EXHIBIT 1.1
12,500,000 SHARES
PREMIUM STANDARD FARMS, INC.
COMMON STOCK (PAR VALUE $0.01 PER SHARE)
UNDERWRITING AGREEMENT
[-], 2005
[-], 2005
Xxxxxx Xxxxxxx & Co. Incorporated
Credit Suisse First Boston LLC
X.X. Xxxxxx Securities Inc.
Xxxxx Xxxxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
The shareholders named in Schedule I hereto (each a "SELLING SHAREHOLDER"
and collectively, the "SELLING SHAREHOLDERS") severally propose to sell to the
several Underwriters named in Schedule II hereto (the "UNDERWRITERS") an
aggregate of 12,500,000 shares (the "FIRM SHARES") of the Common Stock (par
value $0.01 per share) of Premium Standard Farms, Inc., a Delaware corporation
(the "COMPANY"). Each Selling Shareholder is selling the amount set forth
opposite such Selling Shareholder's name under "Number of Firm Shares To Be
Sold" in Schedule I hereto.
The Selling Shareholders also severally propose to sell to the several
Underwriters not more than an additional 1,875,000 shares of the Common Stock
(par value $0.01 per share) of the Company (the "ADDITIONAL SHARES"), with each
Selling Shareholder selling up to the amount set forth opposite such Selling
Shareholder's name under "Number of Additional Shares To Be Sold" in Schedule I
hereto as more fully described herein, if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common Stock
(par value $0.01 per share) of the Company to be outstanding after giving effect
to the sales contemplated hereby are hereinafter referred to as the "COMMON
STOCK." Certain of the Selling Shareholders (each, a "WARRANTHOLDER") are
selling shares of Common Stock (the "WARRANT SHARES") they will be issued upon
the exercise of warrants (the "WARRANTS") currently exercisable for shares of
Common Stock.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the
"REGISTRATION STATEMENT"; the prospectus in the form first used to confirm sales
of Shares is hereinafter referred to as the "PROSPECTUS." If the Company has
filed an abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) under the Securities Act (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Registration Statement.
Xxxxxx Xxxxxxx & Co. Incorporated ("XXXXXX XXXXXXX") has agreed to reserve
a portion of the Shares to be purchased by it under this Agreement for sale to
the Company's directors, officers, employees and business associates and other
parties related to the Company (collectively, "PARTICIPANTS"), as set forth in
the Prospectus under the heading "Underwriters" (the "DIRECTED SHARE PROGRAM").
The Shares to be sold by Xxxxxx Xxxxxxx and its affiliates pursuant to the
Directed Share Program are referred to hereinafter as the "DIRECTED SHARES." Any
Directed Shares not orally confirmed for purchase by any Participant by the end
of the business day on which this Agreement is executed will be offered to the
public by the Underwriters as set forth in the Prospectus.
Credit Suisse First Boston LLC ("CSFB") has agreed, at the request of the
Company and without compensation, to act as "qualified independent underwriter"
within the meaning of 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. in connection with the offering of the Shares.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the Company's knowledge,
threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain 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 not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain 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,
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except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated or
organized, as the case may be, is validly existing as a corporation or
partnership in good standing under the laws of the jurisdiction of its
incorporation or organization, has the corporate or other power and authority to
own its property and to conduct its business as described in the Prospectus and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole; all of the issued shares
of capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
by the Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered by the
Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus; and except as
disclosed in the Prospectus, there are no outstanding securities convertible
into or exchangeable for, or warrants, rights or options to subscribe to or
purchase from the Company, or obligation of the Company to issue, shares of the
Company.
(g) The shares of Common Stock (including the Shares to be sold by the
Selling Shareholders) outstanding prior to the sale of the Shares by the Selling
Shareholders have been duly authorized and are validly issued, fully paid and
non-assessable.
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(h) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision (i) of applicable law; (ii) the certificate of incorporation or
by-laws of the Company, (iii) any agreement or other instrument binding upon the
Company or any of its subsidiaries, or (iv) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, except in the case of clauses (i), (iii) or (iv) for such
contraventions as could not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or on the power or
ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated by the Registration Statement and
Prospectus, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(i) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).
(j) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(k) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(l) The Company is not, and after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
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(m) The Company and each of its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations,
and all orders, agreements, determinations and all other provisions having the
force and effect of law relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants,
contaminants, noise or odor ("ENVIRONMENTAL LAWS"), (ii) have received all
permits, licenses and other approvals required of them under applicable
Environmental Laws to conduct their respective businesses as currently conducted
or as otherwise described in the Registration Statement and Prospectus and (iii)
are in compliance with all terms and conditions of any such permit, license and
approval, except where such noncompliance with or liability under Environmental
Laws, failure to receive required permits, licenses and other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(n) There are no costs, obligations or liabilities pursuant to
Environmental Laws and/or environmental theories of common law (including,
without limitation, any current or future capital or operating expenditures
required for clean-up, corrective action, upgrades, pollution control equipment
or methods, closure of properties or compliance with Environmental Laws or any
permit, license, approval, judgment, order, decree or agreement, or any related
constraints on operating activities and any potential liabilities to third
parties) to which the Company or any of its subsidiaries is subject, other than
costs, obligations or liabilities described in the Registration Statement and
the Prospectus and costs, obligations or liabilities which could not reasonably
be expected, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(o) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement, except as
described in the Registration Statement and the Prospectus.
(p) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) the Company and its
subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii)
there has
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not been any material change in the capital stock, short-term debt or long-term
debt of the Company and its subsidiaries, except in each case as described in
the Registration Statement and the Prospectus.
(q) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, taken as a whole, in each case free and clear of all liens,
encumbrances and defects except such liens, encumbrances and defects as are
described in the Registration Statement and Prospectus or such as could not,
singly or in the aggregate, be reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole. There are no
outstanding options, rights of first offer or rights of first refusal to
purchase any such real properties, Leasehold Improvements or any portion thereof
or interest therein, which could reasonably be expected, singly or in the
aggregate, to have a material adverse effect on the Company and its
subsidiaries, taken as a whole. Any real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid, legal,
binding, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, in each case except
as described in the Prospectus. The Company has obtained a written consent to
the transactions hereunder from the landlord and from the prime landlord under
the Lease Agreement, dated May 1, 2003, between SSB Realty, LLC, as landlord,
and the Company, as tenant.
