Exhibit 1.1
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1,750,000 SHARES
XXXXXXXX, INC.
COMMON STOCK
PAR VALUE $.25 PER SHARE
UNDERWRITING AGREEMENT
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Xxxx Xxxxxxxx Incorporated
Xxxxxxx & Company, Inc.
As Representatives of the several Underwriters
x/x Xxxx Xxxxxxxx Xxxxxxxxxxxx
Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Xxxxxxxx, Inc., a Minnesota corporation (the "Company") proposes,
subject to the terms and conditions stated herein, to issue and sell to the
several Underwriters named in Schedule A hereto (the "Underwriters"), for which
you are acting as representatives (the "Representatives"), an aggregate of
1,750,000 shares (the "Firm Shares") of Common Stock, par value $.25 per share,
of the Company (the "Common Stock"), and, at the election of the Underwriters,
up to 262,500 shares of Common Stock (the "Option Shares"). The Firm Shares and
the Option Shares are herein collectively called the "Shares."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 33- ) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Act"). The registration statement, as
amended at the time it was declared effective, including the information (if
any) deemed to be part thereof pursuant to Rule 430A under the Act and all
documents incorporated by reference in the prospectus contained therein at such
time is herein referred to as the "Registration Statement." The form of
prospectus first filed by the Company with the Commission pursuant to Rules
424(b) and 430A under the Act is referred to herein as the "Prospectus." Each
preliminary prospectus included in the Registration Statement prior to the time
it becomes effective or filed with the Commission pursuant to Rule 424(a) under
the Act is referred to herein as a "Preliminary Prospectus." Any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or supplement to
any Preliminary Prospectus or Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in such
Preliminary Prospectus or Prospectus, as the case may be; and any reference to
any amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration Statement
that is incorporated by reference in the Registration Statement. Copies of the
Registration Statement, including all exhibits and schedules thereto and any
documents incorporated by reference, any amendments thereto and all Preliminary
Prospectuses have been delivered to you.
The Company hereby confirms its agreements with respect to the
purchase of the Shares by the Underwriters as follows:
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(i) The Registration Statement has been declared effective under
the Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or
threatened by the Commission.
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission promulgated thereunder, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, the Company makes no representation or
warranty as to information contained in or omitted in reliance upon,
and in conformity with, written information furnished to the Company
by or on behalf of any Underwriter through the Representatives
expressly for use in the preparation thereof.
The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission conformed in
all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements
of the Securities Act or the Exchange Act as applicable, and the rules
and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(iii) The Registration Statement conforms, and the Prospectus
and any amendments or supplements thereto will conform, in all
material respects to the
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requirements of the Act and the rules and regulations thereunder.
Neither the Registration Statement nor any amendment thereto, and
neither the Prospectus nor any supplement thereto, contains or will
contain, as the case may be, 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, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon,
and in conformity with, written information furnished to the Company
by or on behalf of any Underwriter through the Representatives,
expressly for use in the preparation thereof.
(iv) The Company has been duly organized, is validly existing as
a corporation in good standing under the laws of the State of
Minnesota, has the corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus,
and is duly qualified to transact business in all jurisdictions in
which the conduct of its business or its ownership or leasing of
property requires such qualification and the failure so to qualify
would have a material adverse effect on the business or condition,
financial or otherwise, of the Company and its subsidiaries, taken as
a whole.
(v) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own or lease its properties and conduct its business as
described in the Prospectus, and is duly qualified to transact
business in all jurisdictions in which the conduct of its business or
its ownership or leasing of property requires such qualification and
the failure so to qualify would have a material adverse effect on the
business or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole. All outstanding shares of capital
stock of each of the subsidiaries of the Company have been duly
authorized and validly issued, are fully paid and non-assessable, and
are owned, directly or indirectly, by the Company free and clear of
all liens, encumbrances and security interests. No options, warrants
or other rights to purchase, agreements or other obligations to issue,
or other rights to convert any obligations into, shares of capital
stock or ownership interests in any of the subsidiaries of the Company
are outstanding.
