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OSMONICS, INC.
627,500 SHARES OF COMMON STOCK*
UNDERWRITING AGREEMENT
____________, 1996
Cleary Gull Reiland & McDevitt,
Inc.
As Representative of the Several
Underwriters Named Herein
100 East Wisconsin Avenue, 24th Floor
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
Osmonics, Inc., a Minnesota Corporation (the "Company"), and the persons
listed on Schedule I (the "Selling Shareholders") confirm their respective
agreements with you (the "Representative") and each of the other underwriters
identified on Schedule I annexed hereto (collectively, the "Underwriters"), as
set forth below:
1. Securities. Subject to the terms and conditions herein contained, the
Selling Shareholders propose to issue and sell to the Underwriters an aggregate
of 627,500 shares (the "Firm Shares") of common stock, $.01 par value per
share, of the Company (the "Common
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*Plus an option to acquire up to 94,125 additional shares of Common Stock from
certain of the Selling Shareholders to cover over-allotments.
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Stock"). In addition, certain of the Selling Shareholders have agreed
to grant to the Underwriters an option to purchase up to 94,125 additional
shares of Common Stock, as provided in Section 3 hereof. The Firm Shares and,
to the extent such option is exercised, the Option Shares are collectively
referred to herein as the "Shares."
2. Representations and Warranties.
(a) The Company and the Selling Shareholders, jointly and
severally, represent and warrant to, and agree with, each of the
Underwriters, and shall be deemed to represent and warrant to each of
the Underwriters on each Closing Date (as hereafter defined) that:
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"). The Company
has filed a registration statement on such Form (Reg. No. 333-___) with respect
to the Shares, including a prospectus subject to completion, with the
Securities and Exchange Commission (the "Commission") under the Act, and one or
more amendments to such registration statement may have been so filed. After
the execution of this Agreement, the Company will file with the Commission
either [a] if the Commission has declared such registration statement, as it
may have been amended, effective under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no
such amendment shall have been filed, in such registration statement), with
such changes or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act and as have been provided to and
approved by the Underwriters prior to the execution of this Agreement, or
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[b] if the Commission has not declared such registration statement, as
it may have been amended, effective under the Act, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Underwriters prior to the
execution of this Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, as amended at the time when it
was or is declared effective, including [i] all financial schedules and
exhibits thereto, [ii] all documents (or portions thereof) incorporated by
reference therein filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including any documents filed after the date of the
Preliminary Prospectus (as hereinafter defined) or Prospectus (as hereinafter
defined) and so incorporated by reference, and [iii] any information omitted
therefrom pursuant to Rule 430A under the Act and included in the Prospectus
(as hereinafter defined); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective), including all documents (or portions thereof)
incorporated by reference therein filed under the Exchange Act, as well as any
additional registration statement, and any amendments thereto, filed with the
Commission after the effectiveness of the foregoing registration statement and
prior to the execution of this Agreement or hereafter in accordance with this
Agreement for purposes of registering a portion of the Shares under the Act;
and the term "Prospectus" means the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act or, if no prospectus is required to be
filed pursuant to said Rule 424(b), such term means the
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prospectus included in the Registration Statement, in either case
including all documents (or portions thereof) incorporated by reference therein
filed under the Exchange Act.
(ii) Neither the Commission nor any state securities
commission has issued any order preventing or suspending the use of any
Preliminary Prospectus nor, to the knowledge of the Company and the Selling
Shareholders, have any proceedings for that purpose been initiated or
threatened. When any Preliminary Prospectus was filed with the Commission, it
[a] contained (or incorporated by reference) all statements required to be
stated therein in accordance with, and complied in all material respects with
the requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and [b] did not include (or
incorporate by reference) any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. When
the Registration Statement or any amendment thereto was or is declared
effective, it [i] contained (or incorporated by reference) or will contain (or
incorporate by reference) all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and [ii] did not or will not include
(or incorporate by reference) any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. When the
Prospectus or any amendment or supplement thereto is filed with the Commission
pursuant to
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Rule 424(b) (or, if the Prospectus or such amendment or supplement is
not required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective), on the date when the Prospectus is otherwise amended or
supplemented and on the Firm Closing Date and any Option Closing Date (both as
hereinafter defined), the Prospectus, as amended or supplemented at any such
time, (AA) contained (or incorporated by reference) or will contain (or
incorporate by reference) all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (BB) did not or will not include
(or incorporate by reference) any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The foregoing provisions of this subsection (ii) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or supplement thereto with
respect to the last paragraph on the outside front cover of the Prospectus
concerning the terms of the offering by the Underwriters, the paragraphs on the
inside front cover page of the Prospectus relating to stabilization practices
and passive market making and the concession and reallowance amounts appearing
under the caption "Underwriting." Neither the Company nor any person that
controls, is controlled by or is under common control with the Company has
distributed or will distribute prior to each Closing Date any offering material
in connection with the offering and sale of the Shares other than a Preliminary
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Prospectus, the Prospectus, the Registration Statement or other
materials permitted by the Act and provided to the Representative.
(iii) The documents that are incorporated by reference
in each Preliminary Prospectus, the Prospectus or the Registration
Statement or from which information is so incorporated by reference, when they
became effective or were filed with the Commission, as the case may be,
complied with the requirements of the Act or the Exchange Act, as applicable,
and any document so filed and incorporated by reference subsequent to the
effective date of the Registration Statement shall, when it is filed with the
Commission, comply with the requirements of the Act and the Exchange Act, as
applicable, and when read together with the other information included in such
Preliminary Prospectus, the Prospectus or the Registration Statement, as the
case may be, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(iv) The Company's only subsidiaries are listed in
Exhibit A hereto (the "Subsidiaries"). The Company and the
Subsidiaries have been duly organized and are validly existing as corporations
in good standing under the laws of their respective jurisdictions of
incorporation. The Company and each of the Subsidiaries are duly qualified to
transact business as foreign corporations and are in good standing under the
laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses requires
such qualification, except where the failure to be so
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qualified does not amount to a material liability or disability to the
Company and the Subsidiaries, taken as a whole.
(v) The Company and each of the Subsidiaries have full
power (corporate and other) to own or lease their respective properties
and conduct their respective businesses as described in the Registration
Statement and the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus; and the Company has full power (corporate
and other) to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it.
(vi) The issued shares of capital stock of each of the
Company's directly-owned Subsidiaries as set forth in Exhibit A hereto
have been duly authorized and validly issued; are fully paid and nonassessable
and are all owned beneficially by the Company free and clear of any security
interests, liens, encumbrances, equities or claims. There are no outstanding
options, warrants or other rights of any description, contractual or otherwise,
entitling any person to subscribe for or purchase any shares of capital stock
of any Subsidiary.
(vii) The Company has an authorized, issued and
outstanding capitalization as set forth in the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus. All of
the issued shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. No holder of outstanding
shares of capital stock of the Company is entitled as such to any preemptive or
other rights to subscribe for any of the Shares or any other Common Stock, and
no shares of Common Stock have been
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issued in violation of such rights. No holder of securities of the
Company has any right, which has not been fully exercised or waived, to require
the Company to register the offer or sale of any securities owned by such
holder under the Act in the public offering contemplated by this Agreement.
(viii) The capital stock of the Company conforms to the
description thereof contained in the Prospectus or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus. There are no
outstanding options, warrants or other rights to subscribe for or purchase
Common Stock, except as described in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(ix) The consolidated financial statements and
schedules, if any, of the Company and the Subsidiaries included, and
incorporated by reference, in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the financial position of the Company and the
Subsidiaries and their results of operations and changes in financial condition
as of the dates and periods therein specified. Such financial statements and
schedules have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under the
caption "Selected Consolidated Financial Data" in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) fairly
presents on the basis stated in the Prospectus (or such Preliminary Prospectus)
the information included therein.
