Exhibit 1.1
300,000 SHARES OF COMMON STOCK
NORTHERN STAR FINANCIAL, INC.
MINIMUM: 50,000 Shares
MAXIMUM: 300,000 Shares
UNDERWRITING AGREEMENT
September 9, 2000
Xxxxxxx Xxxxxx & Company Financial Services, Inc.
000 Xxxx Xxxxxx, Xxxx X
X.X. Xxx 000
Xxxxxx, XX 00000-0000
Gentlemen:
1. Introduction. Northern Star Financial, Inc., a Minnesota corporation
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(the "Company") proposes to issue and sell to the public a minimum of 50,000
(the "Minimum") and up to 300,000 (the "Maximum") of its authorized but unissued
common stock, $0.01 par value, at $10.50 per share (the "Common Stock"). Such
Minimum and Maximum number of its shares of Common Stock are collectively
referred to in this Agreement as the "Original Shares." The Company also
proposes to issue and sell to the public up to an additional 30,000 shares of
its Common Stock upon request of the Underwriter. Such additional number of
shares of Common Stock are referred to in this Agreement as the "Option Shares."
The Original Shares and Option Shares are referred to in this Agreement as the
"Shares."
The Company hereby confirms its agreement with Xxxxxxx Xxxxxx & Company
Financial Services, Inc., as underwriter (referred to as "you" or the
"Underwriter") to offer the Original Shares on a "best efforts" basis upon the
terms and conditions herein. The Shares are more fully described in the
Registration Statement and Prospectus hereinafter described.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to, and agrees with, the Underwriter that:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2
(Commission File No. 333-94189) with respect to the Shares including one or
more forms of Preliminary Prospectus in conformity with the requirements of
the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (collectively referred to as the "Act") in the
form heretofore delivered to You; one or more amendments to such
Registration Statement have been prepared and filed and the Company may
prepare and file additional amendments. If the Company has elected not to
rely on Rule 430A, the Company has prepared and will promptly file an
amendment to the Registration Statement and an
amended prospectus (provided the Underwriter has consented to such filing).
If the Company has elected to rely on Rule 430A, it will prepare and timely
file a prospectus pursuant to Rule 424(b) that discloses the information
previously omitted from the prospectus in reliance upon Rule 430A. Such
Registration Statement, as amended, or supplemented, including all
prospectuses included as a part thereof, financial schedules, exhibits, the
information (if any) deemed to be a part thereof pursuant to Rules 430A and
434 under the Act and any Registration Statement filed pursuant to Rule 462
under the Act, is herein referred to as the "Registration Statement." The
term "Prospectus" as used herein shall mean the final prospectus, as
amended or supplemented, included as part of the Registration Statement
filed with the Commission when it becomes effective; provided, however,
that if a prospectus is filed by the Company pursuant to Rule 434 under the
Act, the term "Prospectus" as used herein shall mean the prospectus so
filed pursuant to Rules 424(b) and 430A and the term sheet so filed
pursuant to Rule 434. The term "Preliminary Prospectus" as used herein
means any prospectus, amended or supplemented; used prior to the Effective
Date (as defined herein) and included as part of the Registration
Statement, including any prospectus filed with the Commission pursuant to
Rule 424(b).
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus nor have any proceedings been instituted
for that purpose nor are any such proceedings threatened. Each Preliminary
Prospectus, at the time of filing or use, complied with the requirements of
the Act.
(c) As of the Effective Date or as of the filing date (or delivery to the
Underwriters) of any subsequent amendment or supplement, as the case may
be, and at all times subsequent thereto up to and including the Final
Closing Date (as hereinafter defined): (i) the Registration Statement and
Prospectus contain and will contain all statements which are required to be
stated therein by the Act and will comply in all material respects with the
Act; and (ii) neither the Registration Statement nor the Prospectus
includes or will, at any time up to and including the Final Closing Date,
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, in the light of the circumstances under which they were
made, not misleading, provided however, that none of the representations
and warranties contained in this subsection 1(c) shall apply to statements
in, or omissions from, the Registration Statement, Preliminary Prospectus,
Prospectus, or any amendment thereof, or supplement thereto, which are
based upon and conform to written information furnished to the Company by
the Underwriter, as identified in Section 13 herein, specifically for use
in the preparation of the Registration Statement, Preliminary Prospectus or
the Prospectus, or any amendments or supplements thereto.
(d) On or promptly after the Effective Date, the Company will prepare and
file a final Prospectus pursuant to Rule 424(b) that discloses the
information previously omitted in reliance upon Rule 430A. The Prospectus,
as amended or supplemented from time to time, shall comply in all material
respects with the requirements of the Act.
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(e) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission.
(f) The consolidated financial statements of the Company, including the
related notes, included in the Registration Statement and in the Prospectus
fairly present, on the basis stated therein, the consolidated financial
position, results of operations, cash flows and changes in shareholders'
equity of the Company and its consolidated Subsidiary at the dates and for
the periods to which they relate. Such financial statements and related
notes have been prepared in accordance with generally accepted accounting
principles consistently applied, except as otherwise stated therein,
throughout the periods involved and comply in all material respects with
the requirements of the Act. The selected financial information set forth
in the Prospectus is fairly presented and prepared on a basis consistent
with such audited consolidated financial statements and the books of the
Company 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.
(g) Xxxxxxx Xxxxxx & Co., LLP, who have examined the financial statements
and who have expressed their opinions with respect to the audited
consolidated financial statements and schedules included in the
Registration Statement and filed with the Commission as part of the
Registration Statement and the Prospectus, are independent public
accountants as required by the Act.
