1,800,000 Shares*
XXXX INCORPORATED
Common Shares
(No Par Value Per Share)
AGREEMENT AMONG UNDERWRITERS
November __, 1996
Principal Financial Securities, Inc.
Cruttenden Xxxx Incorporated
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
We understand that Xxxx Incorporated, a Minnesota corporation (the
"Company") desires to enter into an agreement substantially in the form of
Exhibit A hereto (with such changes as are made in accordance with Section 1
hereof, the "Underwriting Agreement") with you and the other prospective
underwriters, if any, named in Schedule A to the Underwriting Agreement for
the sale by the Company to the Underwriters (as defined below), severally and
not jointly, of an aggregate of 1,800,000 shares (the "Firm Shares") of Common
Stock, no par value per share, of the Company ("Common Stock"). In addition,
the Company proposes to grant to the Underwriters, pursuant to the
Underwriting Agreement, an option to purchase up to an aggregate of 270,000
additional shares (the "Option Shares") of Common Stock for the purpose of
covering over-allotments, if any, in connection which the sale of the Firm
Shares; and to sell to the Lead Underwriter (as hereinafter defined), for
$100.00, a warrant to purchase up to 144,900 shares of Common Stock on the
terms and conditions set forth in the Underwriting Agreement and the warrant
attached to the Underwriting Agreement as Exhibit A (the "Underwriter's
Warrant"). The Firm Shares and any Option Shares purchased pursuant to the
Underwriting Agreement are herein called the "Shares."
We understand that changes may be made in those who are to be
Underwriters and in the respective numbers of Shares to be purchased by them,
but that the number of Shares to be purchased by the Underwriters as set forth
in Schedule A to the Underwriting Agreement will not be changed without the
consent of the Underwriters except as provided herein or in the Underwriting
Agreement. The Parties on whose behalf you execute the Underwriting Agreement
are herein called the "Underwriters," and you, co-managers of the Offering, are
--------------------
*Plus an option to purchase up to 270,000 additional
shares to cover over-allotments.
herein called the "Representatives." As further described hereinafter the
Representatives are authorized to exercise all the authority and discretion
vested in the Underwriters by the provisions of this Agreement, the
Underwriting Agreement or any Selected Dealer Agreements (as defined below).
We desire to confirm the agreement among you, the undersigned and the
other Underwriters, if any, with respect to the purchase of the Shares by the
Underwriters, severally and not jointly, from the Company. The aggregate
number of Shares that any Underwriter will be obligated to purchase pursuant
to the terms of the Underwriting Agreement is herein called the "Underwriting
Obligation" of that Underwriter.
1. AUTHORITY OF REPRESENTATIVES; COMPENSATION. We hereby authorize the
Representatives on our behalf, (a) to enter into the Underwriting Agreement
with the Company in substantially the form attached hereto as EXHIBIT A, but
with such changes therein as the Representatives may deem appropriate (other
than as to the purchase price of the Shares to be purchased by the
Representatives or, except as provided herein or in the Underwriting
Agreement, as to the number of Shares to be purchased by the Underwriters),
providing for the purchase by us, severally and not jointly, from the Company,
at the purchase price per share determined as set forth in said EXHIBIT A, of
the number of Firm Shares set forth opposite our name in SCHEDULE A to said
EXHIBIT A, and our proportionate share of the Option Shares (but not of the
Underwriter's Warrant) that the Representatives determines to purchase from
the Company, (b) to take all such actions as the Representatives, in their
discretion, may deem necessary or desirable in order to carry out the
provisions of the Underwriting Agreement and of this Agreement and the sale
and distribution of the Shares, and (c) to determine all matters relating to
the public advertisement of the Shares.
As our share of the compensation for your services hereunder, we will pay
you, and we authorize you to charge to our account on the Closing Date and the
Additional Closing Dates referred to in the Underwriting Agreement, a sum
equal to not more than $_________ of the underwriting discount per share for
each share of Stock which we are then obligated to purchase from the Company
pursuant to the Underwriting Agreement.