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(x) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and the Subsidiaries and delivered
their report with respect to the audited consolidated financial statements and
schedules included, or incorporated by reference, in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are independent public accountants as required by the
Act, the Exchange Act and the related published rules and regulations
thereunder.
(xi) The execution and delivery of this Agreement has
been duly authorized by the Company. This Agreement has been duly
executed and delivered by the Company and, assuming due execution by the other
parties hereto, is the legal, valid and binding obligation of the Company,
enforceable by any such party against the Company in accordance with its terms.
(xii) No legal or governmental proceedings are pending
to which the Company or any of the Subsidiaries is a party or to which
the property of the Company or any of the Subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus and
are not described therein (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), and no such proceedings have been threatened
against the Company or any of the Subsidiaries or with respect to any of their
respective properties; and no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or
filed as required.
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(xiii) The compliance by the Company with the
provisions of this Agreement and the consummation of the other
transactions herein contemplated do not [a] require the consent, approval,
authorization, registration or qualification of or with any governmental
authority or regulatory body, except such as have been obtained or such as may
be required under state securities or blue sky laws ("Blue Sky Laws"), the
National Association of Securities Dealers, Inc. ("NASD") and, if the
Registration Statement (as amended) filed with respect to the Shares is not
effective under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under the Act,
or [b] conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which the Company or any of the Subsidiaries
or any of their respective properties are bound, or the charter documents, Code
of Regulations or by-laws of the Company or any of the Subsidiaries, or any
statute or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Company or any
of the Subsidiaries.
(xiv) The Company has not, directly or indirectly, [a]
taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares, or [b] since the filing of the
Registration Statement [i] sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares or any Common Stock,
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or [ii] paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(xv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), [a] the Company and the 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; [b] 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;
and [c] there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and the Subsidiaries or any change or
development involving or that could be expected to involve a material adverse
change in the condition (financial or otherwise), management, business,
prospects, net worth or results of operations of the Company and the
Subsidiaries ("Material Adverse Change"), except in each case as described in
or contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(xvi) The Company and each of the Subsidiaries have
good and marketable title in fee simple to all items of real property
and marketable title to all personal property owned by each of them, in each
case free and clear of any security interests, liens, encumbrances, equities,
claims and other defects, except such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed
to be made of such property by the Company or such Subsidiary, and any real
property and buildings held
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under lease by the Company or any such Subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or such Subsidiary, in each case mentioned in this
paragraph except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(xvii) No labor dispute with the employees of the
Company or any of the Subsidiaries exists or is threatened or imminent
that could result in a Material Adverse Change, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(xviii) The Company and the Subsidiaries own or
possess, or can acquire on reasonable terms, all material patents,
patent applications, trademarks, service marks, trade names, licenses,
copyrights and proprietary or other confidential information currently employed
by them in connection with their respective businesses, and neither the Company
nor any such Subsidiary has received any notice of infringement of or conflict
with asserted rights of any third party with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Change, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). The Company and the
Subsidiaries have taken reasonable action to protect proprietary or other
confidential information currently employed by them in connection with their
respective businesses, including, without limitation,
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causing appropriate employees to execute enforceable confidentiality
agreements. The patents, registered trademarks and registered service marks
described in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) have been issued or registered as so
described, and the Company has maintained such patents and registrations in
accordance with applicable requirements.
(xix) The Company and each of the 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 such
Subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company nor any such Subsidiary has any reason to believe 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 result in a
Material Adverse Change, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xx) No Subsidiary is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distribution on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or any
other subsidiary of the Company, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
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(xxi) The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Change, except as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xxii) Neither the Company nor any Subsidiary is an
"investment company," an "affiliated person" of or "promoter" or
"principal underwriter" for an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended. The Company will conduct
its operations in a manner that will not subject it to registration as an
"investment company" under such act.
(xxiii) The Company has filed all foreign, federal,
state and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure so to
file would not result in a Material Adverse Change) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
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(xxiv) Neither the Company nor any of the Subsidiaries
is in violation of any federal, state or foreign law or regulation
relating to occupational safety and health, the environment or the storage,
handling or transportation of hazardous or toxic materials, pollutants or
contaminants, including, without limitation, all rules and requirements of the
State of Minnesota, and the Company and the Subsidiaries have received all
permits, licenses or other approvals required of them under applicable federal,
state and foreign occupational safety and health and environmental laws and
regulations to conduct their respective businesses, and the Company and each
Subsidiary is in compliance with all terms and conditions of any such permit,
license or approval, except any such violation of laws or regulations, failure
to receive required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals which
would not, singly or in the aggregate, result in a Material Adverse Change,
except as described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus).
(xxv) Each certificate signed by any officer of the
Company and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
and the Selling Shareholders to each Underwriter as to the matters covered
thereby.
(xxvi) Except for the shares of capital stock of each
of the Subsidiaries owned by the Company and such Subsidiaries, neither
the Company nor any Subsidiary owns any material amount of shares of stock or
any other equity securities of any corporation or has any
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equity interest in any firm, partnership, association or other entity,
except as described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus).
(xxvii) The Company and each of the Subsidiaries
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that [a] transactions are executed in accordance
with management's general or specific authorizations; [b] transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; [c] access to assets is permitted only in accordance with
management's general or specific authorization; and [d] the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxviii) Neither the Company nor any Subsidiary is,
nor with the giving of notice or passage of time, or both, would be, in
violation or in breach of: [a] its respective Articles of Incorporation or
By-laws (or other corporate governing documents); [b] any statute, ordinance,
order, rule or regulation applicable to the Company or such Subsidiary; [c] any
order or decree of any court, regulatory body, arbitrator, administrative
agency or other instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company or such Subsidiary; or [d]
any provision of any agreement, lease, franchise, license, indenture, permit,
mortgage, deed of trust, evidence of indebtedness or other instrument to which
the Company or such Subsidiary is a party or by which any property owned or
leased by the Company or such Subsidiary
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is bound, except as described in or contemplated by the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
(xxix) Neither the Company nor any person that
controls, is controlled by (including the Subsidiaries) or is under
common control with the Company has, directly or indirectly: [a] made any
unlawful contribution to any candidate for political office, or failed to
disclose fully any contribution in violation of law; or [b] made any payment to
any federal, state or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof or applicable foreign jurisdictions, except where such illegal
contribution, payment or failure to disclose would not result in a Material
Adverse Change.
(xxx) The Company and the Subsidiaries are in
compliance with the requirements of the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder, except to the
extent that failure to be in such compliance would not result in a Material
Adverse Change.
(xxxi) The Company has obtained for the benefit of the
Underwriters the written agreement, enforceable by the Representative,
of each of the officers and directors of the Company, that for a period
commencing on the date of such agreement and continuing until 90 days after the
date of the Prospectus, such persons will not, without the prior written
consent of Cleary Gull Reiland & McDevitt Inc. ("Cleary Gull"), directly or
indirectly, offer, sell, transfer or pledge, contract to sell,
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transfer or pledge, or cause or in any way permit to be sold,
transferred, pledged, or otherwise disposed of, any: [a] shares of Common
Stock; [b] rights to purchase shares of Common Stock (including, without
limitation, shares of Common Stock that may be deemed to be beneficially owned
by any such shareholders in accordance with the applicable regulations of the
Commission and shares of Common Stock that may be issued upon the exercise of a
stock option, warrant or other convertible security); or [c] securities that
are convertible or exchangeable into shares of Common Stock, except as may be
provided in any such written agreement.
(xxxii) None of the Company, any Subsidiary, any
officer or director of the Company or any Subsidiary, or any person who
owns, of record or beneficially, 5% or more of any class of securities issued
by the Company is: [a] an officer, director or partner of any brokerage firm,
broker or dealer that is a member of the NASD ("NASD Member") or [b] directly
or indirectly, a "person associated with" an NASD Member or an "affiliate" of
an NASD Member, as such terms are used in the NASD Rules of Fair Practice. In
addition, neither the Company nor any Subsidiary has issued or transferred any
Common Stock, warrants, options or other securities, or any other items of
value, to any of the Underwriters or any "related person" of any Underwriter,
as such term is used in the NASD Rules of Fair Practice, except as provided in
this Agreement.