(vi) The outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable. All offers and sales by the Company of outstanding
shares of capital stock and other securities of the Company, prior to
the date hereof, were made in compliance with the Act and all
applicable state securities or blue sky laws. The Shares to be issued
and sold by the Company to the Underwriters pursuant to this Agreement
have been duly authorized and, when issued and paid for as
contemplated herein, will be validly issued, fully paid and
nonassessable. There are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of capital stock of the Company pursuant to
the Company's Articles of Incorporation, Bylaws or any agreement or
other instrument to which the Company is
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a party or by which the Company is bound. Neither the filing of the
Registration Statement nor the offering or the sale of the Shares as
contemplated by this Agreement gives rise to any rights for, or
relating to, the registration of any shares of capital stock or other
securities of the Company, except such rights which have been validly
waived or satisfied. Except as described in the Prospectus, there are
no outstanding options, warrants, agreements, contracts or other
rights to purchase or acquire from the Company any shares of its
capital stock. The Company has the authorized and outstanding capital
stock as set forth under the heading "Capitalization" in the
Prospectus. The outstanding capital stock of the Company, including
the Shares, conforms, and the Shares to be issued by the Company to
the Underwriters will conform, to the description thereof contained in
the Prospectus.
(vii) The financial statements, together with the related notes
and schedules as set forth or incorporated by reference in the
Registration Statement and Prospectus, present fairly the consolidated
financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated in
the Registration Statement at the indicated dates and for the
indicated periods. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, and all adjustments necessary
for a fair presentation of results for such periods have been made,
except as otherwise stated therein. The summary and selected
financial and statistical data included in the Registration Statement
present fairly the information shown therein on the basis stated in
the Registration Statement and have been compiled on a basis
consistent with the financial statements presented therein.
(viii) There is no action or proceeding pending or, to the
knowledge of the Company, threatened or contemplated against the
Company or any of its subsidiaries before any court or administrative
or regulatory agency which, if determined adversely to the Company or
any of its subsidiaries, would, individually or in the aggregate,
result in a material adverse change in the business or condition
(financial or otherwise), results of operations, shareholders' equity
or prospects of the Company and its subsidiaries, taken as a whole,
except as set forth in the Registration Statement.
(ix) The Company has good and marketable title to all properties
and assets reflected as owned in the financial statements hereinabove
described (or as described as owned in the Prospectus), in each case
free and clear of all liens, encumbrances and defects, except such as
are described in the Prospectus or do not substantially affect the
value of such properties and assets and do not materially interfere
with the use made and proposed to be made of such properties and
assets by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
and its subsidiaries.
(x) Since the respective dates as of which information is given
in the Registration Statement, as it may be amended or supplemented,
(A) there has not been
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any material adverse change, or any development involving a
prospective material adverse change, in or affecting the condition,
financial or otherwise, of the Company and its subsidiaries, taken as
a whole, or the business affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, whether or not occurring in the
ordinary course of business, (B) there has not been any transaction
not in the ordinary course of business entered into by the Company or
any of its subsidiaries which is material to the Company and its
subsidiaries, taken as a whole, other than transactions described or
contemplated in the Registration Statement, (C) the Company and its
subsidiaries have not incurred any material liabilities or
obligations, which are not in the ordinary course of business or which
could result in a material reduction in the future earnings of the
Company and its subsidiaries, (D) the Company and its subsidiaries
have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, windstorm,
accident or other calamity, whether or not covered by insurance, (E)
there has not been any change in the capital stock of the Company
(other than upon the exercise of options and warrants described in the
Registration Statement), or any material increase in the short-term or
long-term debt (including capitalized lease obligations) of the
Company and its subsidiaries, taken as a whole, (F) there has not been
any declaration or payment of any dividends or any distributions of
any kind with respect to the capital stock of the Company, other than
any dividends or distributions described or contemplated in the
Registration Statement, or (G) there has not been any issuance of
warrants, options, convertible securities or other rights to purchase
or acquire capital stock of the Company.
(xi) Neither the Company nor any of its subsidiaries is in
violation of, or in default under, its Articles of Incorporation or
Bylaws, or any statute, or any rule, regulation, order, judgment,
decree or authorization of any court or governmental or administrative
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, or any indenture, mortgage,
deed of trust, loan agreement, lease, franchise, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them are bound or to
which any property or assets of the Company or any of its subsidiaries
is subject, which violation or default would have a material adverse
effect on the business, condition (financial or otherwise), results of
operations, shareholders' equity or prospects of the Company and its
subsidiaries, taken as a whole.
(xii) The issuance and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated herein will not
violate any provision of the Articles of Incorporation or Bylaws of
the Company or any of its subsidiaries or any statute or any order,
judgment, decree, rule, regulation or authorization of any court or
governmental or administrative agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties, and
will not conflict with, result in a breach or violation of, or
constitute, either by itself or upon notice or passage of time or
both, a default under any indenture, mortgage, deed of trust, loan
agreement, lease, franchise, license or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any
property or assets of the Company or any of its
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subsidiaries is subject. No approval, consent, order, authorization,
designation, declaration or filing by or with any court or
governmental agency or body is required for the execution and delivery
by the Company of this Agreement and the consummation of the
transactions herein contemplated, except as may be required under the
Act or any state securities or blue sky laws.