(h) The Company and its wholly-owned subsidiary, Northern Star Bank, a
Minnesota corporation, (the "Subsidiary") is, and at each Closing Date will
be, duly organized and validly existing and in good standing under the laws
of its respective state of incorporation, with full power and authority
(corporate and other) to own, lease and operate property and conduct its
business as currently carried on and contemplated and described in the
Registration Statement and Prospectus. No proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail such qualification. The Company and Subsidiary are
conducting their respective businesses so as to comply in all material
respects with applicable federal, state and local statute, ordinances,
rules and regulations, except for such matters which either individually or
in the aggregate do not have a material adverse effect on the Company's
condition (financial, loss of key personnel or otherwise), business,
properties, assets, results of operations (present or prospective) or net
worth. The Company and Subsidiary hold all licenses, franchises, grants,
authorizations, approvals, easements, consents, orders, certificates and
permits from state, federal and other regulatory authorities necessary for
the conduct of their business as described in the Registration Statement,
except for such licenses, franchises, grants, approvals, easements,
consents, orders, certificates and permits that the Company or Subsidiary
may fail to possess that individually or in the aggregate do not have a
material adverse effect on the Company's or Subsidiary's business or
financial condition, or has obtained waivers from any such applicable
requirements from the appropriate state, federal or other regulatory
authority. No proceeding has been instituted (or to the Company's
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knowledge threatened) in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(i) The Company and Subsidiary, are, and will be on each Closing Date,
duly qualified to do business as a foreign corporation in good standing in
each jurisdiction in which the character and location of its assets or its
business (existing or as contemplated by the Prospectus) requires such
qualification, other than in jurisdictions in which the failure to so
qualify would not have a material adverse effect on the business of the
Company or Subsidiary. No proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or curtail such qualification.
(j) Copies of the Company's and Subsidiary's Articles of Incorporation and
bylaws, as amended to date, have been provided to you, and since June 30,
1999 neither has been subsequently amended or restated as of the date of
this Agreement. There has not been and at each Closing Date shall not have
been any change in the Company's Articles of Incorporation or bylaws from
those filed as exhibits to the Registration Statement. Neither the Company
nor Subsidiary is in violation of its Articles of Incorporation, bylaws or
other governing instruments. Neither the Company nor Subsidiary is in
default (nor with the giving of notice or the passage of time or both would
be in default) in the performance of any obligation, agreement or condition
contained in any contract or any bond, debenture, note, indentured loan
agreement or other evidence of indebtedness or any loan agreement, contract
or joint venture agreement of the Company and Subsidiary or other
instrument, to which they are subject or by which any of their property or
assets are subject except for defaults that individually or in the
aggregate do not have a material adverse effect on the Company's or
Subsidiary's business or financial condition.
(k) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus and, except in each case as
described in or contemplated by the Registration Statement and Prospectus,
prior to the Final Closing Date: (i) the Company and Subsidiary have not
incurred, and will not have incurred, any liabilities or obligations,
direct or contingent, or entered into any transactions, not in the ordinary
course of business; (ii) the Company and its Subsidiary have not and will
not have paid or declared any dividends or other distributions on its
capital stock; (iii) there has not been and will not have been any material
change in the capital stock or outstanding short term or long term debt,
including any capitalized lease obligation, of the Company and Subsidiary,
or any issuance of options, warrants, convertible securities, or other
rights to purchase the capital stock of the Company and Subsidiary or any
material adverse change or a development involving a change in or affecting
the condition (financial or otherwise), business, key personnel,
properties, assets, results of operations (present or prospective), or net
worth of the Company and Subsidiary; and (iv) the Company and Subsidiary
have not sustained any material loss or damage to their properties or
material interference with their businesses, whether or not insured.
(l) Except as accurately described in the Prospectus, there is no action,
suit or proceeding to which the Company and Subsidiary are a party, or of
which any property of
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the Company and Subsidiary are subject pending before or brought by any
court or governmental agency or body or any arbitrator (domestic or
foreign) which might adversely affect the consummation of the transactions
contemplated by this Agreement; nor to the knowledge of the Company is any
such action, suit or proceeding threatened which, if adversely determined,
would, individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), business, properties, assets,
results of operations (present or prospective) of the Company or
Subsidiary.
(m) There are no contracts or other documents of the Company or Subsidiary
that are required to be described or referred to in the Registration
Statement or Prospectus or required by the Act to be filed as exhibits to
the Registration Statement which have not been described or referred to
therein or filed or incorporated by reference as required. All contracts
described in the Registration Statement or Prospectus or filed as exhibits
thereto are in full force and effect as of the date of the Prospectus and
through the Final Closing Date. All descriptions of such contracts and
documents in the Prospectus, required to be described, are correct in all
material respects. The Company and Subsidiary are not in breach of or
default under any of such contracts nor is the Company and Subsidiary in
default with respect to any provision of any lease, loan agreement,
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 and Subsidiary are subject except for defaults that
individually or in the aggregate do not have a material adverse effect on
the Company's or Subsidiary's business or financial condition. There does
not exist any fact which constitutes an event of default as defined in such
documents or which, with giving of notice or lapse of time or both, would
constitute such an event of default.
(n) The Company has full power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder and thereunder. This
Agreement has been duly and validly authorized, executed and delivered by
the Company and constitutes a valid, legal and binding obligation of the
Company enforceable in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or other
similar laws or equitable principals affecting the enforcement of
creditors' rights generally and except as rights to indemnify hereunder may
be limited by applicable securities laws, including the Act. No consent,
approval, authorization, order, registration, filing, qualification,
license, or permit of or with any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or its
properties or assets, is required (i) for the execution, delivery and
performance of this Agreement, and (ii) the consummation of the
transactions contemplated hereby and thereby, including the issuance, sale
and delivery of the Shares except the registration under the Act of the
Shares, and such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses, and permits as may be
required under state securities or blue sky laws or pursuant to the rules
of the National Association of Securities Dealers, Inc. in connection with
the offer and sale of the Shares by the Underwriter.
(o) The Shares have been duly and validly authorized and, when issued,
delivered and sold in accordance with this Agreement, will have been duly
and validly issued and
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delivered. The Shares will be issued free and clear of all liens,
encumbrances, claims, security interests, restrictions on transfer and
other defects of title. The Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(p) The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated herein, will not conflict
with, or constitute a breach of, or default under or with the giving of
notice or the passage of time or both would so constitute a breach or
default, or result in the creation or imposition or acceleration of any
lien, charge or encumbrance upon any property or assets of the Company or
Subsidiary pursuant to: (i) any bond, debenture, note, contract, lease,
license, indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, joint venture, or other agreement, evidence of indebtedness or
instrument to which the Company and Subsidiary are a party, or by which
they may be bound or to which any of the properties or assets of the
Company and Subsidiary are subject; (ii) the Company's and Subsidiary's
Articles of Incorporation, bylaws, or other governing documents, as
amended; or (iii) any law, order, rule, regulation, writ, injunction or
decree of any government, governmental agency, court, or arbitrator having
jurisdiction over the Company's and Subsidiary's properties. To the
Company's knowledge, no event has occurred and condition exists which upon
the passage of time or the giving of notice, would constitute such an event
of default under any such instrument or agreement. 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 Subsidiary and their property or assets is
required for the execution and delivery and performance of this Agreement,
or the consummation of the transactions and performance contemplated herein
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.
