location, (i) no later than the fifteenth (15th) day of each month
during the term of this Agreement, or (ii) on such earlier date or dates
as shall be agreed upon by you and the Company, as to Debentures "sold"
as defined in paragraph 5(d). Such events being herein called
"Closing(s)" and such times and dates being herein called the "Closing
Date(s)."
(c) The Debentures delivered on each Closing Date shall be registered
in such names and such denominations as you have instructed pursuant to
paragraph 5(d), and shall be made available to you in definitive form for
the purpose of inspection and packaging at least twenty-four (24) hours
before each respective Closing Date. Delivery of Debentures to the
respective purchasers or Selected Dealers shall be made by you. Pending
delivery on each Closing Date, proceeds from the sale of Debentures will
be held by you in a separate account.
(d) On each Closing Date, you shall remit to the Company the purchase
price for the Debentures, as determined in accordance with paragraph 4(b)
hereof, which you have confirmed to the Company and which have been sold
in accordance with the terms and provisions of this Agreement. Such
purchase price may be remitted to the Company net of the commissions
referred to in paragraph 4(b) and the expenses for which the Company is
responsible under this Agreement. Appropriate instructions for the
registration of the Debentures and authentication and delivery thereof
pursuant to the Indenture, which instructions shall include the names,
addresses and social security or tax identification numbers of the
registered holders, the principal amounts of the Debentures and the dates
the Debentures are deemed "sold" within the terms of paragraph 5(d)
hereof shall be provided to the Trustee with respect to each remittance
of funds. The Company shall have instructed the Trustee to accept
instructions for the registration of the Debentures directly from you,
and copies of such instructions shall be given to the Company at the same
time they are furnished to the Trustee. The Company agrees that copies of
the confirmation for each sale will satisfy the requirement for
instructions contained in this paragraph.
(e) Debentures shall be deemed to have been sold on the date payment
in good funds is received by you for such Debentures. Funds received from
investors in payment for Debentures shall be transmitted by you to a
separate bank account no later than 12:00 noon on the next business day
after such funds are received and shall be held by you as agent for such
investors. Each Debenture will be dated as of October ___, 1996. As
provided in the Indenture, interest will accrue on each Debenture from
the later of October ___, 1996 or the most recent "Interest Payment Date"
(as defined in the Indenture). In the event you hold Debentures in your
name on the record date for the payment of such interest (resulting from
the purchase of Debentures for your own account or otherwise), which
Debentures have not been resold, you shall be entitled to receive such
interest, subject to your right to direct the Trustee to pay over such
interest, in whole or in part, to a subsequent purchaser.
6. Certain Agreements of the Company. The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement, if the Effective Time is subsequent to the execution and
delivery of this Agreement, and any amendment thereof, to become
effective. If the Effective Time is prior to the execution and delivery
of this Agreement, the Company will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by you, subparagraph (4)) of Rule 424(b)
not later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifth business day
after the Effective Date. The Company will advise you promptly of any
such filing pursuant to Rule 424(b).
(b) The Company will advise you promptly of: (i) any proposal to amend
or supplement the Registration Statement or the Prospectus and will not
affect such amendment or supplementation without your consent; (ii) the
effectiveness of the Registration Statement (if the Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of the Registration Statement or the
Prospectus; (iii) the institution by the Commission of any stop order in
respect of the Registration Statement or of any notification or other
communication relating to the institution of any stop order proceedings
in respect of the Registration Statement (and the Company will use all
reasonable efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting: if issued); and (iv) any
notification of the suspension of qualification of the Debentures for
sale in any jurisdiction or the initiation or threat of any proceedings
for that purpose. The Company will also promptly comply with any
reasonable requests for additional information.
(c) If, at any time when a prospectus relating to the Debentures is
required to be delivered under the Act, any event occurs as a result of
which the Company believes, or in the professional judgment of counsel to
the Company or of counsel to the Underwriters, the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will advise you promptly thereof and
will prepare promptly and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least
twelve (12) months beginning after the Effective Date which will satisfy
the provisions of Section 11(a) of the Act and Rule 158 thereunder. 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 the 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.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be originally executed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as you shall reasonably request.
(f) The Company will use its reasonable efforts to arrange for the
qualification of the Debentures for sale under the blue sky laws of such
jurisdictions as you reasonably designate, and to continue such
qualifications in effect so long as this offering continues. The
preparation and filing of the applications and other documents relating
to such qualifications have been conducted by counsel to the
Underwriters. After the termination of the offering and until all of the
Debentures have been paid in full by the Company at maturity, the Company
will file and make, and pay all fees applicable thereto, such statements
and reports and renewals of registration necessary in order to continue
to qualify the Debentures for secondary market transactions in the
various states in which the Debentures were originally registered for
sale.