(xiii) The Company and each of its subsidiaries holds and is
operating in compliance with all licenses, approvals, certificates and
permits from governmental and regulatory authorities, foreign and
domestic, which are necessary to the conduct of its business as
described in the Prospectus.
(xiv) The Company has the power and authority to enter into this
Agreement and to authorize, issue and sell the Shares it will sell
hereunder as contemplated hereby. This Agreement has been duly and
validly authorized, executed and delivered by the Company.
(xv) Xxxxxx Xxxxxxxx LLP, which has certified certain of the
financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required
by the Act and the rules and regulations thereunder.
(xvi) 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 the Common Stock.
(xvii) The Shares have been approved for designation upon notice
of issuance on the Nasdaq National Market under the symbol "SHEL."
(xviii) The Company has obtained and delivered to the
Representatives written agreements, in form and substance satisfactory
to the Representatives, of each of its directors, officers and certain
shareholders that no offer, sale, assignment, transfer, encumbrance,
contract to sell, grant of an option to purchase or other disposition
of any Common Stock or other capital stock of the Company will be made
for a period of 90 days after the date of the Prospectus, directly or
indirectly, by such holder otherwise than hereunder or with the prior
written consent of the Representatives.
(xix) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus
or the Prospectus or other materials permitted by the Act to be
distributed by the Company.
(xx) The Company is in compliance with all provisions of Florida
Statutes Section 517.075 (Chapter 92-198, laws of Florida). The
Company does not do any business, directly or indirectly, with the
government of Cuba or with any person or entity located in Cuba.
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(xxi) The Company and its subsidiaries have filed all federal,
state, local and foreign tax returns or reports required to be filed,
and have paid in full all taxes indicated by said returns or reports
and all assessments received by it or any of them to the extent that
such taxes have become due and payable, except where the Company and
its subsidiaries are contesting in good faith such taxes and
assessments.
(xxii) The Company and each of its subsidiaries owns or licenses
all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets and other similar
rights necessary for the conduct of its business as described in the
Prospectus. Except as described in the Prospectus, the Company has no
knowledge of any infringement by it or its subsidiaries of any
patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service xxxx registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others,
and neither the Company nor any of its subsidiaries has received any
notice or claim of conflict with the asserted rights of others with
respect to any of the foregoing.
(xxiii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances 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 records 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.
(xxiv) Other than as contemplated by this Agreement, the Company
has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
(xxv) The conditions for the use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(xxvi) The representations and warranties of the Company made in
this Agreement and the information provided in any schedule, list or
other document specifically referred to herein or provided to the
Representatives or their counsel in connection with their due
diligence review of the Company do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
(xxvii) The Company and its management have no reason, other
than matters already disclosed to the Representatives, to believe that
the Company may be unable to begin commercial production at the New
Production Facility by April 1996, as disclosed in the Prospectus.
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(b) Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel to the Underwriters shall be deemed to be
a representation and warranty of the Company to each Underwriter as to the
matters covered thereby.
2. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and covenants contained herein, and subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a price of $______ per share, the number of Firm Shares set
forth opposite the name of each Underwriter in Schedule A hereto, subject to
adjustments in accordance with Section 8 hereof.
In addition, on the basis of the representations, warranties and covenants
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters an option to purchase at their
election up to 262,500 Option Shares at the same price per share as set forth
for the Firm Shares in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. The option granted hereby may be
exercised in whole or in part, but only once, and at any time upon written
notice given within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option and the time and date at which certificates are to be delivered. If any
Option Shares are purchased, each Underwriter agrees, severally and not jointly,
to purchase that portion of the number of Option Shares as to which such
election shall have been exercised (subject to adjustment to eliminate
fractional shares) determined by multiplying such number of Option Shares by a
fraction the numerator of which is the maximum number of Firm Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the maximum
number of Firm Shares which all of the Underwriters are entitled to purchase
hereunder. The time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be earlier
than two or later than ten full business days after the exercise of such option,
and shall not in any event be prior to the Closing Date. If the date of
exercise of the option is three or more full days before the Closing Date, the
notice of exercise shall set the Closing Date as the Option Closing Date.
