8% Cumulative Redeemable Preferred Stock
Cenex Harvest States Cooperatives
FORM OF
UNDERWRITING AGREEMENT
January __, 2003
X. X. XXXXXXXX & CO.
US BANCORP XXXXX XXXXXXX INC.
XXXXXXXXXX & CO., INC.
as Representatives of the Several Underwriters
c/o X. X. Xxxxxxxx & Co.
0 Xxxxx Xxxxxx Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Cenex Harvest States Cooperatives, a Minnesota cooperative (the
"Company"), proposes to issue and sell to the several underwriters named in
SCHEDULE I hereto (each an "Underwriter" and, collectively, the "Underwriters"),
for which you are acting as representatives (the "Representatives"), an
aggregate of 2,500,000 shares of the Company's 8% Cumulative Redeemable
Preferred Stock, with a liquidation preference of $25.00 per share plus all
accumulated and unpaid dividends on such share (the "Preferred Stock"), the
terms of which are more fully described in the Registration Statement and the
Prospectus (as hereinafter defined). In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 375,000 shares of
Preferred Stock as provided in Section 2 hereof.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-2 (File
No.333-101916), which contains a prospectus subject to completion used in
connection with the public offering and sale of the Preferred Stock. Such
registration statement, as amended at the time it was declared effective by the
Commission under the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations promulgated thereunder (collectively, the "Rules and
Regulations"), and, in the event of any amendment thereto after the effective
date and prior to the Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including a registration statement (if any) filed pursuant to Rule
462(b) under the Act increasing the size of the offering registered under the
Act and information (if any) deemed to be part of the registration statement at
the time of effectiveness pursuant to Rules 430A(b) and 434(d) under the Act, is
hereinafter called the "Registration Statement." The prospectus included in the
Registration Statement at the time it was declared effective by the Commission
is
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hereinafter called the "Prospectus," except that if any prospectus (including
any term sheet meeting the requirements of Rule 434 under the Act provided by
the Company for use in connection with the offering of the Preferred Stock
(whether or not required to be filed by the Company with the Commission pursuant
to Rule 424(b) under the Act) differs from the prospectus on file at the time
the Registration Statement was declared effective by the Commission, the term
"Prospectus" shall refer to such differing prospectus (including any term sheet
within the meaning of Rule 434 under the Act) from and after the time such
prospectus is filed with the Commission pursuant to such Rule 424(b) (and Rule
434, if applicable) or from and after the time it is first provided to the
Underwriters by the Company for such use. The term "Preliminary Prospectus" as
used herein means each preliminary prospectus included in the Registration
Statement prior to the time it became effective under the Act and any prospectus
subject to completion as described in Rule 430A or 434 under the Act contained
in the Registration Statement. Reference to the Registration Statement, the
Prospectus and the Preliminary Prospectus include all information incorporated
therein by reference.
For purposes of this Agreement, the term "Subsidiaries" refers to
the Company's wholly- and majority-owned subsidiaries and limited liability
companies; and the term "Material Joint Ventures" refers to Agriliance LLC, CF
Industries, United Harvest LLC, TEMCO LLC, Horizon Milling LLC, and Ventura
Foods LLC.
The Company hereby confirms its agreement with respect to the sale of
the Preferred Stock to the Underwriters as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to, and covenants with, each of the
Underwriters as follows (provided that, each representation and warranty made
with respect to the Material Joint Ventures, or any of them, shall be deemed to
have been made to the knowledge of the Company; and provided further, that the
Company will be deemed to have "knowledge" of a particular fact or other matter
with respect to a Material Joint Venture if any executive officer or director of
the Company is aware of such fact or matter after reasonable inquiry of the
senior management of the Material Joint Venture regarding the accuracy of the
applicable representation or warranty):
(a) The Registration Statement has been declared effective by the
Commission under the Act. The Company has complied to the Commission's
satisfaction with all requests of the Commission for additional or supplemental
information. If the Company has elected to rely upon Rule 430A under the Act, it
will prepare and file a prospectus (or a term sheet meeting the requirements of
Rule 434) pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. Copies of the
Registration Statement, each Preliminary Prospectus, and the Prospectus, any
amendments or supplements thereto, and all documents incorporated by reference
therein that were filed with the Commission on or prior to the date of this
Agreement (including one executed copy
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of the Registration Statement and of each amendment thereto) have been delivered
to the Representatives.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission nor have any proceedings been
instituted or, to the Company's knowledge, threatened for that purpose. No
Preliminary Prospectus, at the time of filing thereof, 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, in light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any Preliminary
Prospectus made in reliance upon, and in conformity with, written information
furnished to the Company by the Representatives, on behalf of any Underwriter,
specifically for use in the preparation thereof.
(c) As of the time the Registration Statement was declared effective by
the Commission, upon the filing or first delivery to the Underwriters of the
Prospectus, and at the Closing Date (as hereinafter defined), (i) the
Registration Statement and Prospectus conformed or will conform in all material
respects to the requirements of the Act and the Rules and Regulations; (ii) the
Registration Statement did not or will not include 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; and (iii) the
Prospectus did not or will not include 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 in which they are or were
made, not misleading; except that the foregoing shall not apply to statements in
or omissions from any such document made in reliance upon, and in conformity
with, written information furnished to the Company by the Representatives, on
behalf of any Underwriter, specifically for use in the preparation thereof. No
stop order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been instituted or, to the
Company' knowledge, contemplated or threatened by the Commission.
(d) The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Preferred Stock other than any Preliminary Prospectus or the Prospectus.
(e) The Company satisfies the requirements for use of Form S-2, as set
forth in the General Instructions thereto.
(f) The documents incorporated by reference in the Prospectus pursuant
to Item 12 of Form S-2, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder (the "Exchange Act Regulations").
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(g) There are no contracts, agreements or other documents of the
Company or any Subsidiary that are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the Act and the Rules and
Regulations which have not been so described or filed as required.
(h) There are no business relationships or related-party transactions
involving the Company or any Subsidiary required to be described in the
Prospectus which have not been described as required.