(r) (i) The classification of each parcel of real property owned or leased
by the Company and its subsidiaries under applicable zoning laws, ordinances and
regulations permits the use and occupancy of such parcel and the operation of
its business as currently conducted thereon and permits all improvements located
thereon as currently constructed, used and occupied, (ii) all certificates of
occupancy, permits, licenses, franchises, approvals and authorizations
(collectively, the "REAL PROPERTY PERMITS") of all governmental authorities,
board of fire underwriters, association or any other entity having jurisdiction
over such owned and leased real properties, which are required or appropriate to
use or occupy such owned and leased real properties or operate the business as
currently conducted or as otherwise described in the Registration Statement and
the Prospectus, if any, have been issued and are in full force and effect, (iii)
the Company has not received any notice from any governmental authority or other
entity having jurisdiction over the owned and leased real properties threatening
a suspension, revocation, modification or cancellation of any Real Property
Permit, if any exists, and, to the Company's knowledge, there is no basis for
the issuance of any such notice or the taking of any such action and
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(iv) the Real Property Permits, if any, will remain in effect after the closing
hereunder without the consent or approval of the issuing governmental authority
or entity, no disclosure, filing or other action by the Company is required in
connection with the transactions hereunder, and the Company shall not be
required to assume any additional liabilities or obligations under the Real
Property Permits, if any, as a result of such transfer, except where any
failures of (i), (ii), (iii) or (iv) above to be true could not reasonably be
expected, singly or in the aggregate, to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(s) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names currently employed by them in connection with the
business now operated by them, except where the failure to own or possess or to
have the right to acquire any of the foregoing, singly or in the aggregate, does
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole, and neither the Company nor any of its subsidiaries has received any
notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, would have a
material adverse affect on the Company and its subsidiaries, taken as a whole.
(t) No labor dispute with the employees of the Company or any of its
subsidiaries exists, except as described in the Prospectus, or, to the knowledge
of the Company, is imminent, except for disputes that do not or would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole;
and the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers or
contractors that could reasonably be expected to have a material adverse affect
on the Company and its subsidiaries, taken as a whole.
(u) None of the following events has occurred or exists: (i) a failure to
fulfill the obligations, if any, under the minimum funding standards of Xxxxxxx
000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 412 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and the regulations and published interpretations
thereunder with respect to a Plan, determined without regard to any waiver of
such obligations or extension of any amortization period; (ii) an audit or
investigation by the Internal Revenue Service, the U.S. Department of Labor, the
Pension Benefit Guaranty Corporation or any other federal or state governmental
agency or any foreign regulatory agency with respect to the employment or
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compensation of employees by the Company or its subsidiaries; (iii) any breach
by the Company or its subsidiaries of any contractual obligation to employees;
or (iv) any failure with respect to a plan (within the meaning of Section 3(3)
of ERISA) to comply with the terms of such plan or applicable law, except where
any failures of (i), (ii), (iii) or (iv) above to be true could not reasonably
be expected, singly or in the aggregate, to have a material adverse effect on
the Company and its subsidiaries, taken as a whole. None of the following events
has or is, to the knowledge of the Company reasonably likely to occur: (i) an
increase in the aggregate amount of contributions required to be made to all
Plans in the current fiscal year of the Company compared to the amount of such
contributions made in the Company's most recently completed fiscal year; (ii) an
increase in the Company's or its subsidiaries' "accumulated post-retirement
benefit obligations" (within the meaning of Statement of Financial Accounting
Standards 106) compared to the amount of such obligations in the Company's most
recently completed fiscal year; (iii) the termination of any Plan the assets of
which are not sufficient to pay benefit liabilities; (iv) a complete or partial
withdrawal from a multiemployer plan (as such term is defined under Section
3(37) of ERISA); or (v) the filing of a claim by one or more employees or former
employees of the Company or its subsidiaries related to their employment, except
where any failures of (i), (ii), (iii), (iv) or (v) above to be true could not
reasonably be expected, singly or in the aggregate, to have a material adverse
effect on the Company and its subsidiaries, taken as a whole. For purposes of
this paragraph, the term "Plan" means a plan (within the meaning of Section 3(3)
of ERISA) subject to Title IV of ERISA with respect to which the Company, its
subsidiaries and any other entity that, together with the Company or any
subsidiary, is treated as a single employer under Section 404 of the Code, may
have any liability.
(v) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries believes that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a material adverse affect
on the Company and its subsidiaries, taken as a whole, except as described in
the Registration Statement and Prospectus.
(w) Neither the Company nor any of its subsidiaries is (i) in violation of
its certificate of incorporation or bylaws or other organizational document, as
the case may be, or (ii) in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
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condition contained in any material indenture, mortgage, deed of trust, credit
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject.
(x) Except as described in the Registration Statement and Prospectus, the
Company and each of its subsidiaries are in compliance with any and all
applicable foreign, federal, state and local laws and regulations, all orders
and determinations, and all other applicable provisions having the force and
affect of law, including without limitation, those concerning agriculture, food,
food safety, livestock, animal feeding operations, medication in feed and animal
waste, and no action, suit, proceeding, hearing, investigation, charge,
complaint, demand, or notice has been filed or commenced against any of them
alleging any failure to so comply, except where such noncompliance could not
reasonably be expected, singly or in the aggregate, to have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(y) (i) The Company and each of its subsidiaries possess and are in
compliance with all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities (including,
without limitation, the U.S. Food and Drug Administration and the U.S.
Department of Agriculture) necessary to conduct their respective businesses and
operate their properties, (ii) neither the Company nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit; and (iii) none of
the terms or conditions in any such certificate, authorization or permit are
likely to prevent, limit or hinder the continued operations of the Company and
its subsidiaries, except where any failures of (i), (ii) or (iii) above to be
true could not reasonably be expected, singly or in the aggregate, to have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(z) (i) The Company and each of its subsidiaries have filed all federal,
state and local tax returns required to be filed through the date of this
Agreement or has requested extensions thereof, (ii) and all such tax returns are
true and complete in all material respects and are prepared in substantial
compliance with all applicable laws and regulations, (iii) the Company and each
of its subsidiaries have paid all taxes (whether or not shown or required to be
shown on any tax return), and (iv) except as currently being contested in good
faith and for which reserves required by generally accepted accounting
principles in the United States have been created on the financial statements of
the Company, no tax deficiency has been determined adversely to the Company, or
any of its subsidiaries (nor does the Company, and each of its subsidiaries have
any knowledge of any tax deficiency, except where any failures of (i), (ii),
(iii) or (iv) above to be true could not reasonably be expected, singly or in
the aggregate,
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to have a material adverse effect on the Company and its subsidiaries taken as a
whole.