Certificates in definitive form for the Shares to be purchased by each
Underwriter hereunder, and in such denominations and registered in such names as
Xxxx Xxxxxxxx Incorporated may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to you
for the account of such Underwriter at such time and place as shall hereafter be
designated by the Representatives, against payment by such Underwriter or on its
behalf of the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company in next day funds. The time and
date of such delivery and payment shall be, with respect to the Firm Shares,
8:30 a.m. Minneapolis time, at the offices of ___________________________, on
_______________, 199 , or such other time and date as you and the Company may
agree upon in writing, such time and date being herein referred to as the
"Closing Date," and, with respect to the Option Shares, at the time and on the
date specified by you in the written notice given by you of the Underwriters'
election to purchase the Option Shares, or such other time and date as you and
the Company may agree upon in writing, such time and date being referred to
herein as the "Option Closing Date." Such certificates will be made available
for checking and packaging at least twenty-four hours prior to the Closing Date
or the Option Closing Date, as the case may be, at a location as may be
designated by you.
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3. Offering by Underwriters. It is understood that the several
Underwriters propose to make a public offering of the Firm Shares as soon as the
Representatives deems it advisable to do so. The Firm Shares are to be
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Representatives may from time to time thereafter change
the public offering price and other selling terms. To the extent, if at all,
that any Option Shares are purchased pursuant to Section 2 hereof, the
Underwriters will offer such Option Shares to the public on the foregoing terms.
It is understood that _______________________ Firm Shares will
initially be reserved by the several Underwriters for offer and sale upon the
terms and conditions set forth in the Prospectus to employees and persons having
business relationships with the Company and its subsidiaries who have heretofore
delivered to you offers or indications of interest to purchase Firm Shares in
form satisfactory to you, and that any allocation of such Firm Shares among such
persons will be made in accordance with timely directions received by you from
the Company, provided that under no circumstances will you or any Underwriter be
liable to the Company or any such person for any action taken or omitted in good
faith in connection with such offering to employees and persons having business
relationships with the Company and its subsidiaries. It is further understood
that any of such Firm Shares which are not purchased by such persons will be
offered by the Underwriters to the public upon the terms and conditions set
forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will prepare and timely file with the Commission under
Rule 424(b) under the Act a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A under the Act, and will not file any amendment to the
Registration Statement or supplement to the Prospectus or any document
incorporated by reference in the Prospectus of which the Representatives
shall not previously have been advised and furnished with a copy and as to
which the Representatives shall have objected in writing promptly after
reasonable notice thereof or which is not in compliance with the Act or the
rules and regulations thereunder. The Company will file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Shares.
(b) The Company will advise the Representatives promptly of any
request of the Commission for amendment of the Registration Statement or
for any supplement to the Prospectus or for any additional information, or
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus,
of the suspension of the qualification of the Shares for offering or sale
in any jurisdiction, or of the institution or threatening of any
proceedings for that purpose, and the Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the
use of the Prospectus or suspending such qualification and to obtain as
soon as possible the lifting thereof, if issued.
(c) The Company will endeavor to qualify the Shares for sale under the
securities laws of such jurisdictions as the Representatives may reasonably
have designated in writing
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and will, or will cause counsel to, make such applications, file such
documents, and furnish such information as may be reasonably requested by
the Representatives, provided that the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent. The Company will, from time to time, prepare and file
such statements, reports and other documents as are or may be required to
continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(d) The Company will furnish the Underwriters with as many copies of
any Preliminary Prospectus as the Representatives may reasonably request
and, during the period when delivery of a prospectus is required under the
Act, the Company will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may, from time to time, reasonably request. The Company
will deliver to the Representatives, at or before the Closing Date, three
signed copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the
Representatives such number of copies of the Registration Statement,
without exhibits, and of all amendments thereto, as the Representatives may
reasonably request.
(e) If, during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, any event shall occur as a result
of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or if for any other reason it shall be necessary
at any time to amend or supplement the Prospectus to comply with any law,
the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein in light of
the circumstances existing when it is so delivered, not misleading, or so
that the Prospectus will comply with law. In case any Underwriter is
required to deliver a prospectus in connection with sales of any Shares at
any time nine months or more after the effective date of the Registration
Statement, upon the request of the Representatives but at the expense of
such Underwriter, the Company will prepare and deliver to such Underwriter
as many copies as the Representatives may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act.
(f) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 18
months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date
of the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 thereunder and will
advise you in writing when such statement has been so made available.
(g) The Company will, for such period up to five years from the
Closing Date, deliver to the Representatives copies of its annual report
and copies of all other documents,
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reports and information furnished by the Company to its security holders or
filed with any securities exchange pursuant to the requirements of such
exchange or with the Commission pursuant to the Act or the Exchange Act.