(i) The consolidated financial statements of the Company and its
subsidiaries, together with the notes thereto, included or incorporated by
reference in the Registration Statement, the Preliminary Prospectus and the
Prospectus, comply in all material respects with the requirements of the Act and
the Rules and Regulations and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of the
dates indicated and the results of operations and changes in financial position
for the periods therein specified; and said consolidated financial statements
have been prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise stated
in the related notes thereto). No other financial statements or schedules are
required to be included or incorporated by reference in the Registration
Statement or the Prospectus. The financial information included in the
Preliminary Prospectus and Prospectus under the caption "Summary Consolidated
Financial Data" and "Selected Consolidated Financial Data" presents fairly in
all material respects the information purported to be shown therein at the dates
and for the periods indicated.
(j) PricewaterhouseCoopers LLP, who certified the financial statements
(which term, as used in this Agreement, includes the related notes thereto)
included or incorporated by reference in the Registration Statement and the
Prospectus, are independent public accountants with respect to the Company and
as required by the Act and the Rules and Regulations.
(k) The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (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.
(l) This Agreement has been duly and validly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting the rights of creditors generally and
by equitable
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principles, and except as obligations of the Company under the indemnification
provisions hereof may be limited under federal or state securities laws and
public policy relating thereto.
(m) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby,
including the issuance, sale and delivery of the Preferred Stock by the Company,
will not (i) result in a breach or violation of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, note, lease or other material agreement, instrument,
franchise, license or permit to which the Company or any Subsidiary is a party
or by which it is bound, or to which any of the property or assets of the
Company or any Subsidiary is subject, or (ii) violate any judgment, decree,
order, statute, rule or regulation of any court or any governmental or
regulatory agency or body, or any arbitrator, having jurisdiction over the
Company or any of its Subsidiaries or any of their respective properties or
assets, which breaches, violations, defaults or liens would have a material
adverse effect upon the business condition (financial or otherwise), earnings,
operations, properties, business or business prospects of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect"); or (iii) violate
or conflict with any provision of the articles or certificate of incorporation,
charter, bylaws or other governing documents of the Company or any of its
Subsidiaries. No consent, approval, authorization, order or decree of any court
or governmental or regulatory agency or body, or any arbitrator having
jurisdiction over the Company or its Subsidiaries or any of their respective
properties or assets is required for the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
except such as have been made or obtained under the Act and as may be required
under state securities or blue sky laws or under the rules and regulations of
the National Association of Securities Dealers, Inc. ("NASD").
(n) The Preferred Stock has been duly authorized and, when issued and
delivered pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued and fully paid and nonassessable and will
in all material respects conform to the description thereof contained in the
Prospectus; the issuance of the Preferred Stock is not subject to preemptive or
other similar rights; and holders of Preferred Stock will be entitled to the
same limitation of personal liability under Minnesota cooperative law as is
extended to stockholders of Minnesota for-profit corporations.
(o) Other than as contemplated by this Agreement or described in the
Prospectus, 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.
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(p) The Shares have been approved for listing on the Nasdaq National
Market, subject only to official notice of issuance.
(q) There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the Preferred Stock.
(r) The Company has been duly organized and is validly existing as a
cooperative under the laws of the State of Minnesota, and is qualified to do
business and is in good standing in each jurisdiction in which the ownership or
leasing of properties or the conduct of its business requires such
qualification, except where failure to be so qualified would not have a Material
Adverse Effect. Each Subsidiary and Material Joint Venture has been duly
incorporated or organized and is in good standing under the laws of its
jurisdiction of incorporation or organization and is qualified to do business
and is in good standing in each jurisdiction in which the ownership or leasing
of properties or the conduct of its business requires such qualification, except
where failure to be so qualified would not have a Material Adverse Effect. The
Company and its Subsidiaries and Material Joint Ventures have all requisite
power and authority (corporate and other) to own their respective properties and
conduct their respective businesses as currently being carried on and as
described in the Prospectus.
(s) The Company is organized without capital stock on a membership
basis. The authorized equity of the Company is as described under the caption
"Business - Membership and Authorized Capital" and "Description of Preferred
Stock" in the Prospectus. The only outstanding equity interests in the Company
are the patrons' equities and the Company's previously issued 8% preferred
stock. All of the outstanding 8% preferred stock of the Company has been duly
authorized and validly issued, has been issued in compliance with all federal
and state securities laws and was not issued in violation of any preemptive
right, resale right, right of first refusal or similar right, and is fully paid
and nonassessable. Neither the filing of the Registration Statement nor the
offering or sale of the Preferred Stock, as contemplated by this Agreement,
gives rise to any rights for or relating to the registration of any equity
securities of the Company.
(t) The Company does not own or control, directly or indirectly, any
corporation, limited liability company, or other entity required to be listed in
Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2002, that is not so listed; and, since August 31, 2002, the Company
has not formed or acquired, directly or indirectly, any corporation, limited
liability company, or other entity that will be required to be so listed
pursuant to Item 601(a)(21) in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2003.
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(u) All the outstanding shares of capital stock or membership interests
of each wholly-owned Subsidiary and, to the Company's knowledge, each
majority-owned Subsidiary, have been duly and validly authorized and issued and
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws and were not issued in violation of any
preemptive right, resale right, right of first refusal or similar right; and,
except as otherwise set forth in the Prospectus, all outstanding shares of
capital stock or membership interests of the Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and clear of
any security interests, claims, liens or encumbrances.
(v) Except for restrictions imposed by (i) National Cooperative
Refinery Association's board of directors on its ability to pay patronage
dividends, (ii) applicable loan or credit facilities and (iii) applicable law,
no Subsidiary or Material Joint Venture is currently restricted, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's or Material Joint Venture's capital stock or
membership interests, or from repaying any loans or advances made by the Company
to such Subsidiary or Material Joint Venture, and no Subsidiary is restricted
from transferring any of its property or assets to the Company.