(aa) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Based on an evaluation of the controls described
above, the Company is not aware of any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company's or its subsidiaries' internal accounting or other controls; and since
the date of the most recent evaluation, there have been no changes in such
controls that have materially and adversely affected, or are reasonably likely
to materially and adversely effect, the Company's or its subsidiaries' internal
accounting or other controls.
(bb) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) that are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Commission, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company's management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate to allow timely decisions
regarding required disclosure.
(cc) Except as described in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), the Company has
not sold, issued or distributed any shares of Common Stock (other than pursuant
to the stock dividend declared on May 6, 2005) during the six-month period
preceding the date hereof, including any sales pursuant to Rule 144A under, or
Regulation D or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
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(dd) The Company has not taken and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares.
(ee) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any amendments or supplements thereto will comply, with
any applicable laws or regulations of foreign jurisdictions in which the
Prospectus or any preliminary prospectus, as amended or supplemented, if
applicable, are distributed in connection with the Directed Share Program.
(ff) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered.
(gg) The Company has not offered, or caused Xxxxxx Xxxxxxx to offer,
Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the Company,
or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
2. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents and warrants to and
agrees with each of the Underwriters and the Company, solely as to itself, that:
(a) This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this Agreement
and the Custody Agreement and Power of Attorney (the "CUSTODY AGREEMENT AND
POWER OF ATTORNEY") signed by such Selling Shareholder and the Custodian and
Attorneys-in-Fact referenced therein, relating to the deposit of the Shares to
be sold by such Selling Shareholder and appointing certain individuals as such
Selling Shareholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement will not contravene any provision of applicable law, or the
organizational documents of such Selling Shareholder (i.e., the certificate of
incorporation and by-laws if such Selling Shareholder is a corporation), or any
agreement or other instrument binding upon such Selling Shareholder or any
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judgment, order or decree of any governmental body, agency or court having
jurisdiction over such Selling Shareholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement and Power of Attorney
of such Selling Shareholder, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale of the
Shares and such as may have previously been made or obtained.
(c) Such Selling Shareholder has on the date hereof (other than (i) a
Warrantholder with respect to Warrant Shares and (ii) Neon Capital Limited
("NEON") with respect to its Shares, for which a security interest has been
granted in favor of HSBC Trustee (C.I.) Limited ("HSBC TRUSTEE") pursuant to a
Trust Instrument dated 19 December 2003 between inter alia Neon and HSBC
Trustee, which security interest will be released prior to payment to the
Custodian with respect to the Shares to be sold by Neon pursuant to this
Agreement), and on the Closing Date such Selling Shareholder (including (i) a
Warrantholder and (ii) Neon) will have, valid title to, or a valid "security
entitlement" within the meaning of Section 8-501 of the New York Uniform
Commercial Code (the "UCC") in respect of, the Shares to be sold by such Selling
Shareholder free and clear of all security interests, claims, liens, equities or
other encumbrances and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement, the Custody Agreement
and Power of Attorney and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder or a security entitlement in respect of such Shares. In
the case of a Warrantholder, such Selling Shareholder has valid title to the
Warrants to be exercised for Warrant Shares free and clear of all security
interests, claims, liens, equities or other encumbrances except those that may
be imposed by the United States federal or state securities laws.
(d) The Custody Agreement and Power of Attorney have been duly authorized,
executed and delivered by such Selling Shareholder and are valid and binding
agreements of such Selling Shareholder.
(e) Upon payment for the Shares to be sold by such Selling Shareholder
pursuant to this Agreement, delivery of such Shares, as directed by the
Underwriters, to Cede & Co. ("CEDE") or such other nominee as may be designated
by the Depository Trust Company ("DTC"), registration of transfer of such Shares
in the stock registry of the Company in the name of Cede or such other nominee
and the crediting of such Shares on the books of DTC to securities accounts of
the Underwriters (assuming that neither DTC nor any such Underwriter has notice
of any adverse claim (within the meaning of Section 8-105 of the UCC) to such
Shares), (A) DTC shall be a "protected purchaser" of such
12
Shares within the meaning of Section 8-303 of the UCC, (B) under Section 8-501
of the UCC, the Underwriters will acquire a valid security entitlement in
respect of such Shares and (C) no action based on any "adverse claim", within
the meaning of Section 8-102 of the UCC, to such Shares may be successfully
asserted against the Underwriters with respect to such shares; for purposes of
this representation, such Selling Shareholder may assume that when such payment,
delivery and crediting occur, (x) such Shares will have been registered in the
name of Cede or another nominee designated by DTC, in each case on the Company's
share registry in accordance with its certificate of incorporation, bylaws and
applicable law, (y) DTC will be registered as a "clearing corporation" within
the meaning of Section 8-102 of the UCC and (z) appropriate entries to the
accounts of the several Underwriters on the records of DTC will have been made
pursuant to the UCC.
(f) The sale of Shares by such Selling Shareholder pursuant hereto is not
prompted by any material non-public historical information concerning the
Company or its subsidiaries.
(g) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain 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 not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain 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;
provided, that (1) the representations and warranties set forth in this
paragraph 2(g) are limited to statements or omissions made in reliance upon and
in conformity with written information relating to such Selling Shareholder
provided to the Company by or on behalf of such Selling Shareholder expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto and (2) the representations
and warranties set forth in this paragraph 2(g) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(h) Such Selling Shareholder has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or
13
manipulation of the price of any security of the Company to facilitate the sale
or resale of its Shares.
(i) Except as disclosed by such Selling Shareholder in writing to Xxxxxx
Xxxxxxx, neither such Selling Shareholder nor any of his, her or its affiliates
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other association
with (within the meaning of Article 1(q) of the Bylaws of the National
Association of Securities Dealers, Inc. (the "NASD")), any member firm of the
NASD.