(b) Each of the Selling Shareholders, severally and not
jointly, represents and warrants to and agrees with the several
Underwriters and the Company, and shall be deemed to represent and
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warrant to the several Underwriters and the Company on each Closing
Date, that:
(i) The Selling Shareholder has duly executed a Power of
Attorney and Agreement and Letter of Transmittal and Custody Agreement
("Power of Attorney and Custody Agreement") naming D. Dean Spatz and Howard W.
Dicke, or either of them, as the Selling Shareholder's attorney(s)-in-fact
("Attorneys-in-Fact") for the purpose of entering into and carrying out this
Agreement and naming Norwest Bank Minnesota, N.A., as custodian ("Custodian")
of the Shares of the Selling Shareholder for the purpose of selling the Shares
to the Underwriters on each Closing Date and receiving payment therefor.
(ii) All consents, approvals, authorizations and orders
necessary for the execution and delivery by the Selling Shareholder of
this Agreement and the Power of Attorney and Custody Agreement and for the sale
and delivery of the Shares have been obtained. The Selling Shareholder has,
and at the time of delivery thereof hereunder the Selling Shareholder will
have, good and valid title to the Shares, free and clear of all voting trust
arrangements, liens, encumbrances, security interests, equities, claims and
community or marital property rights, other than any created by the Power of
Attorney and Custody Agreement or this Agreement for the benefit of the
Underwriters. The Selling Shareholder has full right, power and authority to
enter into this Agreement and the Power of Attorney and Custody Agreement and
to sell, assign, transfer and deliver the Shares hereunder, free and clear of
all voting trust arrangements, liens, encumbrances, security interests,
equities, claims and community or marital property rights, other than any
created by the Power of Attorney and
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Custody Agreement or this Agreement for the benefit of the
Underwriters. Upon delivery of and payment for such Shares hereunder, the
Underwriters will acquire good and valid title thereto, free and clear of all
voting trust arrangements, liens, encumbrances, security interests, equities,
claims and community or marital property rights.
(iii) The Selling Shareholder has not distributed and will not
distribute any Preliminary Prospectus, the Prospectus or any other
material in connection with the offering and sale of the Shares. The Selling
Shareholder has not taken and will not take, directly or indirectly, any action
designed to or which could cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Stock.
(iv) The execution, delivery and performance by the Selling
Shareholder of this Agreement and the Power of Attorney and Custody
Agreement will not, if applicable, constitute a breach, or be in contravention,
of any provision of any agreement, franchise, license, indenture, mortgage,
deed of trust or other instrument to which the Selling Shareholder is a party
or by which the Selling Shareholder or the Selling Shareholder's property may
be bound or affected, or any statute, rule or regulation applicable to the
Selling Shareholder, or violate any order or decree of any court, regulatory
body, administrative agency or other governmental body having jurisdiction over
the Selling Shareholder or any of such Selling Shareholder's property. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of, and
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performance under, this Agreement by the Selling Shareholder or the
consummation by the Selling Shareholder of the transactions contemplated by
this Agreement, except for compliance with the Act, the Exchange Act, the Blue
Sky Laws applicable to the public offering of the Shares by the Underwriters
and the clearance of such offering with the NASD. The Selling Shareholder
hereby represents and warrants that each Attorney-in-Fact has been duly
appointed as attorney-in-fact by the Selling Shareholder for the purpose of
entering into and carrying out this Agreement, and the Power of Attorney and
Custody Agreement has been duly executed and delivered by or on behalf of the
Selling Shareholder to the Representative.
(v) This Agreement and the Power of Attorney and
Custody Agreement are each valid and binding agreements of the Selling
Shareholder enforceable in accordance with their respective terms.
(vi) The Selling Shareholder has deposited in custody,
under the Power of Attorney and Custody Agreement, certificates in
negotiable form for the Shares (including the maximum number of Option Shares,
if applicable) for the purpose of further delivery pursuant to this Agreement.
The Selling Shareholder agrees that the Shares on deposit with the Custodian
are subject to the interests of the Underwriters, that the arrangements made
for such custody, and the appointment of the Attorneys-in-Fact pursuant to the
Power of Attorney and Custody Agreement, are to that extent irrevocable, and
that the obligations of the Selling Shareholder hereunder and under the Power
of Attorney and Custody Agreement shall not be terminated, except as provided
in this Agreement and the Power of Attorney and Custody Agreement, by any act
of the Selling Shareholder, by
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operation of law, whether by the death or incapacity of the Selling
Shareholder or by the occurrence of any other event. If the Selling
Shareholder should die or become incapacitated or if any other event should
occur before the delivery of the Shares hereunder, the certificates for Shares
then on deposit with the Custodian shall, to the extent such Shares are
purchased by the Underwriters, be delivered by the Custodian in accordance with
the terms and conditions of this Agreement and the Power of Attorney and
Custody Agreement as if such death, incapacity or other event had not occurred,
regardless of whether or not the Custodian shall have received notice thereof.
The Selling Shareholder represents that each Attorney-in-Fact has been
authorized by the Selling Shareholder to execute and deliver this Agreement and
the Custodian has been authorized to receive and acknowledge receipt of the
proceeds of sale of the Shares sold by the Selling Shareholder against delivery
thereof and otherwise to act on behalf of the Selling Shareholder.
(vii) Insofar as it relates to the Selling Shareholder,
each Preliminary Prospectus, as of its date, has conformed in all
material respects with the requirements of the Act and, as of its date, has not
included any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein not misleading; and on the
effective date of the Registration Statement and at all times subsequent
thereto up to each Closing Date, [a] the Registration Statement and the
Prospectus, as they relate to such Selling Shareholder, did or will conform to
the requirements of the Act, and [b] neither the Registration Statement nor the
Prospectus as it relates to such Selling Shareholder did or will include any
untrue statement of a material fact or omit to state any
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material fact required to be stated therein or necessary to make the
statements therein not misleading.
3. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions
herein set forth, the Selling Shareholders agrees to sell the Firm Shares to
the Underwriters, and each of the Underwriters agrees to purchase from the
Selling Shareholders the number of Firm Shares as hereinafter set forth at the
price per share of $________. The obligation of each Underwriter to the
Selling Shareholders shall be to purchase from the Selling Shareholders the
number of full Firm Shares set forth opposite the name of such Underwriter in
Schedule I annexed hereto.
(b) On the Firm Closing Date (as hereinafter defined),
the Custodian on behalf of the Selling Shareholders will deliver to the
Representative, at the offices of Cleary Gull, 100 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, or through the facilities of The Depository Trust
Company, for the accounts of the several Underwriters, certificates
representing the Firm Shares against payment in Milwaukee, Wisconsin of the
purchase price therefor by certified or official bank check or checks in New
York Clearing House (next day) funds payable to the order of the Custodian. As
referred to in this Agreement, the "Firm Closing Date" shall be on the third
full business day after the date of the Prospectus, at 9 a.m., Milwaukee,
Wisconsin time, or at such other date or time not later than ten full business
days after the date of the Prospectus as the Representative and the
Attorneys-in-Fact (or either of them) may agree.
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The certificates for the Firm Shares to be so delivered will be in
denominations and registered in such names as the Representative request by
notice to the Attorneys-in-Fact, or either of them, prior to the Firm Closing
Date, and such certificates will be made available for checking and packaging
at 9 a.m., Milwaukee, Wisconsin time on the first full business day preceding
the Firm Closing Date at a location to be designated by the Representative.
