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EXHIBIT 10 (i)
SEL-DRUM INTERNATIONAL, INC.
Common Stock
(par value $.01 per share)
CUSTODY AGREEMENT
Sel-Drum International, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, President and Chief Executive Officer
Dear Xx. Xxxxxx:
There are delivered to you herewith certificates (the "Certificates"),
in negotiable form (and, subject to your requirements, with signatures
guaranteed by a commercial bank or trust company having an office or
correspondent in the United States or by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.),
representing the number of issued and outstanding shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Sel-Drum International, Inc., a
New York corporation (the "Company"), set forth below the name of the
undersigned selling stockholder (the "Seller") at the end of this letter. The
Certificates are to be held by you as Custodian for the account of the Seller
and are to be disposed of by you solely in accordance with this Custody
Agreement ("Custody Agreement").
Concurrently with the execution and delivery of this Custody Agreement,
the Seller has executed a power of attorney (the "Power of Attorney"), the form
of which has been furnished to you, authorizing you as the Attorney-in-Fact to
sell from the number of shares represented by the Certificates that number of
shares of the Common Stock indicated below the signature of the Seller at the
end of this letter (the "Shares") and for that purpose to enter into a
Underwriting Agreement (the "Underwriting Agreement") in substantially the form
of which has been furnished to you, among the Company, certain Selling
Stockholders of the Company including the Seller (the "Selling Stockholders"),
and Pittsford Capital Markets, Inc., the underwriter named therein (the
"Underwriter").
You are authorized and directed to hold the Certificates deposited in
your custody, and prior to any time of closing or delivery specified in the
Underwriting Agreement (each, a "Time of Delivery") of which you shall have been
given prior notice, and upon the instructions of the Attorney-in-Fact, you are
to instruct the transfer agent and registrar for the Common Stock set forth
below name of Seller at the end of this letter and to prepare and countersign a
certificate or certificates (the "Underwriter's Certificates") (which may be
aggregated with such certificates in respect of the other Selling Stockholder)
representing the Shares which are to be sold by the Seller at such Time of
Delivery registered in such names
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and denominations as the Underwriter shall have instructed you. At each Time of
Delivery under the Underwriting Agreement, you are, upon the instructions of the
Attorney-in-Fact, (i) to instruct the transfer agent and registrar for the
Common Stock (A) to cause the Shares that are to be sold at such Time of
Delivery pursuant to the Underwriting Agreement to be transferred upon the books
of the Company into such names and in such denominations as the Underwriter
shall have instructed you, and (B) to deliver the Underwriter's Certificates
(which shall not contain any restrictive legends) pursuant to the Underwriting
Agreement to the Underwriter against receipt by such transfer agent and
registrar from you of the Certificates (or a portion thereof) deposited with you
pursuant to this Custody Agreement, (ii) to purchase all transfer tax stamps (if
any) necessary in connection with the transfer of such Shares, (iii) to deliver
to such transfer agent and registrar the Certificates (or a portion thereof)
against receipt from the Underwriter of payment for such Shares as provided in
the Underwriting Agreement, (iv) to give receipt for such payment and to deposit
such payment to your account as Custodian, (v) to draw upon such account to pay
such fees and expenses (which may include your own) as you may be specifically
instructed in writing to pay by the Attorney-in-Fact, and (vi) after deducting
such fees and expenses, if any, from the amount received by you as payment for
the Shares sold at such Time of Delivery to distribute the balance in accordance
with the payment instructions set forth below the name of the Seller at the end
of this Custody Agreement or such other instructions as you shall have received
prior to such Time of Delivery from the Attorney-in-Fact. Promptly after the
later of (i) the date 30 calendar days after the date of the Underwriting
Agreement and (ii) the Time of Delivery under the Underwriting Agreement, you
shall return to the Seller new certificates (which you shall have obtained from
the transfer agent), representing the number of shares, of Common Stock
represented by the Certificates deposited with you on behalf of the Seller,
which are in excess of the total number of Shares sold by the Seller to the
Underwriter.