(w) Neither the Company nor any Subsidiary or Material Joint Venture is
(i) in violation of its respective articles or certificate of incorporation,
charter, bylaws or other governing documents, or (ii) in violation, breach or
default of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, note, lease or other
material agreement, instrument, franchise, license or permit to which the
Company or any such Subsidiary or Material Joint Venture is a party or by which
it is bound, or to which any of the property or assets of the Company or any
such Subsidiary or Material Joint Venture is subject, where any such violation,
breach or default would have, individually or in the aggregate, a Material
Adverse Effect on the performance by the Company of this Agreement or the
consummation of any of the transactions contemplated hereby.
(x) The Company, its Subsidiaries and Material Joint Ventures have good
title to all properties owned by them that are material to their respective
operations, in each case free and clear of all liens, encumbrances and defects,
and the property held under lease by the Company, its Subsidiaries and Material
Joint Ventures is held by them under valid, subsisting and enforceable leases,
except as (i) do not materially interfere with the current or reasonably
anticipated use of such properties; (ii) described in the Registration Statement
or the Prospectus; or (iii) could not reasonably be expected, singly or in the
aggregate, to have a Material Adverse Effect.
(y) Each of the Company, its Subsidiaries and Ventura Foods, LLC owns
or possesses adequate licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights and know-how necessary to conduct the
businesses now or proposed to be operated by them as described in the
Registration Statement and Prospectus. None of the Company or its Subsidiaries
or Ventura Foods, LLC has received any notice of infringement of or conflict
with (or knows of any such
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infringement of or conflict with) asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-how that, if
such assertion of infringement or conflict were sustained, would have a Material
Adverse Effect.
(z) The Company, its Subsidiaries and Material Joint Ventures are
insured by recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks as
are customary for their businesses including, in the case of the Company,
policies covering real and personal property owned or leased by the Company and
its Subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes, general liability and directors' and officers' liability. The
Company has no reason to believe that it or any Subsidiary or Material Joint
Venture will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not have a Material Adverse Effect. Neither
of the Company nor any Subsidiary or Material Joint Venture has been denied any
insurance coverage which it has sought or for which it has applied during the
last five years.
(aa) The Company, its Subsidiaries and Material Joint Ventures have
filed all necessary federal, state and foreign income and franchise tax returns
and have paid or made provision for the payment of all taxes required to be paid
by any of them and, if due and payable, any related assessment, fine or penalty
levied against any of them. The Company has made adequate charges, accruals and
reserves in the financial statements referred to in Section 1(i) above in
respect of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company or any of its Subsidiaries
and Material Joint Ventures has not been finally determined. The Company is not
aware of any tax deficiency that has been or might be asserted or threatened
against the Company that could reasonably be expected to have a Material Adverse
Effect.
(bb) The Company and each of its Subsidiaries and Material Joint
Ventures has all consents, approvals, authorizations, orders, registrations,
qualifications, certificates, franchises, licenses and permits of and from all
public, regulatory or governmental agencies and bodies, material to the
ownership of their respective properties and conduct of their respective
businesses as now being conducted and as may be described in the Registration
Statement and the Prospectus. The conduct of the business of the Company and
each of the Subsidiaries and Material Joint Ventures is in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations, except where failure to be so in compliance would not have a
Material Adverse Effect. Neither the Company nor any Subsidiary or Material
Joint Venture has received any notice of proceedings relating to the revocation
or modification of, or non-compliance with, any such consents, approvals,
authorizations, orders, registrations, qualifications, certificates, franchises,
licenses and permits which, singly or in the aggregate, if the subject of an
unfavorable
8
decision, ruling or finding, could reasonably be expected to have a Material
Adverse Effect.
(cc) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as otherwise disclosed
therein, (i) there has been no material adverse change, or any development that
could reasonably be expected to have a Material Adverse Effect, in the business
condition (financial or otherwise), earnings, operations, properties, business
or business prospects of the Company and its Subsidiaries and Material Joint
Ventures, taken as a whole (a "Material Adverse Change"), whether or not arising
in the ordinary course of business; (ii) there have been no transactions entered
into by the Company or its Subsidiaries and Material Joint Ventures which would
materially affect the Company or the Subsidiaries and Material Joint Ventures,
taken as a whole, other than in the ordinary course of business; (iii) there has
been no dividend or distribution of any kind declared, paid or made by the
Company on its equity securities or on any class of capital stock or membership
interests of a Subsidiary, except regular redemptions of patrons' equities and
patronage dividends declared by the Board of Directors of the Company and paid
by the Company in the ordinary course of business in accordance with the
redemption and patronage dividend policies established by the Board of
Directors; (iv) neither the Company nor any Subsidiary or Material Joint Venture
has incurred, other than in the ordinary course of business, any material
liabilities or obligations, indirect, direct or contingent; and (v) there has
not been (A) any change in the equity securities of the Company or the capital
stock or membership or other equity interests of any Subsidiary or Material
Joint Venture, or any issuance of warrants, convertible securities or other
rights to purchase equity securities of the Company or the capital stock or
membership or other equity interests of any Subsidiary or Material Joint
Venture, or (B) any material increase in the short-term or long-term debt
(including capitalized lease obligations) of the Company or any Subsidiary or
Material Joint Venture other than borrowings after such dates under the credit
facilities described in the Prospectus and, with respect to the Material Joint
Ventures, borrowings made in the ordinary course of business consistent with
past practices. Neither the Company nor any of its Subsidiaries or Material
Joint Ventures has any contingent liabilities which are not disclosed in the
Prospectus or in the Registration Statement that are material to the Company and
its Subsidiaries and Material Joint Ventures, taken as a whole.
(dd) There is not pending or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the Company
or any Subsidiary or Material Joint Venture of the Company is a party or to
which any of their assets may be subject, before or by any court or governmental
agency, authority or body, domestic or foreign, or any arbitrator, the
disposition of which could reasonably be expected to (i) result in any Material
Adverse Change, or (ii) materially and adversely affect the Company's
performance under this Agreement or the consummation of any of the transactions
contemplated hereby.
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(ee) The Company has been advised of the rules and requirements under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
None of the Company or any Subsidiary is, or after receipt of payment for the
shares of Preferred Stock will be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act. Following this offering, each of the Company and its Subsidiaries
will conduct its respective business in a manner so as not to become subject to
the Investment Company Act.