(q) All of the issued and outstanding shares of capital stock of the
Company and Subsidiary are duly authorized and validly issued, full paid
and nonassessable; have been issued in compliance with all federal and
state securities laws; were not issued in violation of, or subject to any
preemptive rights or other rights to subscribe for or purchase securities;
and the holders thereof are not subject to personal liability by reason of
being such holders. All the issued and outstanding capital stock of
Subsidiary is owned, free and clear of any security interests, lien or
restriction by the Company. Except as disclosed in the Prospectus, neither
the Company nor Subsidiary have any outstanding options or warrants for the
issuance of capital stock. The authorized and issued indebtedness of the
Company and Subsidiary is correctly set forth in the Prospectus, as of the
dates indicated. Except as described in the Prospectus, there are no
outstanding loans or advances or guarantees of Indebtedness by the Company
and Subsidiary to or for the benefit of any of the officers, directors or
affiliates of the Company required to be described in the Prospectus
pursuant to the Act.
(r) The capitalization of the Company as set forth in the Prospectus was
as so described on the date as of which it is set forth therein; and will
be as so described on each Closing
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Date. There are no other classes of stock, authorized or outstanding,
except as described therein.
(s) The statistical information in the Prospectus which is derived from
the Company's financial or other records has been accurately derived
therefrom and, as set forth, is not in conflict with other information
known to the Company.
(t) All descriptions in the Registration Statement or Prospectus of
statutes, regulations, legal or governmental proceedings, the Shares, or
other contracts or other documents are accurate in all material respects
and fairly present the information shown.
(u) To the Company's knowledge, the Company is not in violation of any
law, order, rule, regulation, writ, injunction, or decree of any
governmental authority or court, domestic or foreign, or arbitrator which
violation would have a material adverse effect on the condition (financial
or otherwise), business, properties, results of operations (present or
prospective), assets or net worth of the Company.
(v) The Company holds all, and is operating in compliance with all,
franchises, grants, authorizations, licenses, registrations, approvals,
permits, easements, consents, certificates and orders of any government or
self-regulatory body (domestic and foreign) required for the conduct of its
business or as described in the Prospectus (collectively the "Licenses"),
except for failures to obtain and non-compliances that individually or in
the aggregate do not have a material adverse effect on the Company's or
Subsidiary's business or financial condition, and all the Licenses are
valid and in full force and effect and will be valid and in full force and
effect through the Final Closing Date.
(w) The Company and Subsidiary have good and marketable title (in fee
simple as to real property) to all real and personal properties and assets
described in the Prospectus and the financial statements as owned by them,
free and clear of all security interests, liens, charges, encumbrances,
restrictions or defects except those arising in the ordinary course of
business as reflected in the financial statements included in the
Prospectus and which do not have a material adverse effect on the Company's
and Subsidiary's use of such property or the conduct of their business.
(x) Except as disclosed in the Prospectus, the Company holds valid and
enforceable leases for the properties (real and personal) described in the
Prospectus as leased by it; the Company is not in default (or with the
giving of notice or the passage of time or both would be in default) in
respect to any of such leases, and no claim of any sort has been asserted
by anyone adverse to the rights of the Company and Subsidiary as lessee
under any such lease or questioning its right to continued use and
possession of any of the leased properties under any such lease.
(y) To the best of the Company's knowledge, the Company and Subsidiary own
or possess adequate rights to use all patents, patent applications, patent
rights, licenses, inventions, technology, proprietary rights, trademarks,
trademark applications, service
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marks, trade names, trademark registrations, service xxxx registrations,
copyrights, and other proprietary rights or information used in or
necessary for the conduct of its present or intended business to the extent
material to the Company's and Subsidiary's business. Except as stated in
the Registration Statement and Prospectus, to the best of the Company's
knowledge, the Company and Subsidiary are not in violation of, nor has the
Company received any notice of any claim of infringement or violation of
the rights of other with regard to any patents, patent applications, patent
rights, licenses, inventions, technology, proprietary rights, trademarks,
trademark applications, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, and other
proprietary rights or information.
(z) All United States federal income tax returns required by law to be
filed by or on behalf of the Company and 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 taxes which are
being contested in good faith 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 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 Subsidiary,
consolidated, 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.
(aa) 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 Shares other than the Preliminary Prospectus or the Prospectus or other
materials permitted by the Act to be distributed by the Company and
consented to by the Underwriter.
(bb) Other than the subsidiary of the Company listed in Exhibit 21 to the
Registration Statement, the Company owns no capital stock or other equity
or ownership or proprietary interest in any corporation, partnership,
limited liability company, association, trust or other entity and is not
affiliated (as that term is defined under the Act) with any other company
or business entity except as explicitly stated in the Prospectus. The
Company is not owned or controlled, directly or indirectly, by any
corporation, association or other entity.
(cc) The Company maintains a system of internal accounting controls
sufficient to provide that:
(i) transactions are executed in accordance with management's general
or specific authorization;
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(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(dd) The Company and Subsidiary maintain insurance of the types and in
amounts which are adequate for their businesses.
(ee) No organized labor disputes with the employees of the Company or
Subsidiary exist or are imminent. To the best of Company's knowledge, no
officer of the Company or any Subsidiary presently intends to leave the
Company or Subsidiary.
(ff) The Company is not an "investment company" within the meaning of such
term as defined in the Investment Company Act of 1940, as amended, and will
conduct its business in such a manner as to not become an investment
company as so defined.