(c) In addition, on the basis of the representations,
warranties and agreements herein contained, and subject to the terms
and conditions herein set forth, the Selling Shareholders specified as sellers
of Option Shares on Schedule I annexed hereto hereby agree to sell to the
Underwriters, and the Underwriters, severally and not jointly, shall have the
right at any time within 30 days after the date of the Prospectus to purchase
up to the number of Option Shares from such Selling Shareholders at the
purchase price per share to be paid for the Firm Shares, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
upon notice by the Representative to the Attorneys-in-Fact, or either of them,
within 30 days after the date of the Prospectus setting forth the aggregate
number of Option Shares to be purchased by the Underwriters and sold by such
Selling Shareholders, the names and denominations in which the certificates for
such shares are to be registered and the date and place at which such
certificates will be delivered. Such date of delivery ("Option Closing Date")
shall be determined by the Representative, provided that the Option Closing
Date, which may be the same as the Firm Closing Date, shall not be earlier than
the Firm Closing Date and, if after
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the Firm Closing Date, shall not be earlier than three nor later than
ten full business days after delivery of such notice to exercise. Certificates
for the Option Shares will be made available for checking and packaging at 9
a.m., Milwaukee, Wisconsin time, on the first full business day preceding the
Option Closing Date at a location to be designated by the Representative. The
manner of payment for and delivery of (including the denominations of and the
names in which certificates are to be registered) the Option Shares shall be
the same as for the Firm Shares.
(d) The Representative has advised the
Attorneys-in-Fact that each Underwriter has authorized the
Representative to accept delivery of the Shares and to make payment therefor.
It is understood that the Representative, individually and not as
representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Shares to be purchased by any Underwriter whose funds shall not
have been received by the Representative by the Firm Closing Date or the Option
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any obligation under this
Agreement. As referred to in this Agreement, "Closing Date" shall mean either
the Firm Closing Date or the Option Closing Date.
4. Representation of Underwriters. The Representative will act as the
representative for the several Underwriters in connection with the public
offering of the Shares, and any action under or in respect of this Agreement
taken by the Representative will be binding upon all of the Underwriters.
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5. Information Furnished by the Underwriters. The information set
forth in the last paragraph on the outside front cover page of the
Prospectus concerning the terms of the offering by the Underwriters, the
paragraphs on the inside front cover page of the Prospectus relating to
stabilization practices and passive market making, and the concession and
reallowance amounts appearing under the caption "Underwriting" in the
Prospectus constitute all of the information furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus, as such information is referred to
in this Agreement.
6. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) If the effective time of the Registration Statement
is not prior to the execution and delivery of this Agreement, then the
Company will use its best efforts to cause the Registration Statement to become
effective at the earliest possible time and, upon notification from the
Commission that the Registration Statement has become effective, will so advise
the Representative and counsel to the Underwriters promptly. If the effective
time of the Registration Statement is prior to the execution and delivery of
this Agreement and any information shall have been omitted therefrom in
reliance upon Rule 430A, the Company, at the earliest possible time, will
furnish the Representative with a copy of the Prospectus to be filed by the
Company with the Commission to comply with Rule 424(b) and Rule 430A under the
Act and, if the Representative does not object to the contents thereof, will
comply with such Rules. Upon compliance with such Rules, the Company will so
advise the Representative promptly. The
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Company will advise the Representative and counsel to the Underwriters and the
Attorneys-in-Fact promptly of the issuance by the Commission or any state
securities commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose, or of any notification of the suspension of qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceedings for that purpose, and will also advise the Representative and
counsel to the Underwriters and the Attorneys-in-Fact promptly of any request
of the Commission for amendment or supplement of the Registration Statement, of
any Preliminary Prospectus or of the Prospectus, or for additional information,
and the Company will not file any amendment or supplement to the Registration
Statement (either before or after it becomes effective), to any Preliminary
Prospectus or to the Prospectus (including a prospectus filed pursuant to Rule
424(b)), or file any document under the Exchange Act before the termination of
the public offering of the Shares by the Underwriters if such document would be
deemed to be incorporated by reference in the Registration Statement, if the
Representative has not been furnished with a copy prior to such filing (with a
reasonable opportunity to review such amendment or supplement) or if the
Representative objects to such filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an
Underwriter or dealer, any event occurs as a result of which the Prospectus
would include an untrue statement of a material fact, or would omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
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made, not misleading, or if it is necessary at any time to supplement
the Prospectus to comply with the Act or to file under the Exchange Act any
document that would be deemed to be incorporated by reference in the
Registration Statement to comply with the Act or the Exchange Act, the Company
promptly will advise the Representative and counsel to the Underwriters and the
Attorneys-in-Fact thereof and will promptly prepare and file with the
Commission, at its expense, an amendment to the Registration Statement or file
such document that will correct such statement or omission or an amendment that
will effect such compliance; and, if any Underwriter is required to deliver a
prospectus after the effective date of the Registration Statement, the Company,
upon request of the Representative, will prepare promptly such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act. The Company consents to the use, in accordance
with the provisions of the Act and with the Blue Sky Laws of the jurisdictions
in which the Shares are offered by the several Underwriters and by dealers, of
each Preliminary Prospectus.
(c) Neither the Company nor any Subsidiary will, prior
to the Option Closing Date, if any, incur any liability or obligation,
direct or contingent, or enter into any material transaction, other than in the
ordinary course of business, or enter into any transaction with an "affiliate,"
as defined in Rule 405 under the Act, that is required to be described in the
Prospectus pursuant to Item 404 of Regulation S-K under the Act, except as
described in the Prospectus.
(d) Neither the Company nor any Subsidiary will, prior
to the Option Closing Date, if any, acquire any of the Common Stock
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nor will the Company declare or pay any dividend or make any other
distribution upon its Common Stock payable to shareholders of record on a date
prior to the Option Closing Date, except as described in the Prospectus.
(e) The Company will make generally available to its
security holders and the Representative an earnings statement as soon
as practicable, but in no event later than 60 days after the end of its fiscal
quarter in which the first anniversary of the effective date of the
Registration Statement occurs, covering a period of 12 consecutive calendar
months beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the Act
and Rule 158 promulgated thereunder.
(f) During such period as a prospectus is required by
law to be delivered in connection with sales by an Underwriter or
dealer, the Company will furnish to the Representative, at the expense of the
Company, copies of the Registration Statement, the Prospectus, any Preliminary
Prospectus and all amendments and supplements to any such documents, including
any document filed under the Exchange Act and deemed to be incorporated by
reference in the Registration Statement, in each case as soon as available and
in such quantities as the Representative may reasonably request.
(g) The Company will cooperate with the Representative
and counsel to the Underwriters in qualifying or registering the Shares
for sale under the Blue Sky Laws of such jurisdictions as the Representative
designates and will continue such qualifications or
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registrations in effect so long as reasonably requested by the
Representative to effect the distribution of the Shares, except that the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is not
presently qualified. In each jurisdiction where any of the Shares shall have
been qualified as provided above, the Company will file such reports and
statements as may be required to continue such qualification for a period of
not less than one year from the date of the Prospectus. The Company shall
promptly prepare and file with the Commission, from time to time, such reports
as may be required to be filed by the Act and the Exchange Act, and the Company
shall comply in all respects with the undertakings given by the Company in
connection with the qualification or registration of the Shares for offering
and sale under the Blue Sky Laws.
(h) During the period of three years from the date of
the Prospectus, the Company will furnish to the Representative and to
each of the other Underwriters who may so request, as soon as available, each
report, statement or other document of the Company or its Board of Directors
mailed to its shareholders or filed with the Commission, and such other
information concerning the Company as the Representative may reasonably
request.
(i) The Company shall take all necessary or appropriate
action within its power to maintain the authorization for trading of
the Common Stock as a New York Stock Exchange security, or take such action to
authorize the Common Stock for listing on the New York Stock Exchange or the
American Stock Exchange, for a period of at least 36 months after the date of
the Prospectus.