(g) For period from the date hereof until the payment in full of all
Debentures outstanding at their maturity, the Company will, with out the
need of request:
(i) at close of each fiscal year cause its books and accounts
for such year to be audited by Coopers & Xxxxxxx, L.L.P. or
another nationally recognized firm of independent public
accountants and furnish to you a copy of their report thereon;
(ii) furnish to you, within one hundred twenty (120) days after
the close of each fiscal year, appropriate annual consolidated
financial statements of the Company and its consolidated
subsidiaries, certified by the aforesaid independent public
accountants, in such form as to disclose their financial condition
at the end of and the results of their operations for such fiscal
year provided, that if the Company furnishes you copies of its
Annual Report on Form 10-K, including all exhibits thereto
pursuant to paragraph 6(g)(iv), it shall have fulfilled its
requirements under this paragraph;
(iii) furnish to you within forty-five (45) days after the end
of each of the first three quarters of each fiscal year copies of
quarterly consolidated statements of profit and loss and quarterly
consolidated balance sheets of the Company and its consolidated
subsidiaries for such periods and for the comparable period of the
preceding year, which statements need not be audited provided,
that if the Company furnishes you copies of its Quarterly Report
on Form 10-Q, including all exhibits thereto pursuant to paragraph
6(g)(iv), it shall have fulfilled its requirements under this
paragraph;
(iv) furnish to you copies of all reports (financial or
otherwise) filed with the Commission, copies of all proxy
solicitation materials, statements and notices to equity holders
of the Company (as a group), copies of each notice published or
mailed to holders of the Debentures pursuant to the Indenture, and
copies of each annual certificate or report delivered to the
Trustee pursuant to the Indenture; and
(v) furnish to you such reports, certificates and information
with respect to the Company and its consolidated subsidiaries as
required to be provided to the Underwriters by the Indenture.
(vi) furnish to you such other information with respect to the
Company and its consolidated subsidiaries of their financial
condition as you may reasonably request, including, but not
limited to, information necessary or appropriate to the
maintenance of a secondary market in the Debentures.
(h) The Company will use the net proceeds received by it from the sale
of the Debentures substantially in the manner specified in the Prospectus
under the caption "Use of Proceeds."
(i) The Company will not claim the benefit of any usury laws against
any holders of the Debentures.
(j) The Company will file with the Commission in a timely manner all
reports on Form SR required by Rule 463 and will furnish to you copies of
any such reports as soon as practicable after the filing period.
(k) Whether or not the transactions contemplated hereunder are
consummated, the Company will pay (i) all costs, fees and expenses
incurred in connection with the performance of the Company's obligations
hereunder, including, without limiting the generality of the foregoing,
all fees and expenses of legal counsel for the Company and of the
Company's independent accountants and auditors, all costs and expenses
incurred in connection with the preparation, any printing, filing and
distribution of the Registration Statement, each preliminary prospectus
and the Prospectus (including all exhibits and financial statements) and
all amendments and supplements thereto, this Agreement and the blue sky
memoranda, (ii) all reasonable out-of-pocket expenses of the Underwriters
in connection with the sale of the Debentures, including, without
limitation, the legal fees and disbursements of counsel to the
Underwriters, advertising or sales literature expenses incurred in
connection with the sale of the Debentures, (iii) all costs, fees and
expenses (including legal fees and disbursements of counsel for the
Company or the Underwriters) incurred by the Underwriters in connection
with qualifying or registering all or any part of the Debentures for
offer and sale under blue sky laws, including the preparation of blue sky
memoranda relating to the Debentures, (iv) the fees of the National
Association of Securities Dealers: Inc. ("NASD") in connection with the
request for clearance of such offering with the NASD (v) all fees and
expenses of the Trustee under the Indenture and any paying agent and
debenture registrar, and (vi) costs of printing the certificates for the
Debentures and all transfer taxes, if any, with respect to the sale and
delivery of the Debentures to the Underwriters.
(l) For a period commencing the date of this Agreement and ending
ninety (90) days after the completion of the offering contemplated
hereby, the Company will not offer or sell any Debentures except pursuant
to this offering, and will not publicly offer or sell any of its other
securities, without your prior written consent.
(m) The Company will furnish or cooperate with you in requesting that
the Trustee for the Debentures furnish the list of names and addresses of
Debenture holders as provided in Section 7.1 of the Indenture.