(ff) Neither the Company nor any of its affiliates has, directly or
indirectly, taken any action designed to cause or result in the stabilization or
manipulation of the price of the Preferred Stock to facilitate the sale or
resale of the Preferred Stock.
(gg) Neither of the Company nor any of its Subsidiaries is currently
doing business with the government of Cuba or with any person located in Cuba.
(hh) Each of the Company and its Subsidiaries and Material Joint
Ventures is in compliance in all material respects with all currently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred or is expected to occur
with respect to any "pension plan" (as defined in ERISA) of the Company or its
Subsidiaries or Material Joint Ventures which could reasonably be expected to
have a Material Adverse Effect; neither the Company nor any Subsidiary or
Material Joint Venture has incurred or expects to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"), in each case which could reasonably be expected to have
a Material Adverse Effect; and each "pension plan" for which the Company or any
Subsidiary or Material Joint Venture would have any liability that is intended
to be qualified under Section 501(a) of the Code is so qualified in all material
respects and nothing has occurred or is expected to occur, whether by action or
by failure to act, which would cause the loss of such qualification, except for
such loss as would not reasonably be expected to have a Material Adverse Effect.
(ii) No hazardous substances, hazardous wastes, pollutants or
contaminants have been deposited or disposed of in, on or under the properties
of the Company or any Subsidiary or Material Joint Venture during the period in
which the Company or any Subsidiary or Material Joint Venture has owned,
occupied, managed, controlled or operated such properties in violation of any
applicable law, ordinance, rule, regulation, order, judgment, decree or permit
or which would require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any violation or
remedial action (other than remedial actions of the type routinely carried out
at facilities of like character to those operated by the Company, its
Subsidiaries and Material Joint Ventures) which would
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not have, or could not be reasonably expected to have, singularly or in the
aggregate with all such violations or remedial actions, a Material Adverse
Effect.
(jj) No labor disturbance by the employees of the Company or any of its
Subsidiaries or Material Joint Ventures that could reasonably be expected to
have a Material Adverse Effect exists or is imminent.
2. Purchase, Sale and Delivery of Preferred Stock.
(a) On the basis of the representations, warranties and agreements
herein contained, and on the terms but subject to the conditions herein set
forth, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, the number of shares of Preferred Stock set forth opposite their
respective names on SCHEDULE I hereto (the "Firm Shares"). The purchase price
per share of Preferred Stock to be paid by the several Underwriters to the
Company shall be $24.0625.
(b) Delivery of the Firm Shares to be purchased by the Underwriters
against payment therefor shall be made by the Company and the Representatives as
provided in Sections 2(d) and 2(e) below at 9:00 a.m. Rocky Mountain time (i) on
the third full business day following the first day that the shares of Preferred
Stock are traded; (ii) if this Agreement is executed and delivered after 2:30
P.M., Rocky Mountain time, the fourth full business day following the day that
this Agreement is executed and delivered; or (iii) at such other time and date
not later than seven full business days following the first day that shares of
Preferred Stock are traded as the Representatives and the Company may determine
(or at such time and date to which payment and delivery shall have been
postponed pursuant to Section 11 hereof), such time and date of payment and
delivery being herein called the "Closing Date"; provided, however, that if the
Company has not made available to the Representatives copies of the Prospectus
within the time provided in Section 2(f) hereof, the Representatives may, in
their sole discretion, postpone the Closing Date until no later than two full
business days following delivery of copies of the Prospectus to the
Representatives.
(c) In addition, on the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Company hereby grants an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
375,000 additional shares of Preferred Stock (the "Option Shares") from the
Company at the purchase price per share to be paid by the Underwriters for the
Firm Shares. The option granted hereunder is for use by the Underwriters solely
in covering any over-allotments in connection with the sale and distribution of
the Firm Shares. The option granted hereunder may be exercised at any time upon
notice by the Representatives to the Company, which notice may be given at any
time within 30 days from the date of this Agreement. The time and date of
delivery of the Option Shares, if subsequent to the Closing Date, is referred to
herein as the "Option Closing Date" and shall be
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determined by the Representatives and shall not be earlier than three nor later
than five full business days after delivery of such notice of exercise. If any
Option Shares are to be purchased, each Underwriter agrees, severally and not
jointly, to purchase the number of Option Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Option Shares to be purchased as the
number of Firm Shares set forth on SCHEDULE I opposite the name of such
Underwriter bears to the total number of Firm Shares, and the Company agrees to
sell the number of Option Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Option Shares to be sold by the Company. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(d) Payment for the Shares shall be made at the Closing Date (and,
if applicable, at the Option Closing Date) by wire transfer in immediately
available funds to the order of the Company. It is understood that the
Representatives have been authorized, for their own account and the accounts of
the several Underwriters, to accept delivery of and receipt for, and make
payment of the purchase price for, the Firm Shares and any Option Shares the
Underwriters have agreed to purchase. X. X. Xxxxxxxx & Co., individually and not
as a Representative of the Underwriters, may (but shall not be obligated to)
make payment for any shares of Preferred Stock to be purchased by any
Underwriter whose funds shall not have been received by the Representatives by
the Closing Date or the Option Closing Date, as the case may be, for the account
of such Underwriter, but any such payment shall not relieve such Underwriter
from any of its obligations under this Agreement.
(e) The Company shall deliver, or cause to be delivered, a credit
representing the Firm Shares to an account or accounts at The Depository Trust
Company, as designated by the Representatives for the accounts of the
Representatives and the several Underwriters at the Closing Date, against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. The Company also shall deliver, or cause
to be delivered, a credit representing the Option Shares that the Underwriters
have agreed to purchase at the Closing Date (or the Option Closing Date, as the
case may be), to an account or accounts at The Depository Trust Company as
designated by the Representatives for the accounts of the Representatives and
the several Underwriters, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. Time
shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
(f) Not later than 12:00 noon on the second business day following
the date the shares of Preferred Stock are released by the Underwriters for sale
to the public, the Company shall deliver or cause to be delivered copies of the
Prospectus in such quantities and at such places as the Representatives shall
reasonably request.