2. PUBLIC OFFERING OF SHARES. The sale of the Shares to the public is
to be made, as herein provided, as soon after the Registration Statement (as
defined in the Underwriting Agreement) becomes effective as is advisable in
the judgment of the Representatives. The purchase price to be paid by the
Underwriters for the Shares and the initial public offering price are to be
determined by agreement between the Representatives and the Company. The
Shares shall be first offered to the public at the initial public offering
price as so determined (the "Initial Public Offering Price"). The
Representatives will advise us by telegram, telex, facsimile transmission or
other written form of communication (electronic or otherwise) or orally by
telephone of the date on which the Shares shall be released for offering, the
date on which the Registration Statement shall become effective and the price
at which the Shares are initially to be offered. We agree not to sell any of
the Shares until the Representatives have released the Shares for that
purpose. We authorize the Representatives, after the initial public offering,
to change the public offering price, the concession and the reallowance if, in
the discretion of the Representatives, such action becomes desirable by reason
of changes in
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general market conditions or otherwise. The public offering price at the time
in effect is herein called the "Offering Price." After notice from the
Representatives that the Shares are released for public sale, we will offer to
the public, in conformity with the provisions hereof and with the terms of
offering set forth in the Prospectus (as defined in the Underwriting
Agreement), such shares of the Firm Shares allocated to us as the
Representatives advise us are not reserved.
3. OFFERING TO DEALERS AND RETAIL SALES. We authorize the
Representatives to reserve for offering and sale, and on our behalf to sell,
to retail purchasers (such sales being herein called "Retail Sales") and to
dealers selected by the Representatives (such dealers, which may include any
of the Underwriters, being herein called "Selected Dealers") all or any part
of our Underwriting Obligation as the Representatives, in their discretion,
shall determine. Such sales, if any, shall be made (a) in the case of Retail
Sales, at the Offering Price and (b) in the case of sales to Selected Dealers,
at the Offering Price less such concession or concessions as the
Representatives, in their discretion, shall determine. Except for such sales
as are designated by a purchaser to be for the account of a particular
Underwriter or Selected Dealer, any sales to Selected Dealers made for our
account shall be as nearly as practicable in the ratio that the number of
Shares reserved for our account for offering to Selected Dealers bears to the
aggregate number of Shares of all Underwriters so reserved.
The Representatives shall notify us promptly on the date of the public
offering as to the number of Shares, if any, that we may retain for direct
sale by us. Prior to the termination of the provisions referred to in Section
13 hereof, the Representatives may reserve for offering and sale as
hereinbefore provided any Shares theretofore retained by us remaining unsold
and we may, with the consent of the Representatives, retain any Shares
theretofore reserved by the Representatives remaining unsold.
We agree that, from time to time prior to the termination of the
provisions referred to in Section 13 hereof, we shall furnish to the
Representatives such information as they may request in order to determine the
number of shares of our Underwriting Obligation that then remain unsold and we
shall upon the request of the Representatives sell to the Representatives for
the account of any Underwriter as many of such unsold Shares as the
Representatives may designate at the Offering Price, less all or any part of
the concession to Selected Dealers as the Representatives, in their
discretion, shall determine. The provisions of Section 4 hereof shall not be
applicable in respect of any such sale.
We authorize the Representatives to determine the form and manner of any
communications or agreements with Selected Dealers. In particular, any
agreements with Selected Dealers (collectively, the "Selected Dealer
Agreements") shall be in the form of EXHIBIT B hereto with such changes
therein as the Representatives, in their discretion, shall determine to be
necessary or desirable. The Representatives are authorized to act as manager
under any Selected Dealer Agreements and we agree, in such event, to be
governed by the terms and conditions of any Selected Dealer Agreements.
It is understood that any Selected Dealer to whom an offer may be made as
hereinbefore provided shall be actually engaged in the investment banking or
securities
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business and shall either (a) represent that it is a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD") or (b)
represent that it is a dealer with its principal place of business located
outside the United States, its territories and its possessions and not
registered as a broker or dealer under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and agree not to make any offers or sales of
Shares within the United States, its territories or its possessions or to
persons who are nationals thereof or residents therein. Each Selected Dealer
shall agree to comply with the provisions of Section 24 of Article III of the
Rules of Fair Practice of the NASD, and each Selected Dealer who is not a
member of the NASD also shall agree to comply with (x) the NASD's
interpretation with respect to free-riding and withholding, (y) the provisions
of Sections 8 and 36 of Article III of the NASD's Rules of Fair Practice as
though such Selected Dealer were a member of the NASD, and (z) Section 25 of
Article III of the NASD's Rules of Fair Practice as that Section applies to a
non-member foreign dealer. The several Underwriters may allow, and the
Selected Dealers, if any, may reallow, such concession or concessions as the
Representatives may determine from time to time on sales of Shares to any
qualified dealer, all subject to the Rules of Fair Practice of the NASD.