(n) The Company consents to the use, in accordance with the provisions
of the Securities Act and of the securities or Blue Sky laws of the
jurisdictions in which the Debentures are offered by the Underwriters or
by dealers, prior to the Effective Date, of each Preliminary Prospectus
furnished by the Company.
7. Conditions of the Obligations of the Underwriters. The obligations of the
Underwriters to act as Underwriters in connection with the offer and sale of the
Debentures, to make payment for the Debentures and to take delivery thereof at
each Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company herein set forth, the accuracy in all
material respects of the statements of the Company officers made pursuant to the
provisions hereof, the performance by the Company of its obligations hereunder
and the satisfaction of the following additional conditions precedent:
(a) You shall have received a letter, dated the date of delivery
thereof (which, if the Effective Time is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the Registration Statement to be filed
shortly prior to the Effective Time) of Coopers & Xxxxxxx, L.L.P.
confirming that they are independent public accountants within the
meaning of the Act and the applicable rules and regulations thereunder
and stating in effect, with respect to the consolidated financial
statements of the Company, that:
(i) in their opinion, the consolidated financial statements and
related schedules of the Company examined by them and included in
the Registration Statement and Prospectus on their authority as
experts comply as to form in all material respects with the
applicable accounting requirements of the Act, the applicable
published rules and regulations of the Commission thereunder,
Staff Accounting Bulletins with respect to registration statements
on Form S-1, and the requirements of Form S-1; and
(ii) on the basis of a limited review, not constituting an
audit, including a reading of the latest available interim
financial statements, a reading of the minutes of the shareholders
and of the Board of Directors of the Company, and inquiries of
officials of the Company responsible for financial and accounting
matters and such other inquiries and procedures as they may
specify, nothing has come to their attention which, in their
judgment, would indicate:
(A) that any unaudited consolidated financial statements
and related notes thereto of the Company included in the
Registration Statement and the Prospectus do not comply as
to form in all material respects with the applicable
accounting requirements of the Act and of the published
instructions, rules and regulations of the Commission
thereunder with respect to registration statements on Form
S-1, or that such unaudited financial information contained
in the Prospectus was not prepared in conformity with
generally accepted accounting principles applied on a basis
consistent with those followed in the preparation of the
audited financial statements of the Company included
therein, or would require any material adjustment for a
fair presentation of the information purported to be shown
thereby;
(B) at a specified date not more than five days prior to
the date of this Agreement, the First Closing Date or any
Additional Closing Date, as applicable, there was any
change in the capital stock, long-term debt or short-term
debt of the Company, or any decrease in total assets, net
current assets, net assets or stockholders' equity as
compared with amounts shown on the latest balance sheet
included in the Registration Statement and Prospectus,
except as set forth or contemplated in the Prospectus; and
(C) for the period from the closing date of the latest
income statement included in the Registration Statement and
Prospectus to the specified dates referenced in clause (B)
above, there were any decreases, as compared with the
corresponding period of the previous year, in operating
revenues, income before income taxes or in the total or per
share amounts of net income, except as set forth or
contemplated in the Prospectus;
(iii) they have compared specific dollar amounts, number of
shares, percentages and other financial information pertaining to
the Company set forth in the Prospectus, which have been specified
by you, with the general accounting records of the Company, with
the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do
not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter, and found
them to be in agreement; and
(iv) such other matters as you may reasonably request.
For purposes of this subsection, if the Effective Time is subsequent to
the execution and delivery of this Agreement, "Registration Statement"
shall mean the registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in
the Registration Statement. In the event that the letters to be delivered
pursuant to this subparagraph shall set forth any changes, increases or
decreases, it shall be a further condition to the Underwriters'
obligations that you, in your sole discretion, shall have determined,
after discussion with officers of the Company responsible for financial
and accounting matters and with Coopers & Xxxxxxx, L.L.P., that such
changes, increases or decreases as set forth in such letters do not
reflect a material adverse change in the capital stock, short-term debt
or long-term debt, total assets, net current assets, net assets, or
stockholders' equity of the Company as compared with the amount shown in
the most recent balance sheet of the Company included in the Prospectus.