The Company will deliver to the Representatives similar reports with
respect to significant subsidiaries, as that term is defined in the rules
and regulations under the Act, which are not consolidated in the Company's
financial statements.
(h) No offering, sale or other disposition of any Common Stock or
other capital stock of the Company, or warrants, options, convertible
securities or other rights to acquire such Common Stock or other capital
stock (other than pursuant to employee stock option plans, outstanding
options or on the conversion of convertible securities outstanding on the
date of this Agreement) will be made for a period of days after the date
of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of the Representatives.
(i) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
purposes set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to maintain the designation
of the Common Stock on the Nasdaq National Market.
5. Costs and Expenses. The Company will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of the
obligations of the Company under this Agreement, including, without limiting the
generality of the foregoing, the following: accounting fees of the Company; the
fees and disbursements of counsel for the Company; the cost of preparing,
printing and filing of the Registration Statement, Preliminary Prospectuses and
the Prospectus and any amendments and supplements thereto and the printing,
mailing and delivery to the Underwriters and dealers of copies thereof and of
this Agreement, the Agreement Among Underwriters, any Selected Dealers
Agreement, the Underwriters' Selling Memorandum, the Invitation Letter, the
Power of Attorney, the Blue Sky Memorandum and any supplements or amendments
thereto (excluding, except as provided below, fees and expenses of counsel to
the Underwriters); the filing fees of the Commission; the filing fees and
expenses (including legal fees and disbursements of counsel for the
Underwriters) incident to securing any required review by the NASD of the terms
of the sale of the Shares; listing fees, if any, transfer taxes and the
expenses, including the fees and disbursements of counsel for the Underwriters
incurred in connection with the qualification of the Shares under state
securities or Blue Sky laws; the fees and expenses incurred in connection with
the designation of the Shares on the Nasdaq National Market; the costs of
preparing stock certificates; the costs and fees of any registrar or transfer
agent and all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section 5. In addition, the Company will pay all travel and lodging expenses
incurred by management of the Company in connection with any informational "road
show" meetings held in connection with the offering and will also pay for the
preparation of all materials used in connection with such meetings. The Company
shall not, however, be required to pay for any of the Underwriters' expenses
(other than those related to qualification of the Shares under state securities
or Blue Sky laws and those incident to securing any required review by the NASD
of the terms of the sale of the shares) except that, if this Agreement shall not
be consummated because the conditions in Section 6 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to Section
10(b) hereof, or by reason of any failure, refusal or inability on the part of
the Company to perform any undertaking or
-11-
satisfy any condition of this Agreement or to comply with any of the terms
hereof on its part to be performed, unless such failure to satisfy said
condition or to comply with said terms shall be due to the default or omission
of any Underwriter, then the Company shall promptly upon request by the
Representatives reimburse the several Underwriters for all out-of-pocket
accountable expenses, including fees and disbursements of counsel, incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for damages
on account of loss of anticipated profits from the sale by them of the Shares.
6. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing Date
and the Option Shares, if any, on the Option Closing Date, are subject to the
condition that all representations and warranties of the Company contained
herein are true and correct, at and as of the Closing Date or the Option Closing
Date, as the case may be, the condition that the Company shall have performed
all of its covenants and obligations hereunder and to the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
4(a) hereof; no stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, or any part thereof
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to
the reasonable satisfaction of the Representatives.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Xxxxxxxxx & Xxxxxx,
P.L.L.P., counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters, to the
effect that:
(i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Minnesota with corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus.
(ii) Each subsidiary of the Company has been duly organized and
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Prospectus. The outstanding shares of capital stock
of each such subsidiary have been duly authorized and validly issued,
are fully paid and nonassessable and are owned, directly or
indirectly, by the Company, free and clear of all liens, encumbrances
and security interests, other than security interests specifically
disclosed in the Prospectus. To the knowledge of such counsel, no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock or ownership interests in each such
subsidiary are outstanding.
-12-
(iii) The Company has authorized and outstanding capital stock
as described in the Prospectus. The outstanding shares of the
Company's capital stock have been duly authorized and validly issued
and are fully paid and nonassessable. The form of certificate for the
Shares is in due and proper form and complies with all applicable
statutory requirements. The Shares to be issued and sold by the
Company pursuant to this Agreement have been duly authorized and, when
issued and paid for as contemplated herein, will be validly issued,
fully paid and nonassessable. No preemptive or, to the knowledge of
such counsel, other similar subscription rights of shareholders of the
Company, or of holders of warrants, options, convertible securities or
other rights to acquire shares of capital stock of the Company, exist
with respect to any of the Shares or the issue and sale thereof. To
the knowledge of such counsel, no rights to register outstanding
shares of the Company's capital stock, or shares issuable upon the
exercise of outstanding warrants, options, convertible securities or
other rights to acquire shares of such capital stock, exist which have
not been validly exercised or waived with respect to the Registration
Statement. The capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Prospectus.