(gg) To the Company's knowledge, neither the Company nor any employee or
agent of the Company has made any payment of funds of the Company or
received or retained funds in violation of any law, rule or regulation on
behalf of the Company or Subsidiary.
(hh) The Company has not engaged any "finder" with respect to the
transactions contemplated by this Agreement and there is no outstanding
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.
(ii) 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 except as are described in the Prospectus.
(jj) Neither the filing of the Registration Statement nor the offering or
sale of the Shares by the Company as contemplated by this Agreement gives
rise to any rights, of or relating to the co-sale or registration of any
securities of the Company, nor do any security holders of the Company have
any right to demand that the Company register their securities, in either
case other than those which have been waived or satisfied.
(kk) 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
constitute the stabilization or manipulation of the price of any
outstanding securities of the Company (including the Shares) to facilitate
the sale or resale of the Shares.
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(ll) 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 Shares will have been fully paid or provided for by the
Company and all laws imposing such taxes will have been fully complied
with.
(mm) Any certificate signed by any officer of the Company and delivered to
the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company to the Underwriter as to matters
covered thereby.
(nn) Each acceptance by the Company of an offer for the purchase of Shares
and each issuance of Shares 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.
3. Purchase and Sale.
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(a) On the basis of the representations, warranties and agreements herein
contained and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Underwriter at least the Minimum
number (approximately $525,000) and up to the Maximum number
(approximately, $3,150,000) of the Original Shares at the Price to Public
set forth on the cover page of the Prospectus, less an underwriting
discount and commission equal to 7%. The Underwriter will solicit
indications of interest from the public for the Original Shares and will
purchase from the Company the approximate amount of Original Shares for
which the Underwriter has accepted indications of interest. The Underwriter
is not obligated to purchase any of the Original Shares, but if the
Underwriter does purchase any of the Original Shares it must purchase at
least the Minimum. Even if the Underwriter purchases the Minimum, it is not
obligated to purchase any additional Shares. In the event the Underwriter,
for what ever reason, fails to purchase the Minimum within 90 days of the
Effective Date, this Agreement will automatically terminate. You and the
Company may agree to extend this Agreement for an additional period. During
the term of this Agreement, the Company can only sell Shares to the
Underwriter.
(b) On the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriter to purchase the Option Shares at
the same purchase price as the Original Shares. The Option granted
hereunder may be exercised at any time after the Effective Date (as defined
in Section 6(a) hereof) and prior to the Termination Date upon notice
(confirmed in writing) by the Underwriter to the Company setting forth the
aggregate amount of Option Shares as to which the Underwriter is exercising
the option and the date on which such Option Shares are to be delivered.
The option granted hereby may be cancelled by the Underwriter as to the
Option Shares for which the option is unexercised at any time prior to the
Termination Date upon notice to the Company.
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(c) The Underwriter will offer and solicit indications of interest for the
Shares, as soon as the Underwriter deems practicable after the Registration
Statement becomes effective, subject to the terms and conditions of this
Agreement and in accordance with the Prospectus. The Underwriter will offer
and sell directly to the public the Shares the Underwriter has purchased
from the Company, if any, as soon as the Underwriter deems practicable,
subject to the terms and conditions of this Agreement and in accordance
with the Prospectus, at the Price to Public set forth on the cover page of
the Prospectus. The Underwriter may appoint dealers ("Selected Dealers")
which are members in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") to offer and sell the Shares and,
subject to compliance with applicable rules and regulations of the NASD,
may reallow concessions to such Selected Dealers from the public offering
price of the Shares in such amount as the Underwriter may deem appropriate.
The Underwriter will furnish the Company with such information about the
distribution arrangements as may be necessary for inclusion in the
Registration Statement. It is understood that the public offering price and
concessions may vary after the initial public offering. The Underwriter
shall offer and sell the Shares only in jurisdictions in which the offering
of Shares has been duly registered or qualified, or is exempt from
registration or qualification, and shall take reasonable measures to effect
compliance with applicable state and local securities laws.
(d) You shall be required to take and pay for only such Shares as you
commit to purchase by written confirmation, subject in each case to
applicable closing conditions as herein set forth.
4. Delivery and Payment. On the basis of the representations, warranties
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and agreements, but subject to the terms and conditions set forth in this
Agreement, payment of the purchase price for, and delivery of, the Shares sold
as contemplated hereunder shall be made as follows:
(a) You shall promptly confirm to the Company the number of the Shares for
which you intend to purchase. The first closing shall be held on the third
full business day after the date of your confirmation for purchase of the
Minimum. Thereafter, monthly closings will be held on such date on or after
the second to last business day of each month following the first closing
and no later than the last business day of each month as agreed upon by the
Underwriter and the Company, commencing the month in which the first
closing occurs and through the month after the month of the Termination
Date. Provided the Minimum has been sold, closings may be held more often
upon receipt by the Company of a confirmation from the Underwriter of its
intent to purchase the Shares. The date of each closing is referred to
herein as a "Closing Date" and the last closing hereunder is referred to
herein as the "Final Closing Date." Unless otherwise agreed by the
Underwriter and the Company, each closing will take place at the offices of
Xxxxxxxxxx & Xxxxx, P.A., at 10:00 a.m., on the date of such closing.
(b) The certificates for the Shares to be delivered at each Closing Date
will be in definitive form, in such denominations and registered in such
names as the Underwriter
11
may request and will be made available for inspection and packaging at the
Underwriter's offices or at such other place as designated by you at 10:00
a.m., Minneapolis time, on the second full business day prior to each
Closing Date.
(c) Upon execution and delivery of this Agreement, you will receive an
investment banking fee equal to $10,000. Upon closing of the sale of the
minimum, you shall receive in addition to the 7% underwriting discount and
commission provided in Section 3(a): (i) a non-accountable expense
allowance equal to $25,000; and (ii) warrant, in substantially the form
provided in Exhibit A, to purchase such number of shares of Company Common
Stock at $12.60 per share equal to 10% times the number of Shares purchased
pursuant to this Agreement.