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(j) Except for the issuance and sale by the Company of
Common Stock upon exercise of presently existing outstanding stock
options or pursuant to the 1995 Employee Stock Purchase Plan and the grant of
employee stock options pursuant to the Company's 1993 Stock Option Plan
(provided that none of such options shall be exercisable for a period of 90
days after the date of the Prospectus), the Company shall not, for a period of
90 days after the date of the Prospectus, without the prior written consent of
Cleary Gull, directly or indirectly, offer, sell or otherwise dispose of,
contract to sell or otherwise dispose of, or cause or in any way permit to be
sold or otherwise disposed of, any: (i) shares of Common Stock; (ii) rights to
purchase shares of Common Stock; or (iii) securities that are convertible or
exchangeable into shares of Common Stock.
(k) The Company will maintain a transfer agent and, if
required by law or the rules of the New York Stock Exchange or any
national securities exchange on which the Common Stock is listed, a registrar
(which, if permitted by applicable laws and rules, may be the same entity as
the transfer agent) for its Common Stock.
(l) If at any time when a prospectus relating to the
Shares is required to be delivered under the Act, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which, in the opinion of Cleary Gull, the market price of the Common
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to the Prospectus),
the Company will, after written notice from Cleary Gull advising the Company of
any of the matters set forth above, promptly consult with
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Cleary Gull concerning the advisability and substance of, and, if the
Company and Cleary Gull determine that it is appropriate, disseminate, a press
release or other public statement responding to or commenting on, such rumor,
publication or event.
(m) The Company will comply or cause to be complied
with the conditions to the obligations of the Underwriters in Section 9
hereof.
7. Covenants Of The Selling Shareholders. Each of the Selling
Shareholders, severally and not jointly, covenant and agree with the several
Underwriters and the Company as follows:
(a) If the effective time of the Registration Statement
is not prior to the execution and delivery of this Agreement, the
Selling Shareholder will cooperate to the extent necessary to cause the
Registration Statement to become effective at the earliest possible time; and
the Selling Shareholder will do and perform all things to be done and performed
by such Selling Shareholder prior to each Closing Date, pursuant to this
Agreement or the Power of Attorney and Custody Agreement.
(b) The Selling Shareholder agrees to deliver to the
Custodian on or prior to the First Closing Date a properly completed
and executed United States Treasury Department Form W-9 (or other applicable
substitute form or statement specified by Treasury Department regulations in
lieu thereof).
(c) The Selling Shareholder will pay all federal and
other taxes, if any, on the transfer or sale of the Shares.
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(d) For a period of 90 days after the date of the
Prospectus, the Selling Shareholders will not, without the prior
written consent of Cleary Gull, directly or indirectly, offer, sell, transfer
or pledge, contract to sell, transfer or pledge, or cause or in any way permit
to be sold, transferred, pledged or otherwise disposed of, any: (i) shares of
Common Stock; (ii) rights to purchase shares of Common Stock (including,
without limitation, shares of Common Stock that may be issued upon exercise of
a stock option, warrant or other convertible security); or (iii) securities
that are convertible or exchangeable into shares of Common Stock, except that
the Selling Shareholders may, during such 90-day period, make bona fide gifts
of Common Stock to donees who agree in writing with the Underwriters to be
subject to the same restrictions as set forth herein.
(e) The Selling Shareholder will furnish any documents,
instruments or other information that the Representative may reasonably
request in connection with the sale and transfer of the Shares to the
Underwriters.
(f) If the sale to the Underwriters of the Firm Shares
is not consummated for any reason other than termination of this
Agreement pursuant to Section 12 hereof or pursuant to Section 14(b) or 14(d)
hereof, without limiting any other rights the Underwriters may have, the
Company and/or the Selling Shareholders agree to reimburse the Underwriters
upon demand for all out-of-pocket expenses (including reasonable fees and
expenses of counsel for the Underwriters) that shall have been incurred by the
Underwriters in connection with the proposed purchase and sale of the Shares,
and the provisions of Sections 8 and 11 hereof shall at all times be effective
and apply. The Selling Shareholders
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agree to cover the first $50,000 of such expenses (together with the
expenses provided in section 8 hereof) and the Company shall be responsible for
all of such expenses in excess of that amount.
(g) If the sale to the Underwriters of the Firm Shares
is not consummated for any reason other than termination of this
Agreement by the Underwriters pursuant to Section 14 hereof and the
Representative has not been reimbursed for its expenses in connection with the
transactions contemplated hereby under section 7(f) or otherwise, then the
Company and/or the Selling Shareholders, as the case may be, shall offer to
hire, on customary terms and conditions, the Representative as financial
advisor in connection with the first sale, subsequent to the date hereof, of a
material amount of securities of the Company by the Company and/or the Selling
Shareholders, as the case may be, in a private or public transaction. The
Company and/or the Selling Shareholders can avoid the obligation imposed on
each of them under this Section 7(g) as to the Representative by reimbursing
the Representative for its expenses relating to the transactions contemplated
hereby.
8. Payment of Expenses. Whether or not the
transactions contemplated hereunder are consummated or this Agreement
becomes effective, or if this Agreement is terminated for any reason, the
Company and/or the Selling Shareholders will pay the costs, fees and expenses
incurred in connection with the public offering of the Shares. The Selling
Shareholders agree to pay the first $50,000 of such costs, fees and expenses,
and the Company agrees to pay such expenses in excess of this amount. Such
costs, fees and expenses to be paid by the Company and/or the Selling
Shareholders include, without limitation:
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(a) All costs, fees and expenses (excluding the
expenses incurred by the Underwriters and the reasonable legal fees and
disbursements of counsel for the Underwriters, but including such fees and
disbursements described in subsection (b) of this Section 8) incurred in
connection with the performance of the Company's obligations hereunder,
including, without limiting the generality of the foregoing: the registration
fees related to the filing of the Registration Statement with the Commission;
the fees and expenses related to the quotation of the Shares on the New York
Stock Exchange or other national securities exchange; the fees and expenses
incurred in connection with the preparation, printing, shipping and delivery of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all agreements and
supplements provided for herein, this Agreement and the Preliminary and
Supplemental Blue Sky Memoranda and the Power of Attorney and Custody
Agreement, including, without limitation, shipping expenses via overnight
delivery and/or courier service to comply with applicable prospectus delivery
requirements; and the costs and expenses associated with the production of
materials related to, and travel expenses incurred by the management of the
Company in connection with, the various meetings to be held between the
Company's management and prospective investors.
(b) All registration fees and expenses, including
reasonable legal fees and disbursements of counsel for the Underwriters
incurred in connection with qualifying or registering all or any part of the
Shares for offer and sale under the Blue Sky Laws and the clearing of the
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public offering and the underwriting arrangements evidenced hereby with
the NASD.
(c) All transfer or sales tax imposed upon the transfer
and sale of the Selling Shareholder's Shares to the Underwriters and
for all fees and expenses of the Attorneys-in-Fact and the Custodian. All
costs and expenses incident to the performance of the Selling Shareholder's
obligations hereunder that are not otherwise specifically provided for in this
Section will be borne and paid solely by the Selling Shareholders.
9. Conditions to the Obligations of the Underwriters. The
obligations of the several Underwriters under this Agreement shall be
subject to the accuracy of the representations and warranties on the part of
the Company and the Selling Shareholders herein set forth as of the date hereof
and as of each Closing Date, to the accuracy of the statements of the Company's
officers, the Selling Shareholders and the Attorneys-in-Fact on behalf of the
Selling Shareholders made pursuant to the provisions hereof, to the performance
by the Company and the Selling Shareholders of their respective obligations
hereunder, and to the following additional conditions, unless waived in writing
by the Representative:
(a) The Registration Statement shall have been declared
effective by the Commission not later than 10 a.m., Washington, DC,
time, on the date of this Agreement, or such later time as shall have been
consented to by the Representative; all filings required by Rules 424(b) and
430A under the Act shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
Commission or any state securities commission nor, to
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the knowledge of the Company, shall any proceedings for that purpose
have been initiated or threatened; and any request of the Commission or any
state securities commission for including of additional information in the
Registration Statement, or otherwise, shall have been complied with to the
satisfaction of the Representative.