(iv) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened
by the Commission.
(v) The Registration Statement, the Prospectus and each amendment
or supplement thereto comply as to form in all material respects with
the requirements of the Act and the rules and regulations thereunder
(except that such counsel need express no opinion as to the financial
statements and related schedules included therein). The documents
incorporated by reference in Prospectus or any further amendment or
supplement thereto made by the Company prior to the Closing Date or
the Option Closing Date, as the case may be,(other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; such counsel has no reason to believe that any of such
documents, when such documents became effective or were so filed, as
the case may be, contained in the case of registration statement which
became effective under the Act, an untrue statement of a material
fact, or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or,
in the case of other documents which were filed under the Exchange Act
with the Commission, an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made when
such documents were so filed, not misleading.
(vi) The statements (A) in the Prospectus under the caption
"Description of Capital Stock" and (B) in the Registration Statement
in Item 15 insofar as such statements constitute a summary of matters
of law, are accurate summaries and fairly present the information
called for with respect to such matters.
-13-
(vii) Such counsel does not know of any contracts, agreements,
documents or instruments required to be filed as exhibits to the
Registration Statement, incorporated by reference into the Prospectus,
or described in the Registration Statement or the Prospectus which are
not so filed, incorporated by reference or described as required; and
insofar as any statements in the Registration Statement or the
Prospectus constitute summaries of any contract, agreement, document
or instrument to which the Company is a party, such statements are
accurate summaries and fairly present the information called for with
respect to such matters.
(viii) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or administrative
body or regulatory agency, to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or Prospectus and are not so
described, or statutes or regulations that are required to be
described in the Registration Statement or the Prospectus that are not
so described.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will
not conflict with or result in a violation of or default under the
Articles of Incorporation or Bylaws of the Company or any of its
subsidiaries, or under any statute, permit, judgment, decree, order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties, or under any lease, contract,
indenture, mortgage, loan agreement or other agreement or other
instrument or obligation known to such counsel to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any property or assets of the
Company or any of its subsidiaries is subject, except such agreements,
instruments or obligations with respect to which valid consents or
waivers have been obtained by the Company or any of its subsidiaries.
(x) The Company has the corporate power and authority to enter
into this Agreement and to authorize, issue and sell the Shares as
contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution
and delivery of this Agreement and the consummation of the
transactions herein contemplated (other than as may be required by
state securities and blue sky laws, as to which such counsel need
express no opinion) except such as have been obtained or made,
specifying the same.
(xii) The Company is not, and immediately upon completion of the
sale of Shares contemplated hereby will not be, required to register
as an "investment company" under the Investment Company Act of 1940,
as amended.
-14-
(xiii) Such counsel has no reason to believe that, as of its
effective date, the Registration Statement or any further amendment
thereto made by the Company prior to the Closing Date or the Option
Closing Date, as the case may be, (other than the financial statements
and related schedules therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of
its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to the Closing Date or the Option
Closing Date, as the case may be, (other than the financial statements
and related schedules therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading or that, as of the Closing Date or the Option Closing Date,
as the case may be, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Closing Date or the Option Closing Date, as the
case may be, (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed.
(c) The Representatives shall have received from Xxxxxxxxxx & Xxxxx,
P.A., counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares, the Registration
Statement, the Prospectus, and other related matters as the Representatives
may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters.
(d) The Representatives shall have received on each of the date
hereof, the Closing Date and the Option Closing Date, as the case may be, a
signed letter, dated as of the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance satisfactory to the
Representatives, from Xxxxxx Xxxxxxxx, LLP, to the effect that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of the Act and the related rules and
regulations and containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(e) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Option Closing Date, as the case may be,
there shall not have been any change or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in your judgment, is material and
adverse to the Company and makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
the Closing Date or the Option Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
-15-
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of
the chief executive officer and the chief financial officer of the Company
to the effect that, as of the Closing Date or the Option Closing Date, as
the case may be, each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant to Rule
424(b) within the applicable period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 4
of this Agreement; no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been initiated or are, to his knowledge, threatened by
the Commission.
(ii) The representations and warranties of the Company set forth
in Section 1 of this Agreement are true and correct at and as of the
Closing Date or the Option Closing Date, as the case may be, and the
Company has performed all of its obligations under this Agreement to
be performed at or prior to the Closing Date or the Option Closing
Date, as the case may be.