The Representatives, and any of the several Underwriters with the prior
consent of the Representatives, may make purchases or sales of Shares from or
to any of the other Underwriters, at the Offering Price less all or any part
of the gross spread, and from or to any of the Selected Dealers at the
Offering Price less all or any part of the concession to Selected Dealers.
Upon the request of the Representatives, we will advise the Representatives of
the identity of any dealer to whom we allow such a discount and any
Underwriter or Selected Dealer from whom we receive such a discount.
4. REPURCHASES IN THE OPEN MARKET. Any Shares sold by us (otherwise
than through the Representatives) that shall be contracted for or purchased in
the open market by the Representatives on behalf of any Underwriter or
Underwriters shall be repurchased by us on demand at a price equal to the cost
of such purchase plus commissions and taxes on redelivery. Any Shares
delivered on such repurchase need not be the identical shares originally sold
by us. In lieu of delivery of such shares to us, the Representatives may sell
such shares in any manner for our account and charge us with the amount of any
loss or expense or credit us with the amount of any profit, less any expense,
resulting from such sale, or charge our account with an amount not in excess
of the concession to Selected Dealers.
5. DELIVERY AND PAYMENT. Upon the request of the Representatives, we
shall deliver to the Representatives payment for the Shares to be purchased by
us under the Underwriting Agreement in an amount equal to the Initial Public
Offering Price for such Shares less concessions to Selected Dealers. Such
payment shall be made in such form and at such time and place as may be
specified in such request, and we authorize the Representatives to make
payment for such Shares against delivery thereof for our account hereunder.
If we are a member of or clear through a member of The Depository Trust
Company, the Representatives may, in their discretion, deliver Shares to us
through the facilities of The Depository Trust Company.
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The Representatives shall remit to us, as promptly as practicable, the
amounts received by them from Selected Dealers and retail purchasers as
payment in respect of Shares sold by the Representatives for our account
pursuant to Section 3 hereof for which payment has been received. Shares
purchased by us under the Underwriting Agreement and not reserved or sold by
the Representatives for our account pursuant to Section 3 hereof shall be
delivered to us as promptly as practicable after receipt by the
Representatives. Any Shares purchased by us and so reserved that remain
unsold at any time prior to the settlement of accounts hereunder may, in the
discretion of the Representatives, and shall, upon the request of the
Representatives, be delivered to us, but, until termination of the Selected
Dealer Agreements pursuant to their terms, such delivery shall be for carrying
purposes only. In the event Shares reserved for sale in Retail Sales or to
Selected Dealers shall not be purchased and paid for in due course as
contemplated hereby, we agree (a) to accept delivery when tendered by the
Representatives of any Shares so reserved for our account and not so purchased
and paid for and (b) if we shall have received payment from the
Representatives in respect of any such Shares, to reimburse the
Representatives on demand for the full amount that they shall have paid us in
respect of such Shares.
In the event of our failure to tender payment for Shares as provided in
the Underwriting Agreement, the Representatives shall have the right to
arrange for other persons, who may include Representatives or any other
Underwriters to purchase such Shares that we had agreed to purchase, but
without relieving us from liability for our default.
6. AUTHORITY TO BORROW. We authorize the Representatives to advance
funds for our account (charging current interest rates) and to arrange loans
for our account or the account of the Underwriters for the purpose of carrying
out the provisions of this Agreement, and in connection therewith to execute
and deliver any notes or other instruments and to hold or pledge as security
therefor all or any part of the Shares constituting our Underwriting
Obligation and all or any part of the Common Stock purchased hereunder for our
account. Any lender is hereby authorized to accept the instructions of the
Representatives in all matters relating to such loans. Any part of the Shares
and Common Stock so held by the Representatives may be delivered to us for
carrying purposes and, if so delivered, will be redelivered to the
Representatives upon demand.