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than
10:00 P.M., Minneapolis time, on the date of this Agreement or such later
date as shall have been consented to by you and all filings required by
Rule 424 and/or Rule 430A under the Act shall have been timely made. If
the Effective Time is prior to the execution and delivery of this
Agreement, the Prospectus shall have been filed with the Commission in
accordance with the Act and Section 5(a) of this Agreement. No stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the best knowledge of the Company or you, shall be
contemplated by the Commission or by any blue sky or state securities
authority; and all requests of the Commission or blue sky or state
securities authorities for additional information (to be included in the
Registration Statement or Prospectus or a supplement thereto or
otherwise) shall have been complied with to your satisfaction.
(c) The Debentures shall have been qualified for sale under the blue
sky laws of such states and in such amounts as shall have been specified
by the Underwriters and agreed to by the Company.
(d) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Debentures hereunder, the validity and
form of the certificates representing the Debentures, the execution and
delivery of this Agreement and the Indenture and all corporate
proceedings and other legal matters incident thereto, and the form of the
Registration Statement and the Prospectus (except financial statements)
shall have been approved by counsel for the Underwriters exercising
reasonable judgment.
(e) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of fact which, in the opinion of counsel for
the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is required to be stated therein or necessary to
make the statements therein not misleading.
(f) You shall have received an opinion, dated each Closing Date, of
Xxxxxxx, Street and Deinard, Professional Association, counsel for the
Company, in the form attached hereto as Exhibit A
(g) You shall have received from Xxxxxxxxxxx Xxxxx & Xxxxxxxx, counsel
for the Underwriters, such opinion or opinions, dated each Closing Date,
as you may require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of preparing such opinion.
In rendering such opinion, such counsel may rely upon the opinion of
Xxxxxxx, Street and Deinard, Professional Association, referred to above.
(h) You shall have received a certificate, dated each Closing Date, of
the President and the principal financial officer (or principal
accounting officer) of the Company on behalf of the Company to the effect
that the representations and warranties of the Company in this Agreement
are true and correct on and as of the applicable Closing Date to the same
effect as if made on such Closing Date, that the Company has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date, that
no stop order suspending the effectiveness of the Registration Statement
has been issued and, to the best of their knowledge, no proceedings for
such purpose have been instituted or are contemplated by the Commission,
and that there has not been, since the date hereof or since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the
condition, (financial or otherwise), or in the results of operations, key
personnel, business or business prospects of the Company or any
Subsidiary.
(i) You shall have received a letter, dated each Closing Date, of
Coopers & Xxxxxxx, L.L.P. which meets the requirements of subsection (a)
of this Section, except that the specified date referred to in such
subsection will be a date not more than five days' prior to the
applicable Closing Date for the purposes of this subsection.
(j) The Company will furnish you with such manually signed or
conformed copies of such opinions, certificates, letters and documents as
you reasonably request and of such other certificates and documents as
you may reasonably request.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities joint or severally to
which the Underwriters may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon a breach by the Company
of the representations, warranties or covenants contained herein, or any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under which
they were made not misleading, and will reimburse the Underwriters for
any legal or other expenses reasonably incurred by the Underwriters in
connection with investigating or defending any such loss, claims, damage,
liability or action as such expenses are incurred provided that the
Company will not be liable in any such case to the extent that any such
loss, claims, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by the Underwriters, as
described in the last sentence of paragraph (b) below. The Company shall
reimburse the Underwriters for any legal or other reasonable expenses
incurred by the Underwriters in connection with investigating or
defending against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action notwithstanding
the possibility that the payments for such expenses might later be held
to be improper in which case the person receiving them shall promptly
refund them, provided further that the foregoing indemnity agreement with
respect to any Preliminary Prospectus or Prospectus shall not inure to
the benefit of the Underwriters on account of any loss, liability, claim,
damage and expense whatsoever arising from the sale of any Debentures by
the Underwriters to any person if (A) the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact
contained in such Preliminary Prospectus or Prospectus from which such
loss, liability, claim, damage or expense arose was corrected in a later
Prospectus by amendment or supplement, and (B) a copy of the such later
Prospectus (if such amendments or supplements shall have been furnished
to the Underwriters prior to the confirmation of the sale involved) shall
not have been sent or given by or on behalf of the Underwriters to such
person, if required by law, with or prior to the written confirmation of
the sale involved.