(b) Since the dates as of which information is
given in the Registration Statement:
(i) There shall not have occurred any adverse change,
or development involving a prospective adverse change, in the condition
(financial or otherwise), management, business, prospects, net worth or results
of operations of the Company and the Subsidiaries, whether or not arising from
transactions in the ordinary course of business; and
(ii) Neither the Company nor any Subsidiary shall have
sustained any loss or interference from any labor dispute, strike,
fire, flood, windstorm, accident or other calamity (whether or not insured) or
from any court or governmental action, order or decree, the effect of which on
the Company, in any such case described in clause (i) or (ii) above, is in the
opinion of the Representative so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and Prospectus.
(c) The Representative shall not have advised the Company that
the Registration Statement or the Prospectus contains (or incorporates
by reference) an untrue statement of fact that, in the opinion of
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the Representative or counsel for the Underwriters, is material, or
omits to state a fact that, in the opinion of the Representative or such
counsel, is material, and is required to be stated therein or necessary to make
the statements therein not misleading.
(d) The Representative shall have received an opinion of
Maslon, Edelman, Borman & Brand, counsel for the Company, addressed to
the Representative, as the representative of the Underwriters, and dated the
Firm Closing Date or the Option Closing Date, as the case may be, to the effect
that:
(i) The Company and each of the Subsidiaries have been
duly organized and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the Company
and the Subsidiaries, taken as a whole;
(ii) The Company and each of the Subsidiaries have
corporate power to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and the
Prospectus, and the Company has corporate power to enter into this Agreement
and to carry out all the terms and provisions hereof to be carried out by it;
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(iii) The issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially by the Company free and clear
of any perfected security interests or, to the best knowledge of such counsel,
any other security interests, liens, encumbrances, equities or claims; there
are no preemptive, preferential or, to such counsel's knowledge, other rights
to subscribe for or purchase any shares of capital stock of any Subsidiary; and
to such counsel's knowledge, no shares of capital stock of any Subsidiary have
been issued in violation of such rights;
(iv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus; all of the
issued shares of capital stock of the Company, including, without limitation,
the Shares, have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities; no
holders of outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the Shares; and
no holders of securities of the Company are entitled to have such securities
registered under the Registration Statement; and the certificates for the
Shares to be delivered hereunder are in due and proper form and conform to the
requirements of applicable law;
(v) The statements set forth or incorporated by
reference in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company, provide a
fair summary of such provisions; and the statements set forth or
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incorporated by reference in the Prospectus, insofar as such statements
constitute a summary of pending legal matters, documents or proceedings of the
Company, provide a fair summary of such legal matters, documents and
proceedings therein discussed;
(vi) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
of the Company and this Agreement has been duly executed and delivered by the
Company; and this Agreement is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except
that rights to indemnity or contribution may be limited by applicable law and
except as enforceability of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by equitable principles limiting the right to specific
performance or other equitable relief;
(vii) After due inquiry and to the best knowledge of
such counsel, no legal or governmental proceedings are pending to which
the Company or any of the Subsidiaries is a party or to which the property of
the Company or any of the Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and that are not
described therein, and, to the best knowledge of such counsel, no such
proceedings have been threatened against the Company or any of the Subsidiaries
or with respect to any of their respective properties; and no contract or other
document is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement that is
not described therein or filed as required;
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(viii) The compliance by the Company with the
provisions of this Agreement and the consummation of the transactions
herein contemplated do not [a] require the consent, approval, authorization,
registration or qualification of or with any governmental authority or
regulatory body, except such as have been obtained and such as may be required
under the Blue Sky Laws or by the NASD, as to which counsel need not express an
opinion, or [b] conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument, known to such
counsel, to which the Company or any of the Subsidiaries is a party or by which
the Company or any of the Subsidiaries or any of their respective properties
are bound, or the charter documents, Code of Regulations or by-laws of the
Company or any of the Subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator known to such counsel and applicable to the Company or any of the
Subsidiaries;
(ix) The Registration Statement is effective under the
Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b); no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement or the Prospectus or
any amendment or supplement thereto has been issued; and no proceedings for
that purpose have been instituted or threatened or, to the best knowledge of
such counsel, are contemplated by the Commission;
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(x) The Registration Statement originally filed with
respect to the Shares and each amendment thereto and the Prospectus (in each
case, including the documents incorporated by reference therein but not
including the financial statements and other financial information contained
therein, as to which such counsel need express no opinion) comply as to form in
all material respects with the applicable requirements of the Act, the Exchange
Act and the respective rules and regulations of the Commission thereunder;
(xi) The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses;
(xii) This transaction will not cause the Company to
become an "investment company" subject to registration as such term is
defined under the 1940 Act; and
(xiii) The Common Stock is a New York Stock Exchange
security on the New York Stock Exchange and is registered under the
Exchange Act.
Such counsel shall also state that they have no reason
to believe that the Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of its date or the date of
such opinion, included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order
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to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
In rendering any such opinion, such counsel may rely,
as to matters of fact, to the extent such counsel reasonably deems
proper, on certificates of responsible officers of the Company and public
officials and, as to matters involving the application of laws of any
jurisdiction other than the State of Minnesota or the United States, to the
extent satisfactory in form and scope to counsel for the Underwriters, upon the
opinion of local counsel reasonably satisfactory to counsel for the
Underwriters, and copies of such opinion shall be delivered to the Underwriters
and counsel for the Underwriters.
References to the Registration Statement and the
Prospectus in this subsection (d) shall include any amendment or
supplement thereto at the date of such opinion.
(e) The Representative shall have received an opinion from
Maslon Edelman Borman & Brand, counsel for the Selling Shareholders,
dated the Firm Closing Date or the Option Closing Date, as the case may be, to
the effect that:
(i) Each of this Agreement and the Power of Attorney
and Custody Agreement has been duly authorized, executed and delivered
by or on behalf of the Selling Shareholders and such agreement constitutes the
valid and binding agreement of the Selling Shareholders, enforceable in
accordance with its respective terms, except that rights to indemnity or
contribution thereunder may be limited by applicable law and except as
enforceability of such agreement may be limited by bankruptcy or
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similar laws generally affecting the rights of creditors and by
equitable principles limiting the right to specific performance or other
equitable relief;
(ii) The execution and delivery of this Agreement and
the Power of Attorney and Custody Agreement and the consummation of the
transactions herein and therein contemplated will not constitute a breach, or
be in contravention, of any provision of any agreement, franchise, license,
mortgage, deed of trust or other instrument to which the Selling Shareholders
are a party or by which the Selling Shareholders or the Selling Shareholders'
property may be bound or affected, or violate any order or decree of any court,
regulatory or governmental body, administrative body or instrumentality of the
United States or other jurisdiction having jurisdiction over the Selling
Shareholders;
(iii) The Selling Shareholders have full legal right,
power and authority, and have secured any consent, approval,
authorization and order required to enter into and perform this Agreement and
the Power of Attorney and Custody Agreement and to sell, assign, transfer and
deliver title to the Shares to be sold by the Selling Shareholders as provided
herein; and upon delivery to the Underwriters or upon the order of the
Representative against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Underwriters will acquire
good and marketable title to the Shares to be sold hereunder by such Selling
Shareholders, free and clear of all voting trust arrangements, liens,
encumbrances, security interests, equities, claims and community or marital
property rights; and
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(iv) To such counsel's knowledge, the information
concerning the Selling Shareholders contained in the Prospectus under
the caption "Principal and Selling Shareholders" complies in all material
respects with the Act.
In rendering such opinion, counsel for the Selling
Shareholders may rely, to the extent counsel reasonably deems such
reliance proper, as to matters of fact upon a certificate of the Selling
Shareholders, and copies of such certificate shall be furnished to the
Representative and counsel for the Underwriters on or before each Closing Date.