If the Underwriting Agreement shall not be executed and delivered on or
prior to September 12, 1998, then you are to return to the Seller or as the
Seller may otherwise direct, the Certificates representing shares then on
deposit and received by you on behalf of the Seller pursuant to this Custody
Agreement, together with the stock powers related thereto, and this Custody
Agreement shall forthwith terminate, unless the Seller shall have extended the
term of the Power of Attorney and, with your consent, this Custody Agreement by
written notice thereof delivered to you and to the Attorney-in-Fact.
Under the terms of the Power of Attorney, the authority conferred
thereby is granted and conferred subject to the interests of the Underwriter and
the other Selling Stockholder and, prior to September 12, 1998 is, to the extent
enforceable by law, irrevocable and not subject to termination by the Seller or
by operation of law, whether by the dissolution of the Seller or the occurrence
of any other event, and the obligations of the Seller under the Underwriting
Agreement similarly are not to be subject to termination. Accordingly, the
shares represented by Certificates deposited with you pursuant to this Custody
Agreement and your authority hereunder are subject to the interests of the
Underwriter and the other Selling Stockholder, and this Custody Agreement and
your authority hereunder shall be, to the extent enforceable by law, irrevocable
and not subject to termination by the Seller or by operation of law, whether by
the dissolution of the Seller or the occurrence of any other event. If the
Seller should be dissolved, or if any other such event should occur, before the
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delivery of the Shares to be sold by the Seller under the Underwriting
Agreement, the certificates representing the Shares shall be delivered by or on
behalf of the Seller in accordance with the terms of this Custody Agreement, and
actions taken by you hereunder or by the Attorney-in-Fact, or any of them acting
alone, pursuant to the Power of Attorney shall be as valid as if such
dissolution or other event had not occurred.
Until delivery of the Shares to be sold by the Seller to the Underwriter
has been made as herein and in the Underwriting Agreement provided, the Seller
shall, except as otherwise specifically provided herein, have all rights of
ownership of the Shares and all other shares, if any, represented by the
Certificates deposited with you on behalf of the Seller.
You shall be entitled to act and rely upon any statement, request,
notice or instruction respecting this Custody Agreement given to you by the
Attorney-in-Fact; provided, however, that any statement or notice to you with
respect to a Time of Delivery, or with respect to the non-effectiveness or
termination of the Underwriting Agreement, or advising that the Underwriting
Agreement has not been executed and delivered, shall have been confirmed in
writing by the Underwriter.
It is understood that you assume no responsibility or liability to any
person other than to deal with the Certificates deposited and the proceeds from
the sale of the Shares represented thereby, all in accordance with the
provisions of this Custody Agreement, and the Seller agrees to indemnify and
hold harmless with respect to anything done by you in good faith in accordance
with the foregoing instructions. It is understood that your fees and expenses
acting hereunder will be paid by the Company.
The Seller hereby makes, at and as of the date of this Custody
Agreement, and as of the date of the Underwriting Agreement, with and to you
each of the representations, warranties and agreements set forth in subsections
___, ____, and ___ of Section _______ of the Underwriting Agreement which has
been furnished to you, and such representations, warranties and agreements are
incorporated by reference herein in their entirety (the representations,
warranties and agreements in the first clause of such subsection (i) and in such
subsection (ii) being subject, however, to the exception that orders or other
authorizations may be required under the Securities Act of 1933, as amended, or
under state or Blue Sky laws in connection with the purchase and distribution by
the Underwriter of the Shares to be sold by the Seller).
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Please acknowledge your acceptance hereof as Custodian and receipt of
the Certificates deposited by executing and returning one of the enclosed copies
hereof to the undersigned.
Dated: _________________, 1998
Very truly yours,
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Shareholder
Signature guaranteed: Number of Shares of Common Stock
to be sold:
shares*
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*Plus such additional shares which I may authorize you to sell on
my behalf in connection with the exercise by the Underwriter of
its over-allotment option.