(g) In addition, at each closing, the Company shall have delivered to
the Representatives an opinion, satisfactory in form and substance to the
Representatives and their counsel, of Merchant, Gould, Smith, Edell, Xxxxxx
& Xxxxxxx, special patent counsel for the Company, to the effect that:
(i) In a properly-decided decision, a court or the U.S. Patent
and Trademark Office would find that the patent identified in the
Prospectus under the heading "Proprietary Technology" as a "patent
which may cover certain plated through holes of double-sided circuits"
is either not infringed by the Company's existing or proposed
products, or invalid, or, in an interference proceeding, that the
Company has priority of inventorship with respect to the technology
covered by such patent.
(ii) To the best of such counsel's knowledge, except with respect
to the patent described above, there are no United States patents of
third parties which are infringed by the products currently made, used
and sold by the Company or which the Company currently proposes to
make, use or sell.
(iii) To the best of such counsel's knowledge there are no
legal, governmental or administrative proceedings pending or
threatened against the Company that relate to patents, trademarks or
other intellectual property, except for pending or proposed United
States and foreign patent applications.
(iv) To the best of such counsel's knowledge, after due inquiry,
the Company has not received any notice of conflict with the asserted
rights of others in respect of any trademarks, service marks, trade
names, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets, patents, patent
applications, know-how, or similar rights, nor of any threatened
actions with respect thereto, which, if determined adversely to the
Company, would individually or
-16-
in the aggregate have a material adverse effect on the general
affairs, financial position, net worth, or results of operations of
the Company.
(v) To the best of such counsel's knowledge, after due inquiry,
that the Company owns, possesses, or is licensed under all of the
material trademarks, trademark applications, trademark registrations,
service marks, service xxxx registrations, copyrights, patents, patent
applications, and licenses as are described in the Prospectus and
which are necessary for the Company's present or planned future
business.
(vi) The statements in the Prospectus under the captions "Risk
Factors--Patents, Trademarks and Proprietary Rights" and "Business--
Proprietary Technology" are accurate summaries and such counsel has no
reason to believe that such statements contain an untrue statement of
material fact, or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) The Company shall have furnished to the Representatives such
further certificates and documents as the Representatives may reasonably
have requested.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Representatives and to Xxxxxxxxxx &
Xxxxx, P.A., counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be. In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 7
hereof).
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each officer and director thereof, and each person, if any,
who controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities to which such Underwriter or such
persons may became subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus or the Prospectus, including any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a 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, or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Common Stock or the offering contemplated
hereby, and which is included as part of or referred to in any losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, and will reimburse each Underwriter and each such controlling person
-17-
for any legal or other expenses reasonably incurred by such Underwriter or
such controlling person in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged
omission, made in the Registration Statement, any Preliminary Prospectus or
the Prospectus, including any amendments or supplements thereto, in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein; and provided, further, that the Company shall not be liable in the
case of any matter covered by clause (iii) above to the extent that it is
determined in a final judgment by a court of competent jurisdiction that
such losses, claims, damages or liabilities resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, 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 not misleading in the
light of the circumstances under which they were made, and will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that each Underwriter will be liable in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity or
contribution may be sought pursuant to this Section 7, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) or contribution
provided for in Section 7(f) shall be available with respect to a
proceeding to any party who shall fail to give notice of such proceeding as
provided in this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party otherwise than
on account of the provisions of Section 7(a), (b) or (c). In case any such
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
-18-
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and shall pay as incurred the fees
and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay promptly as incurred the reasonable fees and expenses of
the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and the indemnified party shall have
reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense
of any such action or that there may be legal defenses available to it or
other indemnified parties which are different from or additional to those
available to the indemnifying party. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm at any time for all such indemnified parties. Such firm
shall be designated in writing by the Representatives and shall be
reasonably satisfactory to the Company in the case of parties indemnified
pursuant to Section 7(a) and shall be designated in writing by the Company
and shall be reasonably satisfactory to the Representatives in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) 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 Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits 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 (or actions or proceedings in respect thereof), 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 received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus.
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 on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if
-19-
contributions pursuant to this Section 7(d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect
thereto) referred to above in this Section 7(d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall
be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter; and 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.
The Underwriters' obligations in this Section 7(e) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have, and the
obligations of the Underwriters under this Section 7 shall be in addition
to any liability which the Underwriters may otherwise have.