7. ALLOCATION OF EXPENSES AND LIABILITY. We agree to pay, and authorize
the Representatives to charge our account with, (a) all transfer taxes on
sales made by the Representatives for our account, except as herein otherwise
provided, and (b) our proportionate share (based on our Underwriting
Obligation) of all expenses incurred by the Representatives in connection with
the purchase, carrying, sale and distribution of the Shares and all other
expenses arising under the terms of the Underwriting Agreement or this
Agreement. The Representatives' determination of all such expenses and their
allocation thereof shall be final and conclusive. The Representatives may at
any time make partial distributions of credit balances or call for payment of
debit balances. Funds for our account at any time in the hands of the
Representatives may be held in their general funds without accountability for
interest. As soon as practicable after the termination of this Agreement, the
net credit or debit balance in our account, after proper charge and credit for
all interim payments and receipts, shall be paid to or paid by us, provided
that the Representatives may establish such reserves as they, in their
discretion, shall deem necessary or desirable to cover
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possible additional expenses chargeable to the several Underwriters.
Notwithstanding any settlement, we will remain liable for any taxes on
transfers for our account and for our proportionate share (based on our
Underwriting Obligation) of all expenses and liabilities incurred by the
Representatives for the accounts of the several Underwriters.
8. LIABILITY FOR FUTURE CLAIMS. Neither any statement by the
Representatives of any credit or debit balance in our account nor any
reservation from distribution to cover possible additional expenses relating
to the Shares shall constitute any representation by the Representatives as to
the existence or non-existence of possible unforeseen expenses or liabilities
of or charges against the several Underwriters. Notwithstanding the
distribution of any net credit balance to us or the termination of this
Agreement or both, we shall be and remain liable for, and will pay on demand,
(a) our proportionate share (based on our Underwriting Obligation) of all
expenses and liabilities that may be incurred by or for the accounts of the
Underwriters, or any of them, based on the claim that the Underwriters
constitute an association, unincorporated business, partnership or any
separate entity and (b) any transfer taxes paid after such settlement on
account of any sale or transfer for our account.
9. STABILIZATION AND OVER-ALLOTMENT. We authorize the Representatives
on our behalf and for our account, during the term of this Agreement, in their
discretion, and without obligating them to do so, (a) to buy and sell shares
of Common Stock in the open market or otherwise for either long or short
account, on such terms and at such prices as they may determine and (b) in
arranging for sales, to over-allot and cover such over-allotments, PROVIDED
that at no time shall the net commitment of any Underwriter under authority of
this Section 9, either for long or short account, exceed an amount equivalent
to 15% of the Underwriting Obligation of such Underwriter. During or after
the term of this Agreement the Representatives may cover any short position
incurred under the preceding sentence by purchase of Option Shares from the
Company pursuant to the action contained in Section 2(b) of the Underwriting
Agreement or otherwise. All purchases, sales and over-allotments under
authority of this Section shall be for the accounts of each of the several
Underwriters as nearly as practicable in proportion to their respective
Underwriting Obligations. We agree to take up at cost on demand any shares of
Common Stock so purchased for our account and to deliver on demand any shares
of Common Stock so sold or over-allotted for our account. We also authorize
the Representatives to deliver Shares to be purchased by us under the
Underwriting Agreement or hereunder and any other shares of Common Stock
purchased by the Representatives for our account pursuant to this Section 9,
against sales made by the Representatives for our account pursuant to any
provisions of this Agreement. Notwithstanding the foregoing limitations, in
the event of a default by one or more Underwriters in respect of their
obligations under this paragraph, each non-defaulting Underwriter shall assume
its proportionate share of the obligations of such defaulting Underwriter
without relieving such defaulting Underwriter of its liability hereunder.
In the event that the Representatives effect any stabilizing purchases
pursuant to this Section 9, they will notify each Underwriter promptly of the
date and time when the first stabilizing purchase is effected and the date and
time when stabilizing is terminated. We agree that we will not, at any time
prior to the termination of this Agreement, (a) effect any stabilizing
purchases without the prior written consent of the Representatives or (b)
otherwise
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bid for, purchase, sell or attempt to induce others to purchase or sell,
directly or indirectly, any Common Stock other than (i) with the prior written
consent of the Representatives, (ii) as otherwise explicitly provided for in
this Agreement or the Underwriting Agreement relating to the Shares or (iii)
purchases or sales as broker on unsolicited orders for the accounts of others.