12
3. Offering by the Underwriters.
The Representatives hereby advise the Company that the Underwriters
intend to offer for sale to the public, as described in the Prospectus, their
respective portions of the Firm Shares (and Option Shares, as the case may be)
as soon after this Agreement has been executed and the Registration Statement
has been declared effective as the Representatives, in their sole judgment, have
determined is advisable and practicable.
4. Covenants.
The Company covenants and agrees with the several Underwriters as
follows:
(a) The Company will notify the Representatives promptly (i) of the
time when the Registration Statement or any post-effective amendment to the
Registration Statement has become effective; (ii) any supplement to the
Prospectus (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) has been filed; (iii) of the receipt of any comments from the
Commission; and (iv) of any request by the Commission for any amendment or
supplement to the Registration Statement or Prospectus or additional
information. If the Company has elected to rely on Rule 430A of the Rules and
Regulations, the Company will prepare and file a Prospectus (or term sheet
within the meaning of Rule 434 of the Rules and Regulations) containing the
information omitted therefrom pursuant to Rule 430A with the Commission within
the time period required by, and otherwise in accordance with the provisions of,
Rules 424(b), 430A and 434, if applicable. If the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file a
registration statement with respect to such increase with the Commission within
the time period required by, and otherwise in accordance with the provisions of,
Rule 462(b). The Company will prepare and file with the Commission, promptly
upon the Representatives' request, any amendments or supplements to the
Registration Statement or Prospectus (including any term sheet within the
meaning of Rule 434 of the Rules and Regulations) that, in the Representatives'
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Preferred Stock; and the Company will not file any amendment
or supplement to the Registration Statement or Prospectus (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) which is not
in compliance with the Act or to which the Representatives shall reasonably
object by notice to the Company after having been furnished a copy a reasonable
time prior to the filing.
(b) The Company will advise the Representatives, promptly after the
Company receives notice or obtains knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Preferred Stock for
offering or sale in any jurisdiction or for listing on the Nasdaq National
Market, or of the initiation or threatening of any proceeding for any such
purpose; and the Company
13
will promptly use its best efforts to prevent the issuance of any stop order or
suspension or to obtain its withdrawal if such a stop order or suspension should
be issued.
(c) During such period of time after the first date of the public
offering of the Preferred Stock during which a prospectus relating thereto is
required to be delivered under the Act in connection with sales by the
Underwriters, acting as underwriters and not dealers (the "Distribution
Period"), the Company will comply with all requirements imposed upon it by the
Act, as now and hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as necessary to permit the sale and distribution
of the Preferred Stock by the Underwriters as contemplated by the provisions
hereof and the Prospectus. If during such period any event occurs, or fails to
occur, as a result of which, in the judgment of the Company or in the reasonable
opinion of the Representatives, (i) the Prospectus would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances then existing, not
misleading, or (ii) it becomes necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Act, then the Company will promptly
notify the Representatives and will prepare and file with the Commission, and
furnish at its own expense to the Underwriters, an amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the Act.
(d) The Company shall furnish to the Representatives a copy of any
report or document proposed to be filed with the Commission pursuant to Section
13, 14 or 15 of the Exchange Act during the Distribution Period not less than
one business day before the filing thereof; and the Company shall timely file
with the Commission all reports and documents required to be filed under the
Exchange Act in order to comply with the Exchange Act subsequent to the date of
the Prospectus and during the Distribution Period.
(e) The Company will cooperate with the Representatives and counsel for
the Underwriters in endeavoring to qualify the Preferred Stock for offering and
sale under the applicable securities laws of such states and other jurisdictions
of the United States as the Representatives may reasonably designate; provided
that no such qualification shall be required in any jurisdiction where, as a
result thereof, the Company would become subject to service of general process,
to qualification to do business as a foreign entity or to registration as a
securities dealer. In each jurisdiction in which the Preferred Stock has been so
qualified, the Company will file such statements and reports as may be required
to be filed by it by the laws of such jurisdiction to continue such
qualification in effect so long as required for the distribution of such
securities.
(f) The Company will furnish to the Underwriters copies of the
Registration Statement as originally filed (including all exhibits filed
therewith), each
14
amendment thereto (without exhibits), each of the Preliminary Prospectuses, the
Prospectus, and all amendments and supplements (including any term sheet within
the meaning of Rule 434 of the Rules and Regulations) to such documents, in each
case as soon as available and in such quantities as the Representatives may from
time to time reasonably request.
(g) For a period of five years commencing with the date hereof, the
Company will furnish to the Representatives copies of all documents, proxy
statements, reports and information as are furnished by the Company to the
holders of its preferred stock generally.
(h) The Company will make generally available to holders of the
Preferred Stock as soon as practicable, but in any event not later than 18
months after the "effective date of the Registration Statement" (as defined in
Rule 158(c)) of the Rules and Regulations), an earnings statement (which need
not be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including, at the option of the Company, Rule 158).
(i) The Company will apply the net proceeds from the sale of the
Preferred Stock for the purposes set forth in the Prospectus under the caption
"Use of Proceeds."
(j) The Company will not take, directly or indirectly, prior to the
termination of the offering contemplated by this Agreement, any action designed
to or which might reasonably be expected to cause or result in, or which has
constituted, the stabilization or manipulation of the price of the Preferred
Stock to facilitate the sale or resale of the Preferred Stock.
(k) The Company will not incur 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
other than as contemplated herein.
(l) For so long as the shares of Preferred Stock sold in the offering
contemplated by this Agreement are outstanding, the Company will use its
commercially reasonable efforts to cause the Preferred Stock to continue to be
listed on the Nasdaq National Market or a comparable securities exchange or
market; provided, however, that the Company shall not be obligated to change its
director qualification standards or procedures for nominating and electing
directors, or otherwise modify its corporate governance structure to maintain
such listing.
(m) For so long as the shares of Preferred Stock sold in the offering
contemplated by this Agreement are outstanding, the Company shall engage and
maintain a registrar and transfer agent for the Preferred Stock.
15
(n) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which, in the
reasonable opinion of the Representatives, the market price of the Preferred
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus), the Company will, after written notice from the Representatives
advising the Company to the effect set forth above, promptly prepare, consult
with the Representatives concerning the substance of and disseminate a press
release or other public statement, reasonably satisfactory to the
Representatives, responding to or commenting on such rumor, publication or
event.