(f) The Representative shall have received an opinion of
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., counsel for
the Underwriters, dated the Firm Closing Date or the Option Closing Date, as
the case may be, with respect to the issuance and sale of the Shares, the
Registration Statement and other related matters as the Representative may
require, and the Company shall have furnished to such counsel such documents
and shall have exhibited to them such papers and records as they request for
the purpose of enabling them to pass upon such matters.
(g) The Representative shall have received on each Closing
Date, a certificate of D. Dean Spatz, Chief Executive Officer, and L.
Lee Runzheimer, Chief Financial Officer, of the Company, to the effect that:
(i) The representations and warranties of the Company
and the Selling Shareholders set forth in Section 2(a) hereof are
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true and correct as of the date of this Agreement and as of the date of
such certificate, and the Company has complied with all the agreements and
satisfied all the conditions to be performed or satisfied by it at or prior to
the date of such certificate;
(ii) The Commission has not issued an order preventing
or suspending the use of the Prospectus or any Preliminary Prospectus
or any amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to the
knowledge of the respective signatories, no proceedings for that purpose have
been initiated or are pending or contemplated under the Act or under the Blue
Sky Laws of any jurisdiction;
(iii) Each of the respective signatories has carefully
examined the Registration Statement and the Prospectus, and any
amendment or supplement thereto, including any documents filed under the
Exchange Act and deemed to be incorporated by reference in the Registration
Statement, and such documents contain all statements required to be stated
therein, and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and since the date on which the Registration
Statement was initially filed, no event has occurred that was required to be
set forth in an amendment or supplement to the Prospectus or in an amendment to
the Registration Statement that has not been so set forth, and there has been
no document required to be filed under the Exchange Act that upon such filing
would be deemed to be incorporated by reference in the Registration Statement
that has not been so filed; and
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(iv) Since the date on which the Registration Statement
was initially filed with the Commission, there has not occurred any
Material Adverse Change or development involving, or which could be expected to
involve, a Material Adverse Change, whether or not arising from transactions in
the ordinary course of business, except as disclosed in the Prospectus and the
Registration Statement as heretofore amended or (but only if the Representative
expressly consent thereto in writing) as disclosed in an amendment or
supplement thereto filed with the Commission and delivered to the
Representative after the execution of this Agreement; since such date and
except as so disclosed or in the ordinary course of business, the Company has
not incurred any liability or obligation, direct or indirect, or entered into
any transaction which is material to the Company; since such date and except as
so disclosed, there has not been any change in the outstanding capital stock of
the Company, or any change that is material to the Company in the short-term
debt or long-term debt of the Company; since such date and except as so
disclosed, the Company has not acquired any of the Common Stock or other
capital stock of the Company nor has the Company declared or paid any dividend,
or made any other distribution, upon its outstanding Common Stock payable to
shareholders of record on a date prior to such Closing Date; since such date
and except as so disclosed, the Company has not incurred any material
contingent obligations, and no material litigation has commenced or been
threatened against the Company; and, since such date and except as so
disclosed, the Company has not sustained any material loss or interference from
any strike, fire, flood, windstorm, accident or other calamity (whether or not
insured) or from any court or governmental action, order or decree.
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The delivery of the certificate provided for in
this subsection (g) shall be and constitute a representation and
warranty of the Company as to the facts required in the immediately foregoing
clauses (i), (ii), (iii) and (iv) to be set forth in said certificate.
(h) The Representative shall have received a
certificate from each of the Selling Shareholders (which may be signed
by such Selling Shareholder's Attorneys-in-Fact, or either of them), dated the
Firm Closing Date or the Option Closing Date, as applicable, to the effect
that: (i) the representations and warranties of such Selling Shareholder in
Sections 2 and 3 of this Agreement are true and correct as of the date of this
Agreement and as of the date of such certificate, as if again made on and as of
such Closing Date, and the Selling Shareholder has complied with all of the
agreements and satisfied all of the conditions to be performed or satisfied by
the Selling Shareholder at or prior to such Closing Date; and (ii) the Selling
Shareholder has no reason to believe that the Registration Statement or any
amendment thereto, including any documents filed under the Exchange Act and
deemed to be incorporated by reference in the Registration Statement, at the
time it was declared effective by the Commission contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, including any documents filed under the
Exchange Act and deemed to be incorporated by reference in the Registration
Statement, contains any untrue statement of a material fact or omits 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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(i) At the time this Agreement is executed and also on
each Closing Date, there shall be delivered to the Representative a
letter addressed to the Representative, as representatives of the Underwriters,
from Deloitte & Touche LLP, the Company's independent accountants, the first
letter to be dated the date of this Agreement, the second letter to be dated
the Firm Closing Date and the third letter (if applicable) to be dated the
Option Closing Date, which shall be in form and substance satisfactory to the
Representative and shall, without limitation, contain financial information
concerning the Company and the Subsidiaries as of a date within five days of
the date of such letter. There shall not have been any change or decrease set
forth in any of the letters referred to in this subsection (i) that makes it
impracticable or inadvisable in the judgment of the Representative to proceed
with the public offering or purchase of the Shares as contemplated hereby.
(j) The Shares shall have been qualified or registered
for sale under the Blue Sky Laws of such jurisdictions as shall have
been specified by the Representative, and the underwriting terms and
arrangements for the offering shall have been cleared by the NASD.
(k) Such further certificates and documents as the
Representative may reasonably request (including certificates of
officers of the Company).
All such opinions, certificates, letters and documents
shall be in compliance with the provisions hereof only if they are
satisfactory to the Representative and to Reinhart, Boerner, Van Deuren, Norris
& Rieselbach, s.c., counsel for the Underwriters, which
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Representative and Firm agree to act reasonably in so determining. The
Company and the Selling Shareholders shall furnish the Representative with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as the Representative may reasonably request.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at either Closing Date is not so satisfied,
this Agreement at the election of the Representative will terminate upon
notification to the Company and the Attorneys-in-Fact, or any one of them, for
the Selling Shareholders, without liability on the part of any Underwriter,
including the Representative, the Company or the Selling Shareholders except
for the provisions of Section 7(f) hereof, the expenses to be paid by the
Company and/or the Selling Shareholders pursuant to Section 8 hereof and except
to the extent provided in Section 11 hereof.
10. Maintain Effectiveness of Registration Statement. The
Company will use its best efforts and the Selling Shareholders will use
their best efforts to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order is issued,
to obtain as soon as possible the lifting thereof.
11. Indemnification.
(a) The Company and the Selling Shareholders,
jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act or the Exchange Act from and against any losses, claims,
damages, expenses, liabilities or actions in respect thereof ("Claims"), joint
or several, to which such Underwriter or each such
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controlling person may become subject under the Act, the Exchange Act,
Blue Sky Laws or other federal or state statutory laws or regulations, at
common law or otherwise (including payments made in settlement of any
litigation), insofar as such Claims arise out of or are based upon any breach
of any representation, warranty or covenant made by the Company and/or the
Selling Shareholders in this Agreement, or any untrue statement or Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or in any application filed under any Blue Sky Law or other document
executed by the Company for that purpose or based upon written information
furnished by the Company and filed in any state or other jurisdiction to
qualify any or all of the Shares under the securities laws thereof (any such
document, application or information being hereinafter called a "Blue Sky
Application") or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company and the
Selling Shareholders, jointly and severally, agree to reimburse each
Underwriter and each such controlling person for any legal fees or other
expenses incurred by such Underwriter or any such controlling person in
connection with investigating or defending any such Claim; provided, however,
that the Company and the Selling Shareholders will not be liable in any such
case to the extent that any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or
supplement thereto or in any Blue Sky Application in reliance upon and in
conformity with the written information furnished to the Company pursuant to
Section 5 of this Agreement and provided, further, that with respect to any
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untrue statement or omission, or alleged untrue statement or omission, made in
any Preliminary Prospectus, the indemnity agreement contained in this
subsection 11(a) shall not inure to the benefit of any Underwriter from whom
the person asserting any such losses, claims, damages or liabilities purchased
shares if such untrue statement or omission or alleged untrue statement or
omission made in such Preliminary Prospectus is eliminated or remedied in the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto to the Underwriters) and such loss, claim,
damage or liability of such Underwriter results from the fact that there was
not furnished to such person, at or prior to the written confirmation of the
sale of such Shares to such person, a copy of the Prospectus (as so amended or
supplemented) if the Company had previously furnished copies thereof to such
Underwriter. The indemnification obligations of the Company and the Selling
Shareholders as provided above are in addition to and in no way limit any
liabilities the Company and the Selling Shareholders may otherwise have.