We authorize the Representatives to file with the Securities and Exchange
Commission (the "Commission") all notices and reports that may be required as
a result of any transactions made pursuant to this Section 9.
We agree to advise the Representatives, from time to time upon request of
the Representatives during the term of this Agreement, of the number of Shares
retained by us or purchased by us from other Underwriters and Selected Dealers
remaining unsold, and will, upon the Representatives' request, release to the
Representatives for the accounts of one or more of the several Underwriters,
such number of Shares as the Representatives designates at such price, not
less than the net price to Selected Dealers or more than the public offering
price, as the Representatives may determine.
If, pursuant to the provisions of the first paragraph of this Section 9
and prior to the termination of this Agreement (or such earlier date as the
Representatives may have determined on notice to the Underwriters) the
Representatives purchase or contract to purchase any Shares that were retained
by or released to us for direct sale, which shares were theretofore not
effectively placed for investment by us, we authorize the Representatives, in
their discretion, either to charge our account with an amount equal to the
concession to Selected Dealers with respect thereto or to require us to
repurchase such shares at a price equal to the total cost of such purchase,
including commissions, if any, and transfer tax on the redelivery. Shares
delivered on such purchase need not be the identical shares originally
purchased by and delivered to us.
Upon the termination of this Agreement, the Representatives are
authorized in their discretion, in lieu of delivering to us any Shares then
held for our account pursuant to this Section 9, to sell such shares for our
account at such price or prices as the Representatives may determine and debit
or credit our account for the loss or profit resulting from such sale.
10. OPEN MARKET TRANSACTIONS. We agree that we will not make bids or
offers, or make or induce purchases for our own account or the accounts of
customers, in the open market or otherwise, either before or after the
purchase of the Shares and for either long or short account, of any shares of
Common Stock, or any right to purchase any such security except (a) as
provided in this Agreement, the Underwriting Agreement or any Selected Dealer
Agreement or otherwise approved by the Representatives in writing, (b) in
brokerage transactions not involving solicitation of the customer's order, and
(c) in connection with option and option-related transactions that are
consistent with the Commission's "no-action" position set forth in Release No.
17609, as amended in Release No. 1956S, under the Exchange Act. We further
agree that we will not lend, either before or after the purchase of the
Shares, any shares of Common Stock to any customer, Underwriter, Selected
Dealer or any other securities broker or dealer. Prior to the completion (as
defined in Rule 10b-6 of the Exchange Act) of our participation in the
distribution, we will otherwise comply with Rule 10b-6 under the Exchange Act.
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11. BLUE SKY LAWS. Prior to the initial offering by the Underwriters,
the Representatives shall inform us as to the states and other jurisdictions
under the respective securities or blue sky laws of which it is believed that
the Shares have been qualified for sale or are exempt from such qualification,
but the Representatives do not assume any responsibility or obligation as to
the accuracy of such information or as to the right of any Underwriter or
dealer to offer or sell the Shares in any state or other jurisdiction.
12. DEFAULT BY UNDERWRITERS. Default by one or more Underwriters in
respect of their obligations under the Underwriting Agreement shall not
release us from any of our obligations or in any way affect the liability of
any defaulting Underwriter to the other Underwriters for damages resulting
from such default. In the event of such a default by one or more
Underwriters, the Representatives are authorized increase, prorata with the
other non-defaulting Underwriters, the number of Shares that we shall be
obligated to purchase from the Company; PROVIDED, HOWEVER, that the aggregate
of all such increases for all non-defaulting Underwriters shall not exceed 10%
of the Shares and, if the aggregate number of the Shares not taken up by such
defaulting Underwriters exceeds such 10%, the Representatives are further
authorized, but shall not be obligated, to arrange for the purchase by other
persons, who may include the Representatives or any other non-defaulting
Underwriter, if any, of all or a portion of the Shares not taken up by such
defaulting Underwriters. In the event any such increases or arrangements are
made, the respective numbers of the Shares to be purchased by the
non-defaulting Underwriters and by any such other person or persons shall be
taken as the basis for the Underwriters' obligations under this Agreement, but
this shall not in any way affect the liability of any defaulting Underwriter
to the other Underwriters for damages resulting from such default.