(o) The Company shall file, on a timely basis, with the Commission all
reports and documents required to be filed under the Exchange Act to comply with
the Exchange Act subsequent to the date of the Prospectus and during the
Distribution Period.
(p) During the period commencing on the Closing Date through December
31, 2003, the Company will not, without the prior written consent of X.X.
Xxxxxxxx & Co. and US Bancorp Xxxxx Xxxxxxx Inc., offer, sell or contract to
sell, or otherwise dispose of or enter into any transaction which is designed
to, or could be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise by the Company) directly or indirectly, or announce the offering of,
any additional shares of Preferred Stock or any securities convertible into, or
exchangeable for, Preferred Stock; provided, that, during such period, the
Company may issue and sell shares of Preferred Stock (i) pursuant to any
dividend reinvestment plan of the Company; (ii) in exchange for the Company's
currently outstanding 8% preferred stock; or (iii) in an underwritten public
offering.
(q) For the period commencing January 1, 2004 and ending February 1,
2008, the Company will not without the prior written consent of X.X. Xxxxxxxx &
Co. and U.S. Bancorp Xxxxx Xxxxxxx Inc. issue additional shares of Preferred
Stock except as set forth in the Amended And Restated Resolution Creating A
Series Of Preferred Equity To Be Designated 8% Cumulative Redeemable Preferred
Stock, adopted by the Board of Directors of the Company on January 7, 2003.
5. Costs and Expenses.
(a) The Representatives shall be entitled to receive from the Company,
for themselves alone and not as representatives of the several Underwriters, a
non-accountable expense allowance of one hundred thousand dollars ($100,000).
The Representatives shall be entitled to withhold this allowance on the Closing
Date with respect to shares of Preferred Stock delivered by the Company on the
Closing Date.
16
(b) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, the Company will pay or cause to be
paid all costs, fees and expenses incident to the performance of its obligations
hereunder, including, without limitation, (i) all expenses (including transfer
taxes allocated to the respective transferees) incurred in connection with the
issuance, transfer and delivery of the Preferred Stock; (ii) all expenses and
fees (including fees and expenses of the Company's accountants and counsel but,
except as otherwise provided below, not including fees and expenses of the
Underwriters' counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and the printing, delivery, and shipping of this
Agreement and other underwriting documents, including any Blue Sky Memoranda
reasonably requested by the Representatives; (iii) all filing fees and fees and
disbursements of the Underwriters' counsel incurred in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) the Preferred Stock for offering and sale by the Underwriters
or by dealers under the securities or blue sky laws of the states and other
jurisdictions which the Representatives shall designate; (iv) the fees and
expenses of the transfer agent and registrar; (v) the filing fees incident to,
and the reasonable fees and expenses of counsel for the Underwriters in
connection with, any required review by the NASD of the terms of the sale of the
Preferred Stock; (vi) listing fees; and (vii) all other costs and expenses
incident to the performance of the Company's obligations hereunder that are not
otherwise specifically provided for herein.
(c) Except as provided in this Section 5, Section 7, and Section 9(b),
the Underwriters will pay all of their own costs and expenses, including
transfer taxes on resale of any shares of Preferred Stock by the Underwriters
and any advertising expenses connected with any offers that they may make.
(d) If the sale of the Preferred Stock provided for herein is not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or because any
other condition of the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled (and such non-fulfillment is not due
to the Underwriters' actions or omissions), then Company shall either (i)
reimburse the Underwriters for all out-of-pocket disbursements (including,
without limitation, reasonable fees and disbursements of counsel for the
Underwriters) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Preferred Stock or in
contemplation of performing their obligations hereunder, or (ii) pay the
Representatives the non-accountable expense allowance of one hundred thousand
dollars ($100,000), whichever is less. The Company shall not in any event be
liable to any Underwriter for loss of anticipated profits from the transactions
covered by this Agreement.
6. Conditions of Underwriters' Obligations.
17
The obligations of the several Underwriters to purchase and pay for
the shares of Preferred Stock as provided herein on the Closing Date and, with
respect to the Option Shares, the Option Closing Date, are subject to the
accuracy of the Company's representations and warranties set forth in Section 1
hereof, as of the date hereof and at the Closing Date (as if made at the Closing
Date) and, with respect to the Option Shares, as of the Option Closing Date (as
if made at the Option Closing Date), to the timely performance by the Company of
its covenants and other obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective prior to the
execution of this Agreement or at such later time and date as the
Representatives shall have approved in writing, and all filings required by
Rules 424, 430A and 434 of the Rules and Regulations shall have been timely
made; no stop order suspending the effectiveness of the Registration Statement
or any amendment thereof shall have been issued and no proceedings for the
issuance of such an order shall have been initiated or, to the knowledge of the
Company or any Representative, threatened; any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the Representatives'
reasonable satisfaction; and the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
(b) The Representatives shall not have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations), contains an untrue statement of fact which, in the
Representatives' reasonable opinion, is material, or omits to state a fact
which, in the Representatives' reasonable opinion, is material and is required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, which misstatement
or omission has not been corrected.
(c) Between the date hereof and the Closing Date (or the Option Closing
Date, as the case may be), no Material Adverse Change shall have occurred or
become known to the Company that, in the Representatives' reasonable judgment,
makes it impracticable or inadvisable to proceed with the public offering of the
Preferred Stock as contemplated by the Prospectus.
(d) The Representatives shall have received on the Closing Date and the
Option Closing Date, as the case may be, (i) an opinion of Xxxxxx & Whitney LLP,
counsel for the Company, substantially in the form of EXHIBIT A attached hereto,
and (ii) an opinion from Xxxxx X. Xxxxxxxx, Esq., Senior Vice President and
General Counsel of the Company, substantially in the form of EXHIBIT B attached
hereto, which opinions shall be dated the Closing Date and the Option Closing
Date, as the case may be, and addressed to the Underwriters. Counsel rendering
such opinions may rely as to questions of law not involving the laws of the
United States or the
18
State of Minnesota upon opinions of local counsel, and as to questions of fact
upon representations or certificates of officers of the Company, and of
government officials.