3. Agreements to Sell and Purchase. Each Selling Shareholder (other than
the MSCP Selling Shareholders (as defined below)), severally and not jointly,
hereby agrees to sell to the several Underwriters, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from such Selling Shareholder at $[-] a share (the "PURCHASE PRICE")
the number of Non-MSCP Firm Shares (as defined below) (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the number of Non-MSCP Firm Shares to be sold by such Selling
Shareholder as the number of Non-MSCP Firm Shares set forth in Schedule II
hereto opposite the name of such Underwriter bears to the total number of
Non-MSCP Firm Shares. Each MSCP Selling Shareholder, severally and not jointly,
hereby agrees to sell to the several Underwriters (other than Xxxxxx Xxxxxxx),
and each Underwriter (other than Xxxxxx Xxxxxxx), upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from such
MSCP Selling Shareholders at the Purchase Price the number of MSCP Firm Shares
(as defined below) (subject to such adjustments to eliminate fractioning shares
as you may determine) that bears the same proportion to the number of MSCP Firm
Shares to be sold by such MSCP Selling Shareholder as the number of MSCP Firm
Shares set forth in Schedule II hereto opposite the name of such Underwriter
bears to the total number of MSCP Firm Shares. The terms "MSCP SELLING
SHAREHOLDERS" collectively refers to The Xxxxxx Xxxxxxx Leveraged Equity Fund
II, L.P., Xxxxxx Xxxxxxx Capital Investors, L.P., Xxxxxx Xxxxxxx Capital
Partners III, L.P. and MSCP III 892 Investors, L.P., "NON-MSCP FIRM SHARES"
refers to the Firm Shares being sold by the Selling Shareholders (other than the
MSCP Selling Shareholders) pursuant to this Agreement and "MSCP FIRM SHARES"
refers to the Firm Shares being sold by the MSCP Selling Shareholders pursuant
to this Agreement.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each Selling Shareholder
(other than the MSCP Selling Shareholders), severally and not jointly, agrees to
14
sell to the Underwriters the Additional Shares to be sold by such Selling
Shareholder as described below, and the Underwriters shall have the right to
purchase, severally and not jointly, up to [-] Additional Shares at the Purchase
Price. On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each MSCP Selling
Shareholder, severally and not jointly, agrees to sell to the Underwriters
(other than Xxxxxx Xxxxxxx) the Additional Shares to be sold by such MSCP
Selling Shareholder as described below, and the Underwriters (other than Xxxxxx
Xxxxxxx) shall have the right to purchase, severally and not jointly, up to [-]
Additional Shares at the Purchase Price. You may exercise these rights on behalf
of the Underwriters on a pro rata basis in whole or from time to time in part by
giving written notice not later than 30 days after the date of this Agreement.
Any exercise notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Each purchase date must be at least one business day after the
written notice is given and may not be earlier than the closing date for the
Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 5 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an "OPTION CLOSING DATE"), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Non-MSCP Firm Shares set forth in Schedule II hereto
opposite the name of such Underwriter bears to the total number of Non-MSCP Firm
Shares. On each Option Closing Date, each Selling Shareholder (other than the
MSCP Selling Shareholders), severally and not jointly, agrees to sell to the
Underwriters the respective number of Additional Shares obtained by multiplying
the number of Shares specified in the exercise notice by a fraction (a) the
numerator of which is the number of Shares set forth next to such Selling
Shareholder's name under "Number of Additional Shares to Be Sold" on Schedule I
hereto in the case of each Selling Shareholder and (b) the denominator of which
is the total number of Additional Shares to be sold by such Selling Shareholders
(subject to such adjustments to eliminate fractional shares as you may
determine). On each Option Closing Date, each Underwriter (other than Xxxxxx
Xxxxxxx) agrees, severally and not jointly, to purchase the number of Additional
Shares (subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased on such Option Closing Date as the number of MSCP Firm
Shares set forth in Schedule II hereto opposite the name of such Underwriter
bears to the total number of MSCP Firm Shares. On each Option Closing Date, each
XXXX
00
Selling Shareholder, severally and not jointly, agrees to sell to the
Underwriters (other than Xxxxxx Xxxxxxx) the respective number of Additional
Shares obtained by multiplying the number of Shares specified in the exercise
notice by a fraction (a) the numerator of which is the number of Shares set
forth next to such Selling Shareholder's name under "Number of Additional Shares
to Be Sold" on Schedule I hereto in the case of each MSCP Selling Shareholder
and (b) the denominator of which is the total number of Additional Shares to be
sold by such MSCP Selling Shareholders (subject to such adjustments to eliminate
fractional shares as you may determine).
The Company and each Selling Shareholder hereby agrees that, without the
prior written consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will
not, during the period ending 180 days after the date of the Prospectus, (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise; or (3) file any registration statement
with the Commission relating to the offering of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding paragraph shall not apply to
(a) the Shares to be sold hereunder, (b) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing, (c) the grant of options or the issuance of shares of Common
Stock by the Company to employees, officers or directors pursuant to an employee
benefit plan described in the Prospectus, (d) transactions by a Selling
Shareholder relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the offering of the Shares,
provided that no filing under Section 16(a) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), shall be required or shall be voluntarily
made in connection with subsequent sales of Common Stock or other securities
acquired in such open market transactions or (e) transfers of shares of Common
Stock or other securities convertible into or exercisable or exchangeable for
Common Stock by a Selling Shareholder to affiliates (as such term is defined in
Rule 405 under the Securities Act) of such Selling Shareholder provided that the
transferee shall sign and deliver to Xxxxxx Xxxxxxx a lock-up agreement in the
16
form of Exhibit A hereto prior to the transfer. In addition, each Selling
Shareholder, agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period ending 180 days after
the date of the Prospectus, make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. Each Selling
Shareholder consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of any Shares held
by such Selling Shareholder except in compliance with the foregoing
restrictions. Notwithstanding the foregoing, if (1) during the last 17 days of
the 180-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 180-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 180-day period, the restrictions imposed by this agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event. The
Company shall promptly notify Xxxxxx Xxxxxxx of any earnings release, news or
event that may give rise to an extension of the initial 180-day restricted
period.
Notwithstanding anything to the contrary contained in this Section 3, Neon
may grant, at all times, a security interest in its shares of Common Stock in
favor of HSBC Trustee; provided that, HSBC signs and delivers to Xxxxxx Xxxxxxx
a lock-up agreement in the form of Exhibit A hereto prior to the granting of any
security interest.
4. Terms of Public Offering. The Company and the Selling Shareholders are
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this Agreement have become effective as in your judgment is advisable. The
Company and the Selling Shareholders are further advised by you that the Shares
are to be offered to the public initially at $[-] a share (the "PUBLIC OFFERING
PRICE") and to certain dealers selected by you at a price that represents a
concession not in excess of $[-] a share under the Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of $[-] a share, to any Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Selling Shareholder shall be made to such Selling Shareholder in Federal or
other funds immediately available in New York City against delivery of such Firm
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
New York City time, on [-], 2005, or at such other time on the same or such
other
17
date, not later than [-], 2005, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares to be sold by each Selling Shareholder
shall be made to such Selling Shareholder in Federal or other funds immediately
available in New York City against delivery of such Additional Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on the date specified in the corresponding notice described in Section 3
or at such other time on the same or on such other date, in any event not later
than [-], 2005, as shall be designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Selling Shareholders to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than [-] (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the securities of the
Company or any of its subsidiaries by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and
18
its subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 6(a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of
Sidley Xxxxxx Xxxxx & Xxxx LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company
has the corporate power and authority to own its properties and conduct
its business as presently conducted as described in the Prospectus.