In the event of a default by one or more Underwriters in respect of their
obligations under this Agreement to take up and pay for any shares of Common
Stock purchased by the Representatives for the Underwriters' respective
accounts pursuant to Section 9 hereof, or to deliver any such shares of Common
Stock sold or over-allotted by the Representatives for the Underwriters'
respective accounts pursuant to any provision of this Agreement, and to the
extent that arrangements shall not have been made by the Representatives for
other persons to assume the obligations of such defaulting Underwriter or
Underwriters, each non-defaulting Underwriter shall assume its proportionate
share of the aforesaid obligations of each such defaulting Underwriter without
relieving any such defaulting Underwriter of its liability therefor.
13. TERMINATION. Section 2; the second paragraph and the first sentence
of the third paragraph of Section 3; Section 4; the first sentence of Section
9 and Section 10 hereof will terminate at the close of business on the
forty-fifth calendar day after the effective date of the Registration
Statement, unless extended or sooner terminated as hereinafter provided. The
Representatives may extend such provisions, or any of them, for a period not
to exceed 30 additional calendar days by notice to us to such effect. The
Representatives may terminate any of such provisions at any time by notice to
us, and the Representatives may terminate all such provisions at any time by
notice to us to the effect that the offering provisions of this Agreement are
terminated.
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14. GENERAL POSITION OF THE REPRESENTATIVES. In taking action under
this Agreement, the Representatives shall act only as agent of the several
Underwriters. The authority of the Representatives shall include the taking
of such actions as they may deem necessary or desirable in respect of all
matters pertaining to any and all offers and sales of the Shares, including
the right to make any modifications that they consider necessary or desirable
in the arrangements with Selected Dealers or others. The Representatives
shall be under no liability for or in respect of the value of the Shares; the
validity or the form of the Shares, the Registration Statement, the Prospectus
or agreements or other instruments executed by the Company or others; the
delivery of the Shares; or the performance by the Company or others of any
agreement on its or their part. Representatives shall not be liable under any
of the provisions hereof or for any matters connected herewith, except for
want of good faith and except for any liability arising under the Securities
Act of 1933, as amended (the "Act"). Only obligations expressly assumed
herein by the Representatives as such shall be implied from this Agreement.
In representing the Underwriters hereunder, the Representatives shall act as
representative of each of the Underwriters respectively. Nothing herein
contained shall constitute the several Underwriters partners with the
Representatives or with each other or render any Underwriter liable for the
commitments of any other Underwriter, except as otherwise provided in Section
12 hereof or Section 11 of the Underwriting Agreement. If the Underwriters
shall be deemed to constitute a partnership for Federal income tax purposes,
it is our intent that the Underwriters be excluded from the application of
Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as
amended. We elect to be so excluded and agree not to take any position
inconsistent with such election. We authorize the Representatives, in their
discretion, to execute and file on behalf of the Underwriters such evidence of
election as may be required by the Internal Revenue Service. The commitments
and liabilities of each of the several Underwriters are several in accordance
with their respective Underwriting Obligations and are not joint.
Except as otherwise provided, all actions that may or shall be taken by
the Representatives pursuant to any provision of this Agreement, the
Underwriting Agreement, any Selected Dealer Agreement or any other document
relating to the offering and sale of the Shares may be taken, notwithstanding
any other provision hereof or any provision of the Underwriting Agreement, any
Selected Dealer Agreement or any such other document, by Representatives. In
furtherance of the foregoing, Representatives is authorized to exercise all
the authority and discretion vested in the Underwriters by the provisions of
this Agreement, the Underwriting Agreement or any Selected Dealer Agreements.
15. ACKNOWLEDGMENT OF RECEIPT OF REGISTRATION STATEMENT, ETC. We hereby
confirm that we have examined the Registration Statement as heretofore filed
by the Company with the Commission and each amendment thereto, if any, filed
through the date hereof, that we are willing to be named as an underwriter
therein and to accept the responsibilities of an underwriter thereunder, and
that we are willing to proceed as therein contemplated. We confirm that we
have authorized the Representatives to advise the Company on our behalf (a) as
to the statements to be included in any Preliminary Prospectus (as defined in
the Underwriting Agreement) and in the Prospectus under the heading
"Underwriting" insofar as they relate to us and (b) that there is no other
information about us required to be stated in the Registration Statement or
Prospectus. We understand that the aforementioned documents are subject to
further change and that we will be supplied with
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copies of any further amendments or supplements to the Registration Statement
and of any amended or supplemented Prospectus promptly, if and when received
by the Representatives, but the making of such changes, amendments and
supplements shall not release us or affect our obligations hereunder or under
the Underwriting Agreement.