(b) The Underwriters severally, but not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were
made not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Underwriters, as described in
the last sentence of this paragraph (b), and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred. For all purposes of
this Agreement, the information set forth (i) on the last paragraph of
the cover page of the Prospectus, and (ii) in the section entitled
"Underwriting" in the Prospectus is the only information furnished to the
Company by the Underwriters for use in the Registration Statement or the
Prospectus, or any related preliminary prospectus.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof, but the failure so to notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party otherwise than under subsection (a) or (b) above. In
any case any such action is brought against any party, and such party
notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party will be entitled to participate therein with the
notifying party and any other Indemnifying Party similarly notified, and,
to the extent that it may wish, jointly with any other Indemnifying Party
similarly notified, to assume the defense thereof, with counsel
satisfactory to the notifying party; provided, however, if the defendants
in any such action include both the indemnified party and the
Indemnifying Party and the indemnified party shall have reasonably
concluded that there may be legal defense(s) available to it and/or other
indemnified parties which are different from or additional to those
available to the Indemnifying Party, the indemnified party or parties
shall have the right to select separate counsel to assume the indemnified
party's (or parties') defense and to otherwise participate in the defense
of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the Indemnifying Party to such indemnified party
of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the Indemnifying Party will not be
liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless: (i) the indemnified party
shall have employed such counsel in accordance with the provisions of the
next preceding sentence (it being understood, however, that the
Indemnifying Party shall not be liable for the expenses of more than one
separate counsel representing all the indemnified parties under this
Section 8 who are parties to such action); (ii) the Indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action; or (iii) the Indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the Indemnifying Party. No indemnifying party, without the
prior written consent of the indemnified party, shall 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
includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action. An
Indemnifying Party shall not be liable for settlement of any such action
effected without its written consent but if settled with the written
consent of the Indemnifying Party, or it there be a final judgment for
the plaintiff in any such action, the Indemnifying Party agrees to
indemnify and hold harmless each indemnified party from and against any
loss or liability by reason of such settlement or judgment. The indemnity
agreements contained in this Section 8 and the representations,
warranties, agreements, covenants, indemnities and the statements of the
Company and its officers set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, regardless of: (i)
any investigation made by or on behalf of the Underwriters or any
director or officer or person controlling the Underwriters or by or on
behalf of the Company or any director or officer or person who controls
the Company; (ii) acceptance of any Debentures and payment therefor
hereunder; and (iii) any termination of this Agreement. A successor of an
Underwriter or of the Company or any person controlling an Underwriter or
the Company, or any officer or director of the Company, as the case may
be, shall be entitled to the benefits of the indemnity and reimbursement
agreements contained in this Section 8.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection
(a) or (b) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Debentures or (ii) the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions and underwriting management fees
received by the Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement
or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), the Underwriters shall not be required to contribute
any amount in excess of the underwritten commissions and discounts and
underwriting management fees applicable to the Debentures underwritten by
each Underwriter. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, jointly and severally, to
each officer and director of the Underwriters, and to each person, if
any, who controls any Underwriters within the meaning of the Act. The
obligations of the Underwriters under this Section shall be in addition
to any liability which the Underwriters may otherwise have and shall
extend, upon the same terms and conditions, jointly and severally, to
each director of the Company, to each officer of the Company who has
signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers, and the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriters, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Debentures. If for any reason the purchase of the Debentures
by the Underwriters is not consummated, the Company shall remain responsible for
the expenses to be paid or reimbursed by them pursuant to paragraph 6(k) and the
respective obligations of the Company and the Underwriters under Section 8 shall
remain in effect, and if any Debentures have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 6
shall also remain in effect.
10. Termination. This Agreement shall terminate (a) at the expiration of six
months from the Effective Date, (b) at the Company's Option at such earlier date
as permitted under Section 3 hereof (the "Termination Date"), or (c) when all of
the Debentures have been sold, except that the provisions of Sections 2, 6, 8, 9
and 12 hereof shall at all times be effective and binding. This Agreement shall
be subject to termination in your absolute discretion, by notice given to the
Company prior to delivery of and payment for the Debentures, if prior to such
time (i) any material adverse change or any development involving a prospective
material adverse change, in or affecting the business or properties of the
Company or any Subsidiary shall have occurred which, in the judgment of the
Underwriters, materially impairs the investment quality or the value of the
Debentures, (ii) trading in securities generally on the New York Stock Exchange,
the American Stock Exchange, or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on such
exchange or market system, (iii) a banking moratorium shall have been declared
either by Federal, New York or Minnesota banking authorities, (iv) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis, the
effect of which on financial markets is such as to make it, in your judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Debentures as contemplated by the Prospectus or (v). Any material adverse change
in existing financial, political or economic conditions in the United States or
elsewhere which change, in your opinion, has materially and adversely affected
the market for the Debentures or other securities of the Company or the
prospects for the Company, its business or its properties; or
Any substantial loss to the Company by strike, fire, flood, accident or other
calamity of such a character as to interfere materially with the conduct of the
business and operations of the Company.
11. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to the
Underwriters at Xxxxxx & Xxxxxxxxx Financial, Inc., 000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx X. Xxxxxx, Corporate
Capital Group, with a copy to Offerman & Company, Interchange Tower, Suite 1100,
000 Xxxxxxx 000 Xxxxx, Xxxxxxxxxxx, XX 00000-0000, Attention: Xxxxx Xxxxxxxx;
or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at Xxxxxxxx Bros. Construction, Inc., 000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxx Xxxxxx, or to such other
address of which a party hereto shall notify the other party hereto pursuant to
this paragraph.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder and nothing in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person, except that the representations and
warranties of the Company contained in this Agreement shall also be for the
benefit of any person or persons who control the Underwriters within the meaning
of Section 15 of the Act. No purchaser of Debentures from the Underwriters shall
be deemed to be a successor by reason merely of such purchase.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota, without regard to its
choice of laws provision.
15. Amendment. This Agreement may be amended upon written agreement between
the Underwriters and the Company.
16. Time. The Company and the Underwriters agree that time shall be of the
essence with respect to this Agreement and the performance and completion of the
terms, conditions and provisions set forth and contemplated herein.
17. Headings. The headings and captions used in this Agreement are for
convenience only and shall not affect the meaning of the provision thereof.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
Very truly yours,
XXXXXXXX BROS. CONSTRUCTION, INC.
By ___________________________________
Name: Xxxxx Xxxxxx
Title: President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
XXXXXX & XXXXXXXXX FINANCIAL, INC.
OFFERMAN & COMPANY
By: XXXXXX & XXXXXXXXX FINANCIAL, INC.
By: __________________________________
Name:
Title:
EXHIBIT A
October ___, 1996
(000) 000-0000
Xxxxxx & Xxxxxxxxx Financial, Inc.
Offerman and Company
c/x Xxxxxx & Xxxxxxxxx Financial, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
RE: XXXXXXXX BROS. CONSTRUCTION, INC.
Dear Sirs:
We have acted as counsel to Xxxxxxxx Bros. Construction, Inc., a
Minnesota corporation ("Xxxxxxxx"), in connection with a Registration Statement
on Form S-1 (Registration No. 333-12137) filed by Xxxxxxxx with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), covering the issuance by Xxxxxxxx of up to $3,000,000 aggregate
principal amount of Senior Subordinated Debentures due October 1, 2004 (the
"Debentures"), to be publicly offered by you on behalf of Xxxxxxxx.
This opinion is furnished to you pursuant to Paragraph 7(f) of the
Underwriting Agreement dated ____________, 1996, by and between Xxxxxxxx and you
(the "Underwriting Agreement"). Capitalized terms used in this opinion are as
defined in the Underwriting Agreement unless otherwise specifically provided
herein.
In acting as counsel for Xxxxxxxx and arriving at the opinions
expressed below, we have examined and relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such records of Xxxxxxxx,
agreements and other instruments, certificates of officers and representatives
of Xxxxxxxx, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein. As
to the various questions of fact material to such opinions, we have, when
relevant facts were not independently established, relied upon officers of
Xxxxxxxx and upon statements contained in the Underwriting Agreement.
Based on the foregoing, and subject to the qualifications and
limitations stated herein, it is our opinion that:
1. Xxxxxxxx and its wholly-owned subsidiary, Brush Masters, Inc. (the
"Subsidiary"), have been duly incorporated and are validly existing as
corporations in good standing under the laws of the State of Minnesota, with
full corporate power and authority to own their properties and conduct their
business as described in the Prospectus. To the best of our knowledge, Xxxxxxxx
and the Subsidiary are conducting their respective businesses so as to comply in
all material respects with applicable federal, state and local statutes,
ordinances, rules and regulations. To the best of our knowledge, Xxxxxxxx and
the Subsidiary hold all material licenses, certificates, and permits from state,
federal, and other regulatory authorities necessary for the conduct of their
respective businesses as described in the Registration Statement, or have
obtained waivers from any such applicable requirements from the appropriate
state, federal, or other regulatory authority.
2. All of the shares of capital stock of the Subsidiary have been
duly and validly authorized and issued, are fully paid and non-assessable and,
based solely on our review of the Subsidiary's share ledger, are owned of record
by Xxxxxxxx, free and clear of any security interest, lien or restriction. To
the best of our knowledge, Xxxxxxxx has no subsidiaries (other than the
Subsidiary) or affiliates or affiliated corporations except as explicitly stated
in the Registration Statement.