(ii) Intentionally omitted.
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(iv) the shares of Common Stock (including the Shares to be sold by
the Selling Shareholders) outstanding prior to the sale of the Shares by
the Selling Shareholders have been duly authorized and are validly issued,
fully paid and non-assessable;
(v) this Agreement has been duly authorized, executed and delivered
by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
19
Agreement will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or any agreement or
other instrument binding upon the Company or any of its subsidiaries that
is identified in Annex 1 to this opinion letter (which an officer of the
Company has certified to such counsel constitutes a list of all of the
contracts material to the Company and its subsidiaries, taken as a whole),
or, to the best of such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations under this
Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares;
(vii) the statements relating to legal matters, documents or
proceedings included in (A) the Prospectus under the captions "Certain
Relationships and Related Transactions," "Description of Capital Stock"
and "Underwriters" and (B) the Registration Statement in Items 14 and 15,
in each case fairly summarize in all material respects such matters,
documents or proceedings;
(viii) Intentionally omitted.
(ix) the Company is not required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended; and
(x) (A) in the opinion of such counsel, the Registration Statement
and the Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to
which such counsel need not express any belief) appear on their face to be
appropriately responsive in all material respects to the requirements of
the Securities Act and the applicable rules and regulations of the
Commission thereunder, and (B) nothing has come to the attention of such
counsel that causes such counsel to believe that (i) the Registration
Statement or the prospectus included therein (except for the financial
statements and financial schedules and other financial and statistical
data included therein, as to which such counsel need not express any
belief) at the time the Registration Statement became effective contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Prospectus (except for the
20
financial statements and financial schedules and other financial and
statistical data included therein, as to which such counsel need not
express any belief) as of its date or as of the Closing Date contained or
contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(d) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxx X. Xxxxxxx, General Counsel and Vice President of the Company, dated the
Closing Date, to the effect that:
(i) each subsidiary of the Company has been duly incorporated or
organized, is validly existing as a corporation or partnership in good
standing under the laws of the jurisdiction of its incorporation or
organization, and has the corporate or other power and authority to own
its property and to conduct its business as described in the Prospectus;
(ii) the Company and each subsidiary of the Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; and
(iii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company
or any of its subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so described or
of any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that are not
described or filed as required.
(e) The Underwriters shall have received on the Closing Date an opinion of
legal counsel for each Selling Shareholder (other than those Selling
Shareholders identified on Schedule I as being not required to deliver an
opinion of counsel pursuant to this Section 6(c)), dated the Closing Date,
either in the form attached to this Agreement with respect to the Selling
Shareholder(s) identified therein or to the effect that:
21
(i) the Custody Agreement and Power of Attorney of each Selling
Shareholder have been duly authorized, executed and delivered by such
Selling Shareholder and are valid and binding agreements of such Selling
Shareholder enforceable against such Selling Shareholder in accordance
with its terms, except that the enforceability may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' right generally and
subject to principles of equity, and, assuming that one or more of the
Attorneys-in-Fact has signed this Agreement on behalf of such Selling
Shareholder, this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement and the Custody Agreement and Power of Attorney of such Selling
Shareholder will not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of such Selling Shareholder (if
such Selling Shareholder is a corporation), or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon such
Selling Shareholder or, to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over such Selling Shareholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement and Power of
Attorney of such Selling Shareholder, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
offer and sale of the Shares;
(iii) each of the Selling Shareholders has valid title to, or a
valid security entitlement in respect of, the Shares to be sold by such
Selling Shareholder free and clear of all security interests, claims,
liens, equities and other encumbrances, and each of the Selling
Shareholders has the legal right and power, and all authorization and
approval required by law, to enter into this Agreement and the Custody
Agreement and Power of Attorney of such Selling Shareholder and to sell,
transfer and deliver the Shares to be sold by such Selling Shareholder or
a security entitlement in respect of such Shares; and
(iv) upon payment for the Shares to be sold by the Selling
Shareholders to the Underwriters pursuant to this Agreement, delivery of
such Shares, as directed by the Underwriters, to Cede or such other
nominee as may be designated by DTC, registration of such Shares
22
in the name of Cede or such other nominee and the crediting of such Shares
on the books of DTC to securities accounts of the Underwriters (assuming
that neither DTC nor any such Underwriter has notice of any adverse claim
within the meaning of Section 8-105 of the UCC to such Shares or any
security entitlement in respect thereof), (A) DTC shall be a "protected
purchaser" of such Shares within the meaning of Section 8-303 of the UCC,
(B) under Section 8-501 of the UCC, the Underwriters will acquire a
security entitlement in respect of such Shares and (C) no action based on
any "adverse claim" (within the meaning of Section 8-102 of the UCC) to
such Shares may be asserted against the Underwriters with respect to such
security entitlement; in giving this opinion, counsel for the Selling
Shareholders may assume that when such payment, delivery and crediting
occur, (x) such Shares will have been registered in the name of Cede or
another nominee designated by DTC, in each case on the Company's share
registry in accordance with its certificate of incorporation, bylaws and
applicable law, (y) DTC will be registered as a "clearing corporation"
within the meaning of Section 8-102 of the UCC and (z) appropriate entries
to the accounts of the several Underwriters on the records of DTC will
have been made pursuant to the UCC.
(f) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxxxx & Xxxxx LLP, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Sections 6(c)(v), 6(c)(vii) (but only as to
the statements in the Prospectus under "Description of Capital Stock" and
"Underwriters") and 6(c)(x) above.
With respect to Section 6(c)(x) above, Sidley Xxxxxx Xxxxx & Xxxx LLP and
Xxxxxxxx & Xxxxx LLP may state that their beliefs are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification, except as
specified. With respect to Section 6(e) above, such legal counsel may rely, with
respect to factual matters and to the extent such counsel deems appropriate,
upon the representations of each Selling Shareholder contained herein and in the
Custody Agreement and Power of Attorney of such Selling Shareholder and in other
documents and instruments; provided that copies of such Custody Agreements and
Powers of Attorney and of any such other documents and instruments shall be
delivered to Xxxxxx Xxxxxxx and shall be in form and substance satisfactory to
counsel to the Underwriters.