16. (a) INDEMNITY. We agree to indemnify and hold harmless each other
Underwriter (including the Representatives) and any person who controls any
such Underwriter within the meaning of Section 15 of the Act, to the extent
that, and upon the terms on which, we agree to indemnify and hold harmless the
Company and other specified persons as set forth in the Underwriting
Agreement. Our indemnity agreement contained in this Section 16 shall remain
in full force and effect regardless of any investigation made by or on behalf
of such other Underwriter or controlling person and shall survive the delivery
of any payment for the Shares and the termination of this Agreement and the
similar agreements entered into with the other Underwriters.
(b) CLAIMS AGAINST UNDERWRITERS. Each Underwriter (including the
Representatives) will pay, upon the request of the Representatives, as
contribution, their proportionate share (based upon their Underwriting
Obligation) or any loss, claim, damage or liability, joint or several, paid or
incurred by any Underwriter (including the Representatives) to any person
other than an Underwriter, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
Preliminary Prospectus or any other selling or advertising material approved
by the Representatives for use by the Underwriters in connection with the sale
of the Shares, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading (other than an untrue statement or alleged untrue statement or
omission or alleged omission made in conformity with written information
furnished to the Company through the Representatives by or on behalf of an
Underwriter expressly for use therein) or relating to any transaction
contemplated by this Agreement; and will pay such proportionate share of any
legal or other expense reasonably incurred by the Representatives or with
their consent in connection with investigating or defending against any such
loss, claim, damage or liability, or any action in respect thereof. In
determining the amount of our obligation under this paragraph, appropriate
adjustment may be made by the Representatives to reflect any amounts received
by any one or more Underwriters in respect of such claim from the Company
pursuant to Section 7 of the Underwriting Agreement or otherwise. There shall
be credited against any amount paid or payable by us pursuant to this
paragraph any loss, claim, damage, liability or expense that is incurred by us
as a result of any such claim asserted against us, and if such loss, claim,
damage, liability or expense is incurred by us subsequent to any payment by us
pursuant to this paragraph, appropriate provision shall be made to effect such
credit, by refund or otherwise. If any such claim is asserted, the
Representatives may take such action in connection therewith as they deem
necessary or desirable, including retention of counsel for the Underwriters,
and in their discretion separate counsel for any particular Underwriter or
group of Underwriters, and the fees and disbursements of any counsel so
retained by the Representatives shall be included in the amounts payable
pursuant to this paragraph. In determining amounts payable pursuant to this
paragraph, any loss, claim, damage, liability or expense incurred by any
person who controls any Underwriter within the meaning of Section 15 of the
Act that has been incurred
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by reason of such control relationship shall be deemed to have been incurred
by such Underwriter. Any Underwriter may elect to retain, at its own expense,
its own counsel. The Representatives may settle or consent to the settlement
of any such claim on advice of counsel retained by them. Whenever the
Representatives receive notice of the assertion of any claim to which the
provisions of this paragraph would be applicable, they shall give prompt
notice thereof to each Underwriter. If one or more Underwriters default in
their obligation to make any payments under this paragraph, each
non-defaulting Underwriter shall be obligated to pay its proportionate share
of all defaulted payments, based upon the proportion the Underwriting
Obligation of such non-defaulting Underwriter bears to the aggregate
Underwriting Obligations of all non-defaulting Underwriters. Nothing herein
shall relieve a defaulting Underwriter from liability for its default.
17. CAPITAL REQUIREMENTS. We confirm that the incurring by us of our
obligations under this Agreement and under the Underwriting Agreement will not
place us in violation of the net capital requirements of Rule 15c3-l under the
Exchange Act or of any applicable rules relating to capital requirements of
the NASD, if we are a member, or of any securities exchange to which we are
subject.