(d) On each Closing Date, you shall remit to the Company against delivery
to you or your designated agent, the purchase price for the Shares you have
purchased from the Company. Such purchase price may be remitted to the
Company net of the commissions referred to in paragraph 3(a). Appropriate
instructions for the registration of the Shares and delivery thereof, which
instructions shall include the names, addresses and social security or tax
identification numbers of the registered holders and the number of Shares
shall be provided to the Company's Transfer Agent. The Company shall have
instructed the Transfer Agent to accept instructions for the registration
of the Shares directly from you, and copies of such instructions shall be
given to the Company at the same time they are furnished to the Transfer
Agent.
5. Covenants of the Company. The Company covenants and agrees with the
------------------------
Underwriter that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if it has not already been declared
effective) as promptly as possible and will not at any time, whether before
or after the Effective Date, file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously
have been advised and furnished with a copy a reasonable time prior to the
proposed filing or to which you or your counsel shall object or which is
not in compliance with the Act. If at any time prior to the Termination
Date, any event shall occur which in the professional judgment of counsel
to the Company or of counsel to the Underwriter would cause the
Registration Statement or the Prospectus to include an untrue statement of
a material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they were made,
not misleading or otherwise requires an amendment to the Registration
Statement or supplement to the Prospectus, the Company will prepare and
file with the Commission any amendments to the Registration Statement or
supplements to the Prospectus which may be necessary and will cause the
same to become effective as soon as practicable, subject to the provisions
of the prior sentence. The Company will make all filings of the Prospectus
required under the Act.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise you of any requests made by the Commission (or any
state securities or Blue Sky
12
authority) for amending the Registration Statement, (or any state
securities or Blue Sky authority) of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or of
the institution of any proceedings for that purpose and will use its best
efforts to prevent the issuance of any such order and, if any such order is
issued, will use its best efforts to obtain the lifting thereof as promptly
as possible. The Company will also promptly comply with any requests for
additional information.
(c) The Company will furnish to you copies of the Registration Statement,
including exhibits, all amendments thereto (including pre-effective and
post-effective), each Preliminary Prospectus, the Prospectus and any
supplements thereto, in each case as soon as available and in such
reasonable quantities as you may, from time to time, request.
(d) The Company consents to the use, in accordance with the provisions of
the Act and of the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the Underwriter or by Selected Dealers,
prior to the Effective Date, of each Preliminary Prospectus furnished by
the Company
(e) The Company will continue to use its best efforts to register or
qualify the Shares for sale by the Underwriter and any Selected Dealers
under the securities or Blue Sky laws of such jurisdictions as you may
request and will file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to the service of
process in suits, other than those arising out of the offering or sale of
the Shares or subject itself to taxation, in any jurisdiction where it is
not now so subject. In each jurisdiction where any of the Shares shall have
been registered or qualified as provided above, the Company will continue
such registrations or qualifications in effect for so long as may be
required for purposes of the distribution of the Shares and shall file such
statements and reports as are or may be required by the laws of such
jurisdiction to continue such qualification in effect for so long as there
are Shares outstanding. The Company will notify the Underwriter immediately
of, and confirm in writing, the suspension of qualification of the Shares
or threat of such action in any jurisdiction. The Company will use its best
efforts to qualify or register the Shares for sale in nonissuer
transactions under (or obtain exemptions from the application of)
securities laws of such states designated by the Underwriter (and thereby
permit market making transactions and secondary trading of the Shares in
such states); and will comply with such securities laws and will continue
such qualifications, registrations and exemptions in effect for so long as
the Shares remain outstanding.
(f) If at any time during the period that the delivery of a Prospectus
relating to the Shares is required under the Act, any event occurs as a
result of which the Prospectus, as then amended or supplemented, would
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time
13
to amend or supplement the Prospectus to comply with the Act, the Company
promptly will notify you thereof and will prepare and file with the
Commission at its own expense an amendment or supplement which will correct
such statement or omission or effect such compliance, subject to the
requirements of advice and objection contained in the first sentence of
paragraph a.
(g) As soon as practicable (but in no event later than 90 days after the
Effective Date) the Company will make generally available to its security
holders, and furnish to you, an earnings statement of the Company covering
the period of 12 months beginning not later than the first day of the next
fiscal quarter following the Effective Date of the Registration Statement
which will satisfy the requirements of Section 11(a) or Rule 158 of the Act
and which need not be certified by independent public accountants.
(h) During a period of one year from the Effective Date, the Company will,
as soon as practicable, deliver to the Underwriter, without need of
request:
(i) Copies of each report (financial or other) or proxy solicitation
material mailed to security holders of the Company;
(ii) After the end of each of the first three fiscal quarters, a copy
of the statement of income of the Company for such quarter and a copy
of the balance sheet of the Company as of the end of such quarter all
in reasonable detail and certified by its principal financial or
accounting officer or, in the alternative, a report on Form 10-Q or
10-QSB, as filed with the Commission;
(iii) After the end of each fiscal year, a balance sheet of the
Company as of the end of such fiscal year, together with statements of
income, changes in cash flows and stockholders' equity for such fiscal
year, in reasonable detail and accompanied by a copy of the
certificate or report thereon of the independent certified public
accountants or, in the alternative, a report on Form 10-K or Form 10-
KSB for such fiscal year; and
(iv) Copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange or
Nasdaq.
(i) During the period that the Company is required to furnish reports
pursuant to paragraph h above, the Company will notify you promptly of the
commencement of any litigation or proceedings against the Company or any of
its officers.
(j) The Company will apply the net proceeds from the sale of the Shares in
the manner set forth under the caption "Use of Proceeds" in the Prospectus.
(k) The Company shall cooperate with the Underwriter and its counsel in
connection with their investigation of the Company and related matters and
shall furnish to the Underwriter or its counsel all such information and
documents as may be requested.
14
(l) The Company will not claim the benefit of any usury laws against any
holders of the Shares.
(m) Continue to appoint its current auditors or any replacement firm of
auditors acceptable to you to audit its financial statements, provided that
you shall not unreasonably withhold your consent to a replacement.