3. The authorized capital stock of Xxxxxxxx is as set forth under the
caption "Capitalization" in the Prospectus as of the date(s) indicated, and the
issued and outstanding shares of capital stock of Xxxxxxxx have been duly
authorized and validly issued and are fully paid and non-assessable. The
long-term debt and short-term debt of Xxxxxxxx have been duly authorized. With
the exception of the insurance funded buy-sell agreements described in the
Prospectus, no holder of Xxxxxxxx'x common stock has the right to cause Xxxxxxxx
to redeem such stock.
4. The Underwriting Agreement has been duly authorized, executed and
delivered by Xxxxxxxx and constitutes the legal, valid and binding obligation of
Xxxxxxxx enforceable in accordance with its terms except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by equitable principles (regardless of whether enforcement is sought at law or
in equity), and except as rights to indemnity hereunder may be limited by
applicable securities laws, including the Act and the rules and regulations
thereunder.
5. The Indenture and the Debentures have been duly and validly
authorized, executed and delivered by Xxxxxxxx and constitute the legal, valid
and binding obligations of Xxxxxxxx enforceable in accordance with their
respective terms except as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally, and by equitable principles
(regardless of whether enforcement is sought at law or in equity). The
Debentures are entitled to the benefits of the Indenture. The Debentures are not
subject to the preemptive rights of any security holder of Xxxxxxxx pursuant to
the articles of incorporation or bylaws of Xxxxxxxx or any agreement or other
instrument of which we are aware. All action required to be taken for the due
and proper authorization, issuance and sale of the Debentures has been validly
and sufficiently taken. To the best of our knowledge, no security holder of
Xxxxxxxx has the right to require Xxxxxxxx to register any securities held by
such person for sale in connection with the transactions contemplated by this
Agreement.
6. The Debentures and the Indenture conform in all material respects
to the descriptions thereof contained in the Prospectus. The certificates for
the Debentures to be delivered hereunder are in due and proper form as provided
for in the Indenture.
7. To the best of our knowledge, neither the issue and sale of the
Debentures, the performance of this Agreement, the Indenture, nor the
consummation of the transactions contemplated herein and therein will conflict
with or constitute a breach of, or default under, result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
Xxxxxxxx or any Subsidiary pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument or agreement to which Xxxxxxxx or any
Subsidiary is a party or by which any of them may be bound, or to which any of
the property or assets of any of them is subject, nor will such actions result
in any violation of any administrative or court decree known to us or the
provisions of the articles of incorporation or bylaws of Xxxxxxxx or of the
Subsidiary or, to the best of our knowledge, any applicable law or
administrative regulation.
8. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency, other governmental body or any
self-regulatory agency is required for the execution and delivery of the
Agreement, the Indenture or the Debentures or the consummation of the
transactions contemplated therein, except such as have been obtained under the
Act, or as may be required under applicable blue sky laws and under the rules
and regulations of the National Association of Securities Dealers, Inc.
9. Neither Xxxxxxxx nor the Subsidiary is in violation of its
articles of incorporation or bylaws or, to the best of our knowledge, in default
under any administrative or court decree or in default with respect to any
material provision or any lease, loan agreement, franchise, license or permit to
which it is a party or by which it may be bound, or to which any of the property
or assets of Xxxxxxxx or any Subsidiary is subject. To the best of our
knowledge, there does not exist any state of facts which constitutes an event of
default as defined in such documents or which, with notice or lapse of time or
both, would constitute such an event of default.
10. To the best of our knowledge, there is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending or threatened, against or affecting Xxxxxxxx or the
Subsidiary, which is required to be disclosed in the Registration Statement.
11. To the best of our knowledge, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments, documents or
agreements ("Agreements") of a character required to be described or referred to
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which are not described or referred to or filed as
required. To the best of our knowledge, all descriptions or references to such
Agreements in the Registration Statement are correct in all material aspects.
12. To the best of our knowledge, Xxxxxxxx and the Subsidiary own,
license or exclusively hold all rights to use all material trademarks,
copyrights, and other intangible personal property necessary to engage in the
business conducted by them. In operating their businesses, Xxxxxxxx and the
Subsidiary do not, to the best of our knowledge, infringe upon the right or
claimed right of any person under or with respect to any of the above.