18. UNDERTAKING TO MAIL PROSPECTUSES. As contemplated by Rule l5c2-8
under the Exchange Act, the Representatives agree to mail a copy of the
Prospectus to any person making a written request therefor during the period
referred to in said Rule, the mailing to be made to the address given in the
request. We confirm that we have delivered all Preliminary Prospectuses and
revised Preliminary Prospectuses, if any, required to be delivered under the
provisions of said Rule 15c2-8 and agree to deliver all Prospectuses required
to be delivered thereunder. We acknowledge that the copies of the Preliminary
Prospectuses furnished to us have been distributed to dealers who have been
notified of the foregoing requirements pertaining to the delivery of
Preliminary Prospectuses and Prospectuses. The Representatives have
heretofore delivered to us such number of copies of Preliminary Prospectuses
as have been reasonably requested by us, receipt of which is hereby
acknowledged, and will deliver such number of copies of Prospectuses as will
be reasonably required by us. We have made a record of our distribution of
each Preliminary Prospectus, and when furnished with copies of any revised
Preliminary Prospectus we have, upon your request, promptly forwarded copies
thereof to each person to whom we had theretofore distributed Preliminary
Prospectuses.
19. MISCELLANEOUS. Any notice hereunder from the Representatives to us
or from us to the Representatives shall be deemed to have been duly given if
sent by registered mail, telegram or teletype, to us at our address as set
forth in our Underwriters' Questionnaire previously delivered to the
Representatives, or to the Representatives in care of Principal Financial
Services, Inc., The Fountain Place, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, Attention: Xxxxx Xxxxx.
We understand that the Representative are members in good standing of the
NASD. We hereby confirm that we are actually engaged in the investment
banking or securities business and that either (a) we are a member in good
standing of the NASD or (b) we are a dealer with its principal place of
business located outside the United States, its territories and its
possessions and not registered as a broker or dealer under the Exchange Act
and we agree
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not to make any sales within the United States, its territories or its
possessions or to persons who are nationals thereof or residents therein
(except that we may participate in sales to Selected Dealers and others under
Section 3 of this Agreement). We hereby agree to comply with the provisions
of Section 24 of Article III of the Rules of Fair Practice of the NASD, and,
if we are not a member of the NASD, we also hereby agree to comply with (x)
the NASD's interpretation with respect to free-riding and withholding, (y) the
provisions of Sections 8 and 36 of Article III of the NASD's Rules of Fair
Practice as though we were a member of the NASD, and (z) Section 25 of Article
III of the NASD's Rules of Fair Practice as that Section applies to a
non-member foreign dealer. In connection with sales and offers to sell Shares
made by us outside the United States, its territories and possessions (1) we
will either furnish to each person to whom any such sale or offer is made a
copy of the then-current Preliminary Prospectus or the Prospectus, as the case
may be, or inform such person that such Preliminary Prospectus or Prospectus
will be available upon request and (2) we will furnish to each person to whom
any such sale or offer is made such prospectus, advertisement or other
offering document containing information relating to the Shares or the Company
as may be required under the law of the jurisdiction in which such sale or
offer is made. Any prospectus, advertisement or other offering document
furnished by us to any person in accordance with the preceding sentence and
any such additional offering material as we may furnish to any person (A)
shall comply in all respects with the law of the jurisdiction in which it is
so furnished (B) shall be prepared and so furnished at our sole risk and
expense and (C) shall not contain information relating to the Shares or the
Company that is inconsistent in any respect with the information contained in
the then current Preliminary Prospectus or in the Prospectus, as the case may
be.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota without giving effect to the choice of law or
conflict of laws principles thereof.
This instrument may be signed by or on behalf of the Underwriters in one
or more counterparts each of which shall constitute one and the same agreement
among all the Underwriters and shall become effective at such time as all the
Underwriters shall have signed or have had signed on their behalf such
counterparts and the Representatives shall have confirmed all such
counterparts. The Representatives may confirm such counterparts by facsimile
signature.
Please confirm that the foregoing correctly states the understanding
between us by signing and returning to us a counterpart hereof.
Very truly yours,
By:
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As Attorney-in-Fact for each of the several
Underwriters named in Schedule A to the
Underwriting Agreement referred to above
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Confirmed as of the date
first above written:
PRINCIPAL FINANCIAL SECURITIES, INC.
CRUTTENDEN XXXX INCORPORATED
Representatives
By: Principal Financial Securities, Inc.
By:
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Authorized Signature
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