(n) The Company will pay, in addition to the Underwriter Commission and
discount referred to in paragraph 3(a) and investment banking fee and non-
accountable expense allowance (as described in paragraph 4(c) hereof), upon
the closing of the sale of any of the Shares, unless otherwise limited by
this Agreement, all other expenses related to the subject matter of this
Agreement including: (i) all expenses incident to the issuance and delivery
of the Shares; (ii) the expenses charged by the financial printer; (iii)
all Commission, National Association of Securities Dealers, Inc. ("NASD")
and state securities or Blue Sky filing fees and all fees and expenses of
legal counsel for the Underwriter incurred in registering the Shares for
sale under the securities or blue sky laws of such states as the
Underwriter may designate; (iv) the cost of all certificates representing
the Shares; and (v) the fees and expenses of the Company's independent
accounts, including the cost of "cold comfort" review.
(o) The Company and Subsidiary will maintain through the Final Closing
Date insurance of the types and in amounts which are adequate for their
businesses.
6. Conditions of the Underwriter's Obligations. The obligations of the
-------------------------------------------
Underwriter and the closing and sale of the Shares as contemplated herein shall
be subject to the accuracy of the representations and warranties of the Company
herein as of the date hereof, the Effective Date, and each Closing Date, to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, or otherwise, to the performance by the Company of its
covenants and agreements hereunder, and to the following additional conditions.
(a) The Registration Statement shall have become effective not later than
4:30 p.m. Minneapolis, Minnesota time on September 14, 2000 or such later
time and date as shall have been consented to by you (referred to herein as
the "Effective Date") and all filings required by Rule 424 and/or Rule 430A
under the Act shall have been timely made; no stop orders suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened or
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.
(b) You shall not have advised the Company that the Registration Statement
or the Prospectus or any amendment or any supplement thereto contains an
untrue statement of
15
material fact or omits to state a material fact which is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) You and your counsel shall have been furnished with such documents and
information as you or they may have requested.
(d) You shall have received the opinion of Xxxxxxxxxx & Xxxxx, P.A., legal
counsel for the Company, dated as of each Closing Date, in the form
attached hereto as Exhibit B.
(e) On the Effective Date of this Agreement and also on the first Closing
Date, you shall have received from Xxxxxxx Xxxxxx & Co., LLP , a letter or
letters, dated the date of delivery thereof, stating that they are
independent public accountants with respect to the Company within the
meaning of the Act and that:
(i) In their opinion, the financial statements included in the
Registration Statement and Prospectus and reported on therein by them
comply as to form in all material respects with the applicable
accounting requirements of the Act;
(ii) On the basis of a limited review (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited financial statements included in the
Registration Statement and Prospectus (if any) and the latest
available interim financial statements of the Company subsequent
thereto; a reading of the minutes of the board of directors and
shareholders of the Company subsequent thereto; and inquiries of
officials of the Company responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in
such letter and agreed upon by you, nothing has come to their
attention that causes them to believe that:
a) The unaudited financial statements included in the
Registration Statement and Prospectus, if any, do not comply
as to form in all material respects with the applicable
accounting requirements of the Act or that such financial
statements are not fairly presented in conformity with
generally accepted accounting principles applied on a basis
consistent with that of the audited financial statements
included in the Registration Statement and Prospectus;
b) As of a specified date not more than five days prior to
the date of this Agreement or each Closing Date, as
applicable, there have been any changes in the capital
stock, increases in long term or short term debt, decreases
in total accounts receivable, or total inventories of the
Company or any increase in liabilities or decreases in net
current assets or stockholders' equity of the Company, in
each case, as compared with amounts shown in the most recent
balance sheet included in the Prospectus except, in each
case, for changes, decreases or increases, as appropriate,
which the
16
Prospectus discloses have occurred or may occur or which
are described in such letter; and
c) For the period from the date of the most recent balance
sheet included therein to such specified date, there was
any decrease, as compared with the corresponding period of
the previous year, in net revenues or any decrease in
income from operations or net income or in primary or
fully-diluted per share amounts of net income except, in
each case, for such decreases which the Prospectus
discloses have occurred or may occur or which are described
in such letter.
(iii) In addition to the examination referred to in their report
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in clause
(ii) above, they have carried out certain specified procedures
requested by you, not constituting an audit in accordance with
generally accepted auditing standards with respect to certain amounts,
percentages and other financial information which are derived from the
accounting records and other financial and statistical data of the
Company which appear in the Prospectus and which are specified by you
and have compared certain of such amounts, percentages and financial
information with the accounting records and other appropriate data of
the Company and have found them to be in agreement.
In the event that the letters to be delivered pursuant to
this subparagraph (e) shall set forth any changes, increases or
decreases, it shall be a further condition to the Underwriter's
obligation that you, in your sole discretion, shall have determined,
after discussion with officers of the Company responsible for
financial and accounting matters and with Ernst & Young, LLP, 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
or long-term debt, net assets, net current assets, total accounts
receivable, total inventories 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 or material adverse change in
revenues or the total or per share amounts of net income (loss).
(f) On each Closing Date, you shall have received a certificate, dated
such date, of the President and the Chief Financial Officer of the Company
to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of such date and
the Company has performed all obligations and satisfied all conditions
on its part to be performed or satisfied at or prior to such date;
(ii) The Commission has not issued any order suspending the
effectiveness of the Registration Statement and no proceedings for
that purpose have been instituted or are pending or threatened under
the Act;
17
(iii) The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto contain all statements and
information required to be included therein and neither the
Registration Statement nor the Prospectus nor any amendment nor any
supplement thereto includes any untrue statement of a material fact or
misstates any material fact required to be stated therein or necessary
to make the statements therein not misleading and since the Effective
Date, there has occurred no event required to be set forth in an
amendment to the Registration Statement or supplement to the
Prospectus which has not been so set forth.