The opinions of Sidley Xxxxxx Xxxxx & Xxxx LLP, Xx. Xxxxxxx and legal
counsel for each Selling Shareholder described in Sections 6(c), 6(d) and 6(e)
above (and any opinions of counsel for any Selling Shareholder referred to in
the
23
immediately preceding paragraph) shall be rendered to the Underwriters at the
request of the Company or one or more of the Selling Shareholders, as the case
may be, and shall so state therein.
(g) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Deloitte & Touche LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus; provided
that the letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the
Company relating to sales and certain other dispositions of shares of Common
Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(i) The Shares shall have been approved for listing on the NASDAQ National
Market, subject only to official notice of issuance.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge, prior
to 10:00 a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 7(c) below, as many
copies of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
24
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus is
required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been sold by
you on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering the twelve-month period
ending [-], 2006 that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
(f) To comply with all applicable securities and other laws, rules and
regulations in each jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and counsel for
25
the Selling Shareholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment memorandum
(which fees of counsel shall not exceed $10,000), (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the National Association of Securities Dealers, Inc., including those reasonable
fees and disbursements incurred with respect to CSFB's participation as a
"qualified independent underwriter" within the meaning of Rule 2720 of the
National Association of Securities Dealers' Conduct Rules in connection with the
offering of the Shares, (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to listing the Shares on the
NASDAQ National Market and other national securities exchanges and foreign stock
exchanges, (vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the production
of road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and 50% of the cost of any aircraft chartered
or limousine rented in connection with the road show, (ix) the document
production charges and expenses associated with printing this Agreement, all
fees and disbursements of counsel incurred by the Underwriters in connection
with the Directed Share Program and stamp duties, similar taxes or duties or
other taxes, if any, incurred by the Underwriters in connection with the
Directed Share Program, (xi) all expenses in connection with any offer and sale
of the Shares outside of the United States, including filing fees and the
reasonable fees and
26
disbursements of counsel for the Underwriters in connection with offers and
sales outside the United States and (xii) all other costs and expenses incident
to the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 9 entitled "Indemnity and
Contribution", Section 10 entitled "Directed Share Program Indemnification" and
the last paragraph of Section 12 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
9. Indemnity and Contribution. The Company agrees to indemnify and hold
harmless (i) each Underwriter, each Selling Shareholder, each person, if any,
who controls any Underwriter or Selling Shareholder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each
affiliate of any Underwriter or Selling Shareholder within the meaning of Rule
405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein or, with respect to the indemnification provided by
the Company under this Section 9(a) to each Selling Shareholder, each person, if
any, who controls any Selling Shareholder within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate
of any Selling Shareholder within the meaning of Rule 405 under the Securities
Act, information relating to any Selling Shareholder furnished in writing by or
on behalf of such Selling Shareholder to the Company expressly for use therein
and (ii) CSFB and each person, if any, who controls CSFB within the meaning of
either Section 15 of the Securities Act, or Section 20 of the Exchange Act, and
each affiliate of CSFB within the meaning of Rule 405 under Securities Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) to which
CSFB may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions with
27
respect thereof) arise out of or are based upon CSFB's acting (or alleged
failing to act) as such "qualified independent underwriter" within the meaning
of Rule 2720 of the National Association of Securities Dealers' Conduct Rules in
connection with the offering of the Shares, except for any losses, claims,
damages and liabilities that are judicially determined to have resulted from
CSFB's, or such controlling person's, willful misconduct; provided, however,
that the indemnity agreement in (i) above with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting such losses, claims, damages or liabilities purchased Shares,
or any person controlling such Underwriter, if it is established that a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of noncompliance by the Company with Section
7(a) hereof.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act and the Company, the directors of
the Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus or any amendment or supplement thereto, or caused by any 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 that the untrue statement or alleged untrue statement or omission
or alleged omission is made in reliance upon and in conformity with information
relating to such Selling Shareholder furnished in writing by or on behalf of
such Selling Shareholder to the Company expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto; provided, however, the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting such losses, claims, damages or
28
liabilities purchased Shares, or any person controlling such Underwriter or any
affiliate of such Underwriter, if it is established that a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 7(a)
hereof. The liability of each Selling Shareholder under the indemnity agreement
contained in this paragraph shall be limited to an amount equal to the aggregate
Public Offering Price of the Shares sold by such Selling Shareholder under this
Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to
29
retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (i) the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Underwriters and all
persons, if any, who control any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act or who are
affiliates of any Underwriter within the meaning of Rule 405 under the
Securities Act, (ii) the reasonable fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Selling Shareholders and all persons, if any, who control any
Selling Shareholder within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for the Underwriters and such control persons and affiliates
of any Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx.
In the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be designated in
writing by the Company. In the case of any such separate firm for the Selling
Shareholders and such control persons of any Selling Shareholders, such firm
shall be designated in writing by a majority of the Selling Shareholders as
measured by the number of Shares being sold pursuant to this Agreement. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding and 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.
30
(e) To the extent the indemnification provided for in Section 9(a), 9(b)
or 9(c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties 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 benefits
received by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other hand in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses) received by the
Company and the Selling Shareholders on the one hand and the total underwriting
discounts and commissions received by the Underwriters on the other hand, in
each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand 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, the Selling Shareholders or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint. The
Selling Shareholders' respective obligations to contribute pursuant to this
Section 9 are several in proportion to the respective number of shares they have
sold hereunder and not joint. The liability of each Selling Shareholder under
the contribution agreement contained in this paragraph shall be limited to an
amount equal to the aggregate Public Offering Price of the Shares sold by such
Selling Shareholder under this Agreement.
(f) The Company, the Selling Shareholders and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters
31
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in Section 9(e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 9
and the representations, warranties and other statements of the Company and the
Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
10. Directed Share Program Indemnification. The Company agrees to
indemnify and hold harmless Xxxxxx Xxxxxxx, each person, if any, who controls
Xxxxxx Xxxxxxx within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and each affiliate of Xxxxxx Xxxxxxx within the
meaning of Rule 405 of the Securities Act ("XXXXXX XXXXXXX ENTITIES") from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (i) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program or caused by any
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)
caused by
32
the failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase; or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
Xxxxxx Xxxxxxx Entities.