(e) The Representatives shall have received on the Closing Date and the
Option Closing Date, as the case may be, an opinion from Stoel Rives LLP,
counsel for the Underwriters, dated the Closing Date and the Option Closing
Date, as the case may be, and addressed to the Underwriters, as to such matters
as the Underwriters may reasonably request. Such counsel shall have received
such papers and information as they reasonably request from the Company to
enable such counsel to pass upon such matters.
(f) On the Closing Date and on the Option Closing Date, as the case may
be, the Representatives shall have received a letter from PricewaterhouseCoopers
LLP, independent certified public accountants, dated the Closing Date and the
Option Closing Date, as the case may be, and addressed to the Underwriters, in
the form previously agreed with the Representatives.
(g) You shall have received on the Closing Date and the Option
Closing Date, as the case may be, a certificate of the Company, dated the
Closing Date or the Option Closing Date, as the case may be, signed by the Chief
Executive Officer 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 the Closing Date or the Option Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date or the Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or, to the Company's knowledge, are pending or threatened under
the Act; and
(iii) When the Registration Statement became effective
and at all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be included therein by
the Act and in all material respects conformed to the requirements of the Act;
the Registration Statement and the Prospectus, and any amendments or supplements
thereto, did not and does not include any 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 the case of the Prospectus, in light of the
circumstances under which they are or were made) not misleading; and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been so set forth.
19
(h) The shares of Preferred Stock shall have been approved for
listing on the Nasdaq National Market, subject only to official notice of
issuance.
(i) The Company shall have complied with the provisions of Sections
2(f) and 4(e) hereof with respect to the furnishing of Prospectuses.
(j) On or before each of the Closing Date and the Option Closing
Date, as the case may be, the Representatives and counsel for the Underwriters
shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the shares of Preferred Stock as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 6 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Option Shares, at any time prior to the Option
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 5, Section 7 and Section 8 shall
at all times be effective and shall survive such termination.
All opinions, certificates, letters and other documents delivered
pursuant to this Section 6 will be in compliance with the provisions hereof only
if they are satisfactory in form and substance to the reasonable judgment of the
Representatives and the Underwriters' counsel.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
its officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses ("Losses"), joint or several, to which such Underwriter
may become subject under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such Losses (or actions in respect thereof) arise out of or
are based (i) upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereto, or 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; (ii)
upon any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (iii) in whole or in
part upon any inaccuracy in the representations and
20
warranties of the Company contained herein; (iv) in whole or in part upon any
failure of the Company to perform its obligations hereunder or under law; or (v)
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 Preferred
Stock or the offering contemplated hereby, and which is included as part of or
referred to in any Losses or action arising out of or based upon any matter
covered by clause (i), (ii), (iii) or (iv) above, except that the Company shall
not be liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such Losses resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its bad faith or willful misconduct; and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
Losses or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such Losses
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by the Representatives, on behalf of the Underwriters, specifically for
use in the preparation thereof; and provided further, that the Company will not
be liable in any such case to the extent that any such Losses arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto) if the person asserting any
such Losses purchased shares of Preferred Stock from an Underwriter but was not
sent or given a copy of the Prospectus (as amended or supplemented) in any case
where such delivery of the Prospectus (as amended or supplemented) was required
by the Act.
(b) Each Underwriter agrees, severally but not jointly, to indemnify
and hold harmless the Company, its directors, officers and employees, and each
person, if any, who controls the Company within the meaning of the Act, against
any Losses to which the Company may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Representatives), insofar as such Losses (or actions
in respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a 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 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 the Registration
Statement, any Preliminary Prospectus, the Prospectus, in reliance upon and in
conformity with written information furnished to the Company by the
Representatives on behalf of such Underwriter, specifically for use in the
preparation thereof; and (ii) an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus that was
corrected in the Prospectus (or any amendment or
21
supplement thereto) if the person asserting any such Losses purchased shares of
Preferred Stock from an Underwriter but was not sent or given a copy of the
Prospectus (as amended or supplemented) in any case where such delivery of the
Prospectus (as amended or supplemented) was required by the Act; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending against any such Losses or
action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party in
writing of the commencement thereof; but the failure to so notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party (i) unless and to the extent the
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses, (ii) for contribution or (iii) otherwise than under this
Section 7. In case any such action 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 in, and, to the extent
that it shall elect, jointly with any other indemnifying party similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified 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 a conflict may arise 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 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 such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties.
After notice from the indemnifying party to such indemnified party
of the indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party (X.X. Xxxxxxxx & Co. and US Bancorp Xxxxx
Xxxxxxx Inc. in the case of subsection (b) above, representing the indemnified
parties who are parties to such action)); (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
22
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, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
(d) The indemnifying party under this Section 7 shall not be liable
for any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld, 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 against any Losses by reason of
such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes (x) an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (y) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the Losses
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Preferred Stock,
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 Underwriters on the other in
connection with the statements or omissions that resulted in such Losses, 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 bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relevant 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 (e) 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 paragraph of
this subsection (e).
23
The amount paid by an indemnified party as a result of the Losses referred to in
the first paragraph of this subsection (e) 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 (e). Notwithstanding the provisions of this subsection (e),
no Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the shares of Preferred
Stock purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his or her consent, is named in the Registration Statement as about to become a
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.
(g) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such Losses are incurred, but in
all cases, no later than thirty (30) days of invoice to the indemnifying party.
(h) The parties to this Agreement hereby acknowledge that they are
sophisticated business entities that were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
8. Representations and Agreements to Survive Delivery.
All representations, warranties, and agreements of the Company
herein or in certificates delivered pursuant hereto, and the agreements of the
Company and the Underwriters contained in Section 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or
24
controlling persons, and shall survive delivery of, and payment for, the
Preferred Stock to and by the Underwriters hereunder and any termination of this
Agreement. A successor to any Underwriter, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in Section 7.