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to the
date of such certificate, and except as set forth or contemplated in
the Registration Statement or the Prospectus: (A) the Company has not
incurred, except in the ordinary course of business, any lease
obligations or any direct or contingent liabilities or commitments,
(B) the Company has not entered into any transaction other than in the
ordinary course of business, (C) the Company has not paid or declared
any dividends or other distributions on its capital stock, (D) there
has not been any change in the capital stock or any material adverse
change, increase or decrease in the short-term or long-term debt,
total accounts receivable, total inventories, net assets, net current
assets or stockholders' equity of the Company or any material adverse
change in or affecting the condition (financial or otherwise),
business, key personnel, properties, assets, results of operations
(present or prospective), or net worth of the Company and (E) no legal
or governmental proceeding affecting the Company or the transactions
contemplated hereby has been instituted or, to the Company's
knowledge, threatened;
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the conduct of
the business and operations of the Company has not, except as
otherwise stated therein, been materially interfered with by strike,
fire, flood, hurricane, accident, or other calamity (whether or not
insured) or by any court, arbitrator or governmental action, order or
decree and, except as otherwise expressly stated therein, the
properties of the Company have not sustained any material loss or
damage (whether or not insured) as a result of any such occurrence;
and
(vi) Attachment A to the certificate is a complete and accurate
description of all transactions between the Company and Subsidiary and
their affiliates, and Attachment B to the certificate is a complete
and accurate description of all outstanding indebtedness of the
Company and Subsidiary as of the date of this Agreement.
(vii) No Event of Default, as defined in the Indenture, has occurred
nor with the giving of notice or passage of time or both would occur.
18
(g) The Shares 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
Underwriter.
(h) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred:
(i) Any change or development involving a prospective change in or
affecting particularly the business or properties of the Company which
in the judgment of the Underwriters materially impairs the investment
quality of the Shares;
(ii) Any banking moratorium;
(iii) Any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if,
in the judgment of the Underwriter, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for
the Shares;
(iv) 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
Shares or other securities of the Company or the prospects for the
Company, its business or its properties; or
(v) 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 regardless of whether such loss shall have been insured.
All such opinions, certificates, letters and documents shall be
in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and to your counsel. If any of the
conditions specified in this section shall not have been fulfilled
when and as required by this Agreement, this Agreement and all
obligations of the Underwriter hereunder may be canceled at, or at any
time prior to, the applicable Closing Date by you. Any such
cancellation shall be without liability of the Underwriter to the
Company and shall be in writing or by telegraph or telephone and
confirmed in writing. The Underwriters may waive in writing the
nonperformance by the Company of any one or more of the foregoing
conditions or extend the time for performance of such conditions. Each
such waiver shall be applicable only to the item to which it relates
and the closing to which it relates and no waiver or series of waivers
shall be deemed to have waived any condition at any time other than
the condition at the time explicitly waived.
19
7. Indemnification.
---------------
The Company will indemnify and hold harmless the Underwriter, each officer
and director of the Underwriter and each person, if any, who controls such
Underwriter within the meaning of the Act, against any loss, claim, damage or
liability, joint or several, to which the Underwriter, such officer or director
of the Underwriter, or such controlling person may become subject under the Act
or otherwise, insofar as such loss, claim, damage or liability (or action in
respect thereof) arises out of or is 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 arises out of or is 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 not misleading, and will reimburse each Underwriter, each
officer and director of each Underwriter, and each such controlling person for
any legal or other expenses incurred by such Underwriter, such officer or
director of such Underwriter, or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
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. Notwithstanding the
foregoing covenant of indemnity, 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 any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Preliminary Prospectus,
the Prospectus or such amendment or such supplement in reliance upon and in
conformity with written information furnished to the Company by you specifically
for use therein, or in any application or other statement executed by you filed
in any jurisdiction in order to qualify the Shares under, or exempt the Shares
or the sale thereof from qualification under, the securities or blue sky laws of
such jurisdiction (collectively, the "Underwriter Information") and further
provided that the foregoing indemnity insofar as it relates to any actual or
alleged untrue statement or omission made in or from any Preliminary Prospectus
or the Prospectus but eliminated or remedied in the Prospectus (including any
amendment or supplement) shall not inure to the benefit of the Underwriter (or
any person controlling the Underwriter) in respect of any action or claim
asserted by a person who purchased the Shares from the Underwriter unless such
person was sent or given a copy of the Prospectus with or prior to the written
confirmation of the sale of the Shares to such person. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(a) The Underwriters will indemnify and hold harmless the Company, each of
its directors, each of its officers who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of the
Act, against any loss, claim, damage or liability to which the Company or
any such director, officer, or controlling person may become subject, under
the Act or otherwise, insofar as such loss, claim, damage or liability (or
action in respect thereof) arises out of or is 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 arises
20
out of or is 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 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 the Underwriter Information, 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 loss, claim, damage, liability or action. This indemnity agreement
will be in addition to any liability which the Underwriters may otherwise
have.
(b) Promptly after receipt by any party under this Section 7 of notice of
the commencement of any action, such party will, if a claim for indemnity
in respect thereof is to be made against another party (the "Indemnifying
Party") under this Section 7, notify the Indemnifying Party in writing of
the commencement thereof and shall make available all pleadings and all
other documents served related thereto, upon request. The omission so to
notify the Indemnifying Party will not relieve it from any liability under
this Section 7 as to the particular item for which indemnification is then
being sought, unless such omission so to notify prejudices the indemnifying
party's ability to defend such action. In 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 7 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 7 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.
(c) 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,
21
or if 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.
(d) The indemnity agreements contained in this Section 7 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 Shares 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 7.
8. Contribution.
------------
(a) If the indemnification provided for in Section 7 is unavailable to or
insufficient to hold harmless an indemnified party under subsections (a) or
(b) thereof, 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 subsections (a) or (b) of
Section 7 above, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriter on the other hand from the offering of the Shares, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, then 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 Underwriter on the other hand
in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. 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
Underwriter and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (a) were to be
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the first sentence of this subsection (a). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (a) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or
claim which is the subject of this subsection (a). 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 is not guilty of
such fraudulent misrepresentation.
22
(b) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each officer or director of
an Underwriter and each person, if any, who controls an Underwriter within
the meaning of the Act; and each Underwriter's obligations under this
Section 8 shall be in addition to any liability that the Underwriter may
otherwise have and shall extend upon the same terms and conditions 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.
(c) The obligations of the Company pursuant to this Section 8 shall
survive any termination of this Agreement.