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any Xxxxxx Xxxxxxx Entity in respect of which
indemnity may be sought pursuant to Section 10(a), the Xxxxxx Xxxxxxx Entity
seeking indemnity, shall promptly notify the Company in writing and the Company,
upon request of the Xxxxxx Xxxxxxx Entity, shall retain counsel reasonably
satisfactory to the Xxxxxx Xxxxxxx Entity to represent the Xxxxxx Xxxxxxx Entity
and any others the Company may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any Xxxxxx Xxxxxxx Entity shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Xxxxxx Xxxxxxx Entity unless (i) the Company shall have agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the Xxxxxx
Xxxxxxx Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not, in respect of the legal expenses of the Xxxxxx Xxxxxxx
Entities in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Xxxxxx Xxxxxxx Entities. Any such
separate firm for the Xxxxxx Xxxxxxx Entities shall be designated in writing by
Xxxxxx Xxxxxxx. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Company agrees to
indemnify the Xxxxxx Xxxxxxx Entities from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time a Xxxxxx Xxxxxxx Entity shall have requested the Company to
reimburse it for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the Company agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by the Company
of the aforesaid request and (ii) the Company shall not have reimbursed the
Xxxxxx Xxxxxxx Entity in accordance with such request prior to the date of such
settlement. The Company shall not, without the prior written consent of Xxxxxx
Xxxxxxx, effect any settlement of any pending or threatened proceeding in
respect of which any Xxxxxx Xxxxxxx Entity is or could have been a party and
indemnity could have been sought hereunder by such Xxxxxx Xxxxxxx Entity, unless
such settlement
33
includes an unconditional release of the Xxxxxx Xxxxxxx Entities from all
liability on claims that are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section 10(a) is
unavailable to a Xxxxxx Xxxxxxx Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company in lieu of
indemnifying the Xxxxxx Xxxxxxx Entity thereunder, shall contribute to the
amount paid or payable by the Xxxxxx Xxxxxxx Entity as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the Xxxxxx
Xxxxxxx Entities on the other hand from the offering of the Directed Shares or
(ii) if the allocation provided by clause 10(c)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 10(c)(i) above but also the relative
fault of the Company on the one hand and of the Xxxxxx Xxxxxxx Entities on the
other hand in connection with any statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Xxxxxx Xxxxxxx Entities on the other hand in connection with the
offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the Xxxxxx Xxxxxxx Entities for the Directed Shares, bear to the
aggregate Public Offering Price of the Directed Shares. If the loss, claim,
damage or liability is caused by an untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact, the
relative fault of the Company on the one hand and the Xxxxxx Xxxxxxx Entities on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement or the omission or alleged omission
relates to information supplied by the Company or by the Xxxxxx Xxxxxxx Entities
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(d) The Company and the Xxxxxx Xxxxxxx Entities agree that it would not be
just or equitable if contribution pursuant to this Section 10 were determined by
pro rata allocation (even if the Xxxxxx Xxxxxxx Entities were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 10(c). The amount
paid or payable by the Xxxxxx Xxxxxxx Entities as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by the Xxxxxx Xxxxxxx
Entities in
34
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10, no Xxxxxx Xxxxxxx Entity
shall be required to contribute any amount in excess of the amount by which the
total price at which the Directed Shares distributed to the public were offered
to the public exceeds the amount of any damages that such Xxxxxx Xxxxxxx Entity
has otherwise been required to pay. The remedies provided for in this Section 10
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(e) The indemnity and contribution provisions contained in this Section 10
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Xxxxxx Xxxxxxx Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Directed Shares.
11. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade or other relevant exchanges, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States or other relevant
jurisdiction shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.
12. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
35
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you, the
Company and the Selling Shareholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders. In any such case either you or the relevant Selling
Shareholders shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or any Selling
Shareholder to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or any Selling Shareholder, as the
case may be, shall be unable to perform its obligations under this Agreement,
the Company and the Selling Shareholders who did not comply with the terms or
fulfill any of the conditions of this Agreement, as the case may be, will
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees
36
and disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
13. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
16. Notices. All communications hereunder shall be in writing and
effective only upon receipt and if to the Underwriters shall be delivered,
mailed or sent to you at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Attention:
Xxxxxx Xxxxxxx; if to the Company shall be delivered, mailed or sent to 000
Xxxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxx 00000. Attention: Chief
Financial Officer; and if to the Selling Shareholders or any of them shall be
delivered, mailed or sent to the Attorneys-in-Fact named in the Custody
Agreement and Power of Attorney.
Very truly yours,
PREMIUM STANDARD FARMS, INC.
By: _________________________________
Name:
Title:
37
The Selling Shareholders named in
Schedule I hereto, acting severally
By: ____________________________________
Attorney-in Fact
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Credit Suisse First Boston LLC
X.X. Xxxxxx Securities Inc.
Xxxxx Xxxxxxx & Co.
Acting severally on behalf of themselves and the
several Underwriters named in
Schedule II hereto
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: _____________________________________
Name:
Title:
38
SCHEDULE I
NUMBER OF
NUMBER OF FIRM ADDITIONAL SHARES
SELLING SHAREHOLDER SHARES TO BE SOLD TO BE SOLD
---------------------------------------------- --------------------- -----------------
Xxxxx Xxxxxx#....................................
Xxxxx Xxxxxx, as custodian
for Xxxxxxxx Xxxxxx-Xxxxxxx#..................
W. Xxxxx Xxxxx, Deceased
Xxxxxxxx Xxxxx, Executor#.....................
Xxxxxx X. Xxxxxxx
Family Trust#.................................
Xxxxxxx X. Xxxxx#................................
Columbia/HCA Master Retirement Trust
(Account I)......................................
Columbia/HCA Master Retirement Trust
(Account II).....................................
ContiGroup Companies, Inc........................
Continental Assurance Company Pension
Investment Fund..................................
Deerway & Co.....................................
General Motors Trust Bank, National
Association, as trustee for GMAM Investment
Funds Trust......................................
Gimlet & Co......................................
Xxxxx X. Xxxxxxxx#...............................
Xxxxxxxx X. Xxxxxxxx, Xx.#......................
IFTCO............................................
Xxxxx X. Xxxxx#..................................
Xxxxxx Xxxxxx#...................................
I-1
NUMBER OF
NUMBER OF FIRM ADDITIONAL SHARES
SELLING SHAREHOLDER SHARES TO BE SOLD TO BE SOLD
---------------------------------------------- --------------------- -----------------
Xxxx X. Xxxx f/k/a
Xxxx X. Xxxxx#................................
J. Xxxxx Xxxx#...................................
Xxxxx & McLennan Companies, Inc. U.S.
Retirement Plan - High Yield.....................