8. Default by Underwriters. If on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter shall fail to purchase and pay for the
portion of the Shares which such Underwriter has agreed to purchase and pay for
on such date (otherwise than by reason of any default on the part of the
Company), you, as Representatives of the Underwriters, shall use your best
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may be
agreed upon, and upon the terms set forth herein, of the Firm Shares or Option
Shares, as the case may be, which the defaulting Underwriter or Underwriters
failed to purchase. If during such 36 hours you, as Representatives, shall not
have procured such other Underwriters, or any others, to purchase the Firm
Shares or Option Shares, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate number of
Shares with respect to which such default shall occur does not exceed 10% of the
Firm Shares or Option Shares, as the case may be, covered hereby, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Firm Shares or Option Shares, as the case may be, which they are
obligated to purchase hereunder, to purchase the Firm Shares or Option Shares,
as the case may be, which such defaulting Underwriter or Underwriters failed to
purchase, or (b) if the aggregate number of shares of Firm Shares or Option
Shares, as the case may be, with respect to which such default shall occur
exceeds 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the Company or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company except for expenses to be
borne by the Company and the Underwriters as provided in Section 5 hereof and
the indemnity and contribution agreements in Section 7 hereof. In the event of
a default by any Underwriter or Underwriters, as set forth in this Section 8,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as you, as Representatives, may
determine in order that the required changes in the Registration Statement or in
the Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a
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defaulting Underwriter. Any action taken under this Section 8 shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
9. Notices. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters, to Xxxx Xxxxxxxx Incorporated,
Xxxx Xxxxxxxx Plaza, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: ______________________, with copies to Xxxxxxxxxx & Xxxxx, P.A., 1100
International Centre, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxx; and if to the Company, to Sheldahl, Inc., 0000
Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx X. XxXxxxx, with
copies to Xxxxxxxxx & Xxxxxx, P.L.L.P., 0000 XXX Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxx.
10. Termination. This Agreement may be terminated by you by notice to the
Company as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters or (ii) 4:00 p.m.,
Minneapolis time, on the first business day following the later of the date
on which the Registration Statement becomes effective or the date of this
Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse
change in or affecting the condition, financial or otherwise, of the
Company and its subsidiaries taken as a whole or the business affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, whether or
not arising in the ordinary course of business, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency after
the date hereof or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the
financial markets of the United States would, in your judgment, make the
offering or delivery of the Shares impracticable or inadvisable, (iii)
suspension of trading in securities on the New York Stock Exchange or the
American Stock Exchange or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such
Exchange, or a halt or suspension of trading in securities generally which
are quoted on Nasdaq National Market System, or (iv) declaration of a
banking moratorium by either federal or New York State authorities; or
(c) as provided in Sections 6 and 8 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company, as
to any obligation of the Underwriters to purchase the Option Shares, upon the
occurrence at any time prior to the Option Closing Date of any of the events
described in subparagraph (b) above or as provided in Sections 5 and 7 of this
Agreement.
11. Written Information. For all purposes under this Agreement
(including, without limitation, Section 1, Section 2 and Section 7 hereof), the
Company understands and agrees with each of the Underwriters that the following
constitutes the only written information furnished to the Company by or through
the Representatives specifically for use in preparation of the Registration
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Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto: (i) the per share "Price to Public" and per share
"Underwriting Discounts and Commissions" set forth on the cover page of the
Prospectus, (ii) the information relating to stabilization and passive market
making set forth in the last two paragraphs on page two of the Preliminary
Prospectus and the Prospectus, and (iii) the information set forth in the first,
second and last paragraphs under the caption "Underwriting" in the Preliminary
Prospectus and the Prospectus.
12. Successors. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Company and their
respective successors, executors, administrators, heirs and assigns, and the
officers, directors and controlling persons referred to herein, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares merely because of such purchase.
13. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors and officers and (c) delivery of and payment for
the Shares under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Minnesota.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
XXXXXXXX, INC.
By:________________________________________
Xxxxx X. Xxxxxxx
Chief Executive Officer
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The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
XXXX XXXXXXXX INCORPORATED
XXXXXXX & COMPANY, INC.
As Representatives of the several Underwriters
By Xxxx Xxxxxxxx Incorporated
By:_______________________________
Its:____________________________
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SCHEDULE A
SCHEDULE OF UNDERWRITERS
Number of Firm Maximum Number
Underwriter Shares to be Purchased of Option Shares
----------- ---------------------- ----------------
Xxxx Xxxxxxxx Incorporated............
Xxxxxxx & Company, Inc.
[Names of Underwriters by Grouping]
Total.......................
461319
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