9. Representations and Agreements to Survive. The respective indemnities,
-----------------------------------------
agreements, representations, warranties, covenants or other statements of the
Company as set forth in or made pursuant to this Agreement and the indemnity and
contribution agreements of the Compay and the Underwriter contined in Sections 7
and 8, respectively, shall survive and remain in full force and effect
regardless of any (i) investigation made by or on behalf of any party or any of
its directors, officers, or controlling persons; (ii) delivery of and payment
for the Shares; (iii) the Final Closing Date; and (iv) any successor of the
Company and the Underwriter or any controlling person, officer or director
thereof, as the case may be, shall be entitled to the benefits thereof.
10. Effective Date and Termination.
------------------------------
(a) This Agreement shall become effective at 10:00 a.m. Minneapolis time,
on the day which you shall commence selling the Original Shares to the
public. You shall notify the Company immediately after you have taken any
action which causes this Agreement to become effective. Until this
Agreement is effective, it may be withdrawn by the Company or by you by
giving notice as hereinafter provided, except that the provisions of 5(n)
and Sections 6 and 7 shall at all times be effective. For purposes of this
Agreement, the commencement of the sale of the Shares shall mean the time
of the release by the Underwriter for publication of the first newspaper
advertisement which is subsequently published related to the Shares, or the
time of the first mailing of copies of the Prospectus related to the Shares
which are subsequently delivered, whichever shall first occur. This
Agreement shall, nevertheless become effective at such time earlier than
the time specified above, after the Effective Date; as the Underwriter may
determine by notice to the Company.
(b) Unless the Minimum has been purhased by the Underwriter, this
Agreement shall automatically terminate 90 days from the date hereof.
Otherwise, this Agreement shall automatically terminate at the expiration
of six months from the date hereof, unless earlier terminated by the
Underwriter by notice to the Company in the event that the Company shall
have failed or been unable to comply with any of the terms, conditions, or
provisions of this Agreement on the part of the Company to be performed,
complied with or fulfilled (including but not limited to those specified in
Sections 2, 4, 5 and 6 hereof) within the respective times provided for on
each Closing Date, unless compliance therewith or
23
performance or satisfaction thereof shall have been expressly waived by the
Underwriter in writing (the "Termination Date"), except that Sections 5, 7,
8 and 9 shall at all times be effective and bind all the Parties. In
addition, this Agreement may be terminated on or at any time prior to the
first Closing Date by agreement of the parties or by the Underwriter, by
written or telegraphic notice to the Company, if there shall have occurred:
(i) Any change or development involving a prospective change in or
affecting particularly the business or properties of the Company which
in the judgment of the Underwriter materially impairs the investment
quality of the Shares;
(ii) Any banking moratorium;
(iii) Any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if,
in the judgment of the Underwriter, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for
the Shares;
(iv) 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
Shares or other securities of the Company or the prospects for the
Company, its business or its properties; or
(v) 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 regardless of whether such loss shall have been insured.
(c) Termination of this Agreement pursuant to this Section 10 shall be
without liability of any party to any other party other than as provided in
Sections 5(a), 7 and 8 hereof.
11. Notices. All communications hereunder will be in writing and, if sent
--------
to the Underwriter, will be mailed, delivered or telegraphed and confirmed to
the Underwriter at Xxxxxxx Xxxxxx & Company Financial Services, Inc., 000 Xxxx
Xxxxxx, Xxxx. X., X.X. Xxx 000, Xxxxxx, XX 00000-0000 Attention: Xxxxxx Xxxxxxx,
with a copy to Xxxxxxx Xxxxx at the same address; or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at Northern Star
Financial, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention Xxxxxx
Xxxxxxxxxx; with a copy to Xxxxxxxxxx & Xxxxx, P.A., 000 Xxxxxx Xxxxxx Xxxxx,
0000 Xxxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention Xxxxxx X.
Xxxxxx, Esq.; or to such other address of which a party hereto shall notify the
other party hereto pursuant to this paragraph.
12. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Underwriter, the Company, and their successors and legal
representatives, and nothing in this Agreement is intended or shall be construed
to give any other person any legal or equitable right,
24
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 Units will be deemed a successor
because of such purchase.
13. Information Furnished by the Underwriter. The statements set forth in
----------------------------------------
the last paragraph on the cover page, the stabilization ledgered on the inside
front cover and the statements under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute written information
furnished by, or on behalf of, the Underwriter specifically for use with
reference to the Underwriter referred to in Section 2(c) and Sections 7 and 8
hereof. The Underwriter hereby represents and warrants to, and agrees with, the
Company that in connection with the Underwriter's distribution of the Shares to
the public: (i) other than to employees and agents of the Underwriter and of
dealers participating in the distribution of the Shares, the Underwriter has not
distributed and will not distribute any prospectus or any other offering
material in connection with the offering and sale of the Shares other than the
Preliminary Prospectus or the Prospectus or other materials permitted by the Act
and Rules and Regulations to be distributed by the Underwriter and consented to
by the Company or its counsel; (ii) neither the Underwriter nor any officer or
other person employed by the Underwriter will provide any informaiton or make
any representations to purchasers of the Shares, other than such information and
representations as are either contained in the Preliminary Prospectus or the
Prospectus or are not inconsistent with the information set forth in the
Preliminary Prospectus or the Prospectus; and (iii) the Underwriter will
endeavor to comply with Rule 2310, Conduct Rules, of the National Association of
Securities Dealers, Inc. Manual and similar applicable state and federal
securities laws regarding the suitability of the Shares for its customers.
14. Governing Law. This Agreement shall be governed by, and construed in
--------------
accordance with the substantive laws of the State of Minnesota without regard to
its choice of laws provisions.
15. Counterparts. This Agreement may be signed in any number of
------------
counterparts and all such counterparts taken together shall constitute the
single Agreement of the parties.
16. Amendment. This Agreement may be amended upon written agreement
----------
between the Underwriter and the Company.
17. Miscellaneous. Your rights and obligations hereunder shall not be
--------------
assignable without the written consent of the Company.
18. Time. The Company and the Underwriter 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.
25
19. Headings. The headings and captions used in this Agreement are for
---------
convenience only and shall not affect the meaning of the provison thereof.
Very truly yours,
NORTHERN STAR FINANCIAL, INC.
By:____________________________
Its:________________________
The foregoing is agreed to and accepted
this ______ day of September, 2000.
________________________________________
Xxxxxxx Xxxxxx & Company Financial Services, Inc.
26