9. Termination.
(a) The Representatives shall have the right to terminate this
Agreement, by notice as hereinafter specified, at any time at or prior to the
Closing Date (i) if in the reasonable opinion of the Representatives there has
been, since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
contemplated in the Registration Statement or the Prospectus, any Material
Adverse Change, whether or not arising in the ordinary course of business; (ii)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the reasonable judgment of
the Representatives may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured; (iii) if the Company shall have failed, refused or been unable, at
or prior to such Closing Date, to perform any agreement on its part to be
performed hereunder; (iv) if any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled
and such non-fulfillment is not due to the Underwriters' actions or omissions;
(v) if there has occurred an outbreak or escalation of hostilities between the
United States and any foreign power, an outbreak or escalation of any
insurrection or armed conflict involving the United States, or any other
calamity or crisis, or material adverse change or development in political,
financial or economic conditions having an effect on the U.S. financial markets
that, in the reasonable judgment of the Representatives, makes it impracticable
or inadvisable to market the Preferred Stock in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of the
Preferred Stock; or (vi) if trading in the Preferred Stock has been suspended or
limited by the Commission or the Nasdaq National Market, or if trading in
securities generally on either the New York Stock Exchange or the Nasdaq
National Market has been suspended or limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by the Nasdaq National Market or by order of the Commission or any
other governmental authority, or the NASD, or if a banking moratorium has been
declared by federal, Minnesota, or New York authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of (i) the Company to any Underwriter,
except as provided in Section 5(d) hereof; (ii) any Underwriter to the Company,
or (iii) of any party hereto to any other party except that the provisions of
Section 7 shall at all times be effective and shall survive such termination.
10. Default by the Company.
25
If the Company shall fail at the Closing Date to sell and deliver the
number of Preferred Stock which it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party. No action taken pursuant to this Section shall relieve the
Company so defaulting from liability, if any, in respect of such default.
11. Default By the Underwriters.
(a) If any Underwriter or Underwriters shall default in their
obligations to purchase the Preferred Stock which they have agreed to purchase
hereunder, the Representatives may in their discretion arrange for the purchase
of such Preferred Stock by themselves or another party or other parties on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter, the Representatives do not arrange for the purchase of such
Preferred Stock, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
reasonably satisfactory to the Representatives to purchase such Preferred Stock
on such terms. In the event that, within the respective prescribed periods, the
Representatives notify the Company that they have has so arranged for the
purchase of such Preferred Stock, or the Company notifies the Representatives
that it has so arranged for the purchase of such Preferred Stock, the
Representatives or the Company shall have the right to postpone the Closing Date
for a period of not more than seven days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees to file
promptly any amendments to the Registration Statement or the Prospectus which in
the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Preferred Stock. The foregoing
shall not relieve any defaulting Underwriter from liability for its default.
(b) If, after giving effect to any arrangements for the purchase of the
Preferred Stock of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of shares of such Preferred Stock which remains unpurchased
does not exceed 10% of the aggregate number of shares of all the Preferred Stock
to be purchased, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of shares of Preferred Stock
which such Underwriter agreed to purchase hereunder and, in addition, to require
each non-defaulting Underwriter to purchase its pro rata share (based on the
aggregate number of shares of Preferred Stock which such Underwriter agreed to
purchase hereunder) of the Preferred Stock of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve any defaulting Underwriter from liability for its default.
26
(c) If, after giving effect to any arrangements for the purchase of the
Preferred Stock of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of shares of such Preferred Stock which remains unpurchased
exceeds 10% of the aggregate number of shares of all the Preferred Stock to be
purchased, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Preferred Stock of the defaulting Underwriter or Underwriters, then this
Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company except for the 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, but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
12. Information Furnished by Underwriters.
The Company hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct.
13. Notices.
Except as otherwise provided herein, all communications hereunder shall
be in writing and, if to the Underwriters, shall be mailed or delivered to the
Underwriters, c/o X. X. Xxxxxxxx & Co., 0 Xxxxx Xxxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxxxx 00000, Attention: Syndicate Department; if to the Company, shall be
mailed or delivered to it at Cenex Harvest States Cooperatives, 0000 Xxxxx
Xxxxx, Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxx 00000, Attention: Chief Executive Officer.
Any party to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for such purpose.
14. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 7. Nothing in this
Agreement is intended or shall be construed to give to any other person, firm or
corporation any legal or equitable remedy or claim under or in respect of this
Agreement or any provision herein contained. The term "successors and assigns"
as herein used shall not include any purchaser, as such purchaser, of any of the
Preferred Stock from the Underwriters.
15. Governing Law.
27
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any provisions
relating to conflicts of laws.
16. Severability.
The invalidity or unenforceability of any section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other section, paragraph or provision hereof. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such changes as are necessary to
make it valid and enforceable.
17. General Provisions.
This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may not be amended or modified unless in writing
by all of the parties hereto (it being understood that execution by the
Representatives of any such amendment or modification shall constitute execution
by the Underwriters) , and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. Nothing herein contained shall constitute any of the Underwriters an
unincorporated association or partner with any other Underwriter or with the
Company.
18. Counterparts.
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.
28
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the Company
and the Underwriters in accordance with its terms.
Very Truly Yours,
CENEX HARVEST STATES COOPERATIVES
By ___________________________
Accepted as of the date hereof.
X. X. Xxxxxxxx & Co. US Bancorp Xxxxx Xxxxxxx Inc. Xxxxxxxxxx & Co., Inc
By: X.X. XXXXXXXX & CO.
By: ________________________________
Name: ________________________________
Title: _________________________________
For itself and on behalf of the Representatives
29
SCHEDULE I
Total Number of Shares
of
Underwriter Preferred Stock
-----------
To Be Purchased
X.X. Xxxxxxxx & Co. ................................
US Bancorp Xxxxx Xxxxxxx Inc........................
Xxxxxxxxxx & Co. Inc................................
Total ............................ 2,500,000
30
EXHIBIT A
FORM OF OPINION OF XXXXXX & WHITNEY LLP
31
EXHIBIT B
FORM OF OPINION OF XXXXX X. XXXXXXXX, ESQ.,
SENIOR VICE PRESIDENT AND GENERAL COUNSEL OF THE COMPANY
32