13. To the best of our knowledge, Xxxxxxxx and the Subsidiary have
good and marketable title to all property described in the Prospectus as being
owned by them, in each case free and clear of all liens, claims, security
interests or other encumbrances, except those arising in the ordinary course of
business in the development of lots and the construction of homes as described
in the Registration Statement or Prospectus and which do not interfere in any
material respect with the use of the property or the conduct of the business of
Xxxxxxxx or the Subsidiary. To the best of our knowledge, the property held
under lease by Xxxxxxxx and the Subsidiary is held by them under valid,
subsisting and enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with the conduct of
the business of Xxxxxxxx or the Subsidiary.
14. Xxxxxxxx is not, and will not become upon the sale of the
Debentures, an "investment company," as such term is defined in the Investment
Company Act of 1940, as amended.
15. The Indenture is not required to be qualified under the Trust
Indenture Act of 1939, as amended.
16. The conditions for use of a registration statement on Form S-1 set
forth in the General Instructions to Form S-1 have been satisfied with respect
to Xxxxxxxx and the Registration Statement.
17. The Commission has declared the Registration Statement effective
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue
dates, complied as to form in all material respects with the requirements of the
Act and the rules and regulations thereunder.
18. To the best of our knowledge, Xxxxxxxx has not sold any securities
in violation of Section 5(a) of the Act.
In addition to the qualifications and limitations set forth above, the
opinions expressed herein are subject to the following qualifications and
limitations:
(a) We express no opinion with respect to laws other than those of the
State of Minnesota and the federal laws of the United States of America, and we
assume no responsibility as to the applicability thereto, or the effect thereon,
of the laws of any other jurisdiction.
(b) The phrases "known to us," "to the best of our knowledge," "of
which we are aware," and phrases of similar effect qualifying the opinions set
forth above are intended to indicate that, based solely upon the meetings and
reviews described below, without any further independent investigation on our
part, we have no actual knowledge that the statements made are incorrect.
(c) In giving the opinions expressed in paragraphs 4 and 5 above, we
have assumed that any party seeking to enforce the Underwriting Agreement at all
times has been, and will continue at all times to be, exempt from the filing
requirements of Minnesota Statutes, Section 290.371, as it relates to the filing
of a Notice of Business Activities Report or, if not exempt, has duly filed, and
will continue to duly file, all such Notice of Business Activities Reports.
The primary purpose of our professional engagement by Xxxxxxxx in
connection with the transactions contemplated by the Underwriting Agreement was
not to establish factual matters and, because many determinations involved in
the preparation of the Registration Statement and Prospectus were of a wholly or
partially non-legal character, we have not passed upon and do not assume any
responsibility for the accuracy, completeness or fairness of statements
contained in the Registration Statement or Prospectus and make no representation
that we have independently verified the accuracy, completeness or fairness of
such statements.
However, in the course of acting pursuant to our engagement by
Xxxxxxxx, we met in conferences prior to the filing of the Registration
Statement with representatives of Xxxxxxxx, representatives of Coopers & Xxxxxxx
L.L.P., independent certified public accountants for Xxxxxxxx, your
representatives and your counsel, during which conferences the contents of the
Registration Statement and Prospectus and related matters were discussed. In
addition, we reviewed copies of the exhibits filed with the Registration
Statement, as furnished to us by Xxxxxxxx, the minutes of meetings of the Board
of Directors and the stockholders of Xxxxxxxx, which minutes were represented to
us by Xxxxxxxx to be all such minutes since the date of Xxxxxxxx'x
incorporation, and various other corporate documents.
Based on the foregoing, our understanding of applicable law (including
the requirements of Form S-1 and the character of the Prospectus contemplated
thereby) and the experience we have gained in our practice under the Act, we
advise you that we have no reason to believe that either the Registration
Statement or the Prospectus as of the effective date of the Registration
Statement contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that (i) we make no
statement regarding the financial statements, schedules and other financial and
statistical data contained therein; and (ii) we make no statement concerning
statements in, or omissions from, the Registration Statement or Prospectus, or
any amendment thereof or supplement thereto, which are based upon and conform to
written information furnished to Xxxxxxxx by the Underwriter specifically for
use in the preparation of the Registration Statement or the Prospectus, or any
such amendment or supplement.
We are furnishing this opinion to you solely for your benefit in
connection with the above-described transaction. It is not to be used,
circulated, quoted or otherwise referred to for any other purpose and no one
other than you is entitled to rely on this opinion. This opinion speaks only as
of the date hereof, and we hereby expressly disclaim any duty to update any of
the statements made herein.
Very truly yours,
XXXXXXX, STREET AND DEINARD
By
Xxxxxxx X. Xxxxxx
SRP/crs