Xxxxxx X. XxXxxxxx
and Xxxxx XxXxxxxx,
Co-Trustees of XxXxxxxx
Family Trust#.................................
Xxxxxx X. XxXxxxxx,
DDS, Inc. Profit
Sharing Plan Trust#...........................
Xxxxxxxx XxXxx#..................................
Xxxxxx Xxxxxxx...................................
Xxxxxx Xxxxxxx & Co. Incorporated................
The Xxxxxx Xxxxxxx Leveraged Equity Fund II,
L.P..............................................
Xxxxxx Xxxxxxx Capital Investors, L.P............
Xxxxxx Xxxxxxx Capital Partners III, L.P.........
Xxxxxx X. Xxxxxx#................................
MSCP III 892 Investors, L.P......................
Neon Capital Limited.............................
OCM Opportunities Fund, L.P......................
OCM Opportunities Fund II, L.P...................
Prudential Funds.................................
I-2
NUMBER OF
NUMBER OF FIRM ADDITIONAL SHARES
SELLING SHAREHOLDER SHARES TO BE SOLD TO BE SOLD
---------------------------------------------- --------------------- -----------------
Prudential Investment Management, Inc............
Xxxxxx High Yield Trust*.........................
Putnam Variable Trust-Putnam VT High Yield
Fund*............................................
Xxxxxx Master Intermediate Income Trust*.........
Xxxxxx High Yield Fixed Income Fund, LLC.........
Putnam Asset Allocation Funds - Conservative
Portfolio*.......................................
Putnam Asset Allocation Funds - Growth
Portfolio*.......................................
Putnam Equity Income Fund*.......................
Xxxxxx High Income Bond Fund*....................
Putnam Managed High Yield Trust*.................
Xxxxxx Premier Income Trust*.....................
Putnam Variable Trust-Putnam VT Diversified
Income Fund*.....................................
REK, LLC#........................................
Xxxxx Xxxx, M.D.
A Medical Corporation
Defined Benefit Pension Plan#.................
Xxxxxxx X.X. Xxxxxxx#............................
The Xxxxxx Xxxxxx Fund of Boston*................
The Lucy Xxxx Xxxxxxxxx
Irrevocable Trust#............................
I-3
NUMBER OF
NUMBER OF FIRM ADDITIONAL SHARES
SELLING SHAREHOLDER SHARES TO BE SOLD TO BE SOLD
---------------------------------------------- --------------------- -----------------
Xxxxxxx Xxxxxxxx#.............................
---------- ---------
Xxxxxx Xxxxxxx#...............................
---------- ---------
========== =========
Total................................... 12,500,000 1,875,000
========== =========
* Copies of the Agreements and Declarations of Trust of the Selling Shareholders
that are organized as Massachusetts business trusts are on file with the
Secretary of State of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the officers of such trusts
as officers and not individually and that the obligations of this instrument are
to binding upon any of the Trustees, officers or shareholders of such trusts
individually but are binding only upon the assets and property of such trusts.
# Not required to deliver a legal opinion pursuant to Section 6(c).
I-4
SCHEDULE II
NUMBER OF FIRM SHARES
TO BE PURCHASED
-----------------------------
Non-MSCP MSCP
UNDERWRITER Firm Shares Firm Shares
--------------------------------- ----------- -----------
Xxxxxx Xxxxxxx & Co. Incorporated 0
=========== ===========
Credit Suisse First Boston LLC
=========== ===========
X.X. Xxxxxx Securities Inc.
=========== ===========
Xxxxx Xxxxxxx & Co.
=========== ===========
=========== ===========
=========== ===========
=========== ===========
=========== ===========
=========== ===========
=========== ===========
Total:..................
=========== ===========
II-1
EXHIBIT A
[FORM OF LOCK-UP LETTER]
[-], 2005
Xxxxxx Xxxxxxx & Co. Incorporated
Credit Suisse First Boston LLC
X.X. Xxxxxx Securities Inc.
Xxxxx Xxxxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Premium Standard Farms, Inc., a Delaware
corporation (the "COMPANY"), providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters, including Xxxxxx Xxxxxxx (the
"Underwriters"), of [-] shares (the "SHARES") of the Common Stock (par value
$0.01 per share) of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise [TO BE ADDED TO LOCK-UP LETTER FOR EXECUTIVE OFFICERS ONLY -- ;
PROVIDED, THAT THE UNDERSIGNED WILL BE ALLOWED TO SELL, AFTER 145 DAYS AFTER THE
DATE OF THE FINAL PROSPECTUS, SHARES OF COMMON STOCK ACQUIRED THROUGH EXERCISE
OF CURRENTLY OUTSTANDING STOCK OPTIONS IN AN AMOUNT SUFFICIENT TO
FUND EXPECTED FEDERAL AND STATE TAX LIABILITIES RESULTING FROM OPTION
EXERCISES]. The foregoing sentence shall not apply to (a) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering, provided that no
filing under Section 16(a) of the Securities Exchange Act of 1934, as amended,
shall be required or shall be voluntarily made in connection with subsequent
sales of Common Stock or other securities acquired in such open market
transactions or (b) transfers of shares of Common Stock or other securities
convertible into or exercisable or exchangeable for Common Stock to affiliates
(as such term is defined in Rule 405 under the Securities Act of 1933, as
amended) of the undersigned provided that the transferee shall sign and deliver
to Xxxxxx Xxxxxxx a lock-up agreement in the form of this letter prior to the
transfer. In addition, the undersigned agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's shares of Common
Stock except in compliance with the foregoing restrictions.
If:
(1) during the last 17 days of the 180-day restricted period the Company
issues an earnings release or material news or a material event relating to the
Company occurs; or
(2) prior to the expiration of the 180-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 180-day period;
the restrictions imposed by this agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
The undersigned shall not engage in any transaction that may be restricted
by this agreement during the 34-day period beginning on the last day of the
initial 180-day restricted period unless the undersigned requests and receives
prior written confirmation from the Company or Xxxxxx Xxxxxxx that the
restrictions imposed by this agreement have expired.
The undersigned understands that the Company and the Underwriters are
relying upon this agreement in proceeding toward consummation of the Public
2
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. This agreement shall
automatically terminate upon the earlier of (i) August 15, 2005, if the
Underwriting Agreement has not been executed on or prior to that date or (ii)
the date of the filing with the Securities and Exchange Commission of a notice
of a withdrawal of the registration statement relating to the Public Offering
pursuant to Rule 477 promulgated under the Securities Act of 1933, as amended.
Very truly yours,
_____________________________________
(Name)
_____________________________________
(Address)
3