(b) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors and each
of its officers who signs the Registration Statement, and each person, if any,
who controls the Company within the meaning of the Act or the Exchange Act and
the Selling Shareholders against any Claim to which the Company, or any such
director, officer, controlling person or the Selling Shareholders may become
subject under the Act, the Exchange Act, Blue Sky Laws or other federal or
state statutory laws or regulations, at common law or otherwise (including
payments made in settlement of any litigation, if such settlement is effected
with the written consent of such Underwriter and
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Cleary Gull), insofar as such Claim arises out of or is based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, or arises out
of or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, in reliance solely upon and in conformity with the written
information furnished by the Representative to the Company solely as specified
in Section 5 of this Agreement. Each Underwriter will severally reimburse any
legal fees or other expenses incurred by the Company, or any such director,
officer, controlling person or the Selling Shareholders in connection with
investigating or defending any such Claim, and from any and all Claims solely
resulting from failure of an Underwriter to deliver a Prospectus, if the person
asserting such Claim purchased Shares from such Underwriter and a copy of the
Prospectus (as then amended if the Company shall have furnished any amendments
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) would have cured the defect giving rise to such
Claim. The indemnification obligations of each Underwriter as provided above
are in addition to any liabilities any such Underwriter may otherwise have.
Notwithstanding the provisions of this section, no
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Underwriter shall be required to indemnify or reimburse the Company, or
any officer, director, controlling person or Selling Shareholders in an
aggregate amount in excess of the total price at which the Shares purchased by
any such Underwriter hereunder were offered to the public, less the amount of
any damages such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) Promptly after receipt by an indemnified party
under this section of notice of the commencement of any action in
respect of a Claim, such indemnified party will, if a Claim in respect thereof
is to be made against an indemnifying party under this section, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party will not relieve an indemnifying party from
any liability it may have to any indemnified party under this section or
otherwise, except to the extent the indemnifying party is actually prejudiced
by the failure to give such notice. In case any such action is brought against
any indemnified party, and such indemnified party notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate in and, to the extent that he, she or it may wish, jointly with all
other indemnifying parties, similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party and any indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to the
indemnified party and/or other indemnified parties which are different from or
additional to those available to any
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indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action 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 any claims that are the subject matter of such action.
(d) Upon receipt of notice from the indemnifying party
to such indemnified party of the indemnifying party's election to
assume the defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will not be
liable to such indemnified party under this section for any legal fees or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, unless:
(i) The indemnified party shall have employed separate
counsel in connection with the assumption of legal defenses in
accordance with the proviso to the last sentence of subsection (c) of this
Section (it being understood, however, that the indemnifying party shall not be
liable for the legal fees and expenses of more than one separate counsel,
approved by the Representative, if one or more of the Underwriters or their
controlling persons are the indemnified parties);
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(ii) The indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the indemnified party's
notice to the indemnifying party of commencement of the action; or
(iii) The indemnifying party has authorized the
employment of counsel at the expense of the indemnifying party.
(e) If the indemnification provided for in this section is
unavailable to an indemnified party under subsection (a) or (b) hereof
in respect of any Claim referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall, subject to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Selling Shareholders and
the Underwriters from the offering of the Shares; or
(ii) if the allocation provided by clause (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 (i) above, but
also the relative fault of the Company, the Selling Shareholders and the
Underwriters in connection with the statements or omissions which resulted in
such Claim, as well as any other relevant equitable considerations.
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The relative benefits received by each of the Company,
the Selling Shareholders and the Underwriters shall be deemed to be in
such proportion so that the Underwriters are responsible for that portion
represented by the percentage that the amount of the underwriting discounts and
commissions per share appearing on the cover page of the Prospectus bears to
the public offering price per share appearing thereon, and the Company
(including its officers and directors and controlling persons), and the Selling
Shareholders is responsible for the remaining portion. The relative fault of
the Company, the Selling Shareholders and the Underwriters 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 the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the Claims
referred to above shall be deemed to include, subject to the limitations set
forth in subsections (c) and (d) of this section, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
(f) The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if
contribution pursuant to this section were determined by pro rata or per capita
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method or allocation which does not take into account
the equitable considerations referred to in subsection (e) of this Section.
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Notwithstanding the other provisions of this section, no Underwriter
shall be required to contribute any amount that is greater than 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 which
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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this section are several in proportion to their respective
underwriting commitments and not joint.
12. Default of Underwriters. It shall be a condition
to the obligations of each Underwriter to purchase the Shares in the
manner as described herein, that, except as hereinafter provided in this
section, each of the Underwriters shall purchase and pay for all the Shares
agreed to be purchased by such Underwriter hereunder upon tender to the
Representative of all such Shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Shares
hereunder on either the Firm Closing Date or the Option Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total number of Shares
which the Underwriters are obligated to purchase on such Closing Date, the
Representative may make arrangements for the purchase of such Shares by other
persons, including any of the Underwriters, but if no such arrangements are
made by such Closing Date the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective
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commitments hereunder, to purchase the Shares which such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of Shares with
respect to which such default or defaults occur is greater than 10% of the total
number of Shares which the Underwriters are obligated to purchase on such
Closing Date, and arrangements satisfactory to the Representative for the
purchase of such Shares by other persons are not made within 36 hours after such
default, then this Agreement will terminate without liability on the part of any
nondefaulting Underwriter, the Company or the Selling Shareholders, except for
the expenses to be paid by the Company and the Selling Shareholders pursuant to
Section 8 hereof and except to the extent provided in Section 11 hereof.
In the event that Shares to which a default relates are
to be purchased by the nondefaulting Underwriters or by another party or
parties, the Representative shall have the right to postpone the Firm Closing
Date or the Option Closing Date, as the case may be, for not more than seven
business days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
13. Effective Date. This Agreement shall become effective upon the
execution and delivery of this Agreement by the parties hereto. Such execution
and delivery shall include an executed copy of this
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Agreement sent by telecopier, facsimile transmission or other means of
transmitting written documents.
14. Termination. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof, this Agreement may be terminated by the
Representative prior to or on the Firm Closing Date and the over-allotment
option from the Selling Shareholders referred to in Section 3(c) hereof, if
exercised, may be cancelled by the Representative at any time prior to or on
the Option Closing Date, if in the judgment of the Representative, payment for
and delivery of the Shares is rendered impracticable or inadvisable because:
(a) Trading in the Common Stock shall have been
suspended by the Commission or the New York Stock Exchange; additional
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally; minimum or maximum prices shall
have been established on the New York Stock Exchange, the American Stock
Exchange or NASDAQ; or trading in securities generally shall have been suspended
or materially limited on either such exchange or on NASDAQ;
(b) A general banking moratorium shall have been
established by either federal or state authorities in New York,
Minnesota or Wisconsin;
(c) Any event shall have occurred or shall exist which
makes untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or which is not reflected in
the Registration Statement but should be reflected therein to
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make the statements or information contained therein not misleading in
any material respect; or
(d) An outbreak or escalation of hostilities or other
national or international calamity, crisis or emergency or any
substantial change in political, financial or economic conditions shall have
occurred or shall have accelerated to such extent, in the judgment of the
Representative, as to have a material adverse effect on the financial markets of
the United States, or to make it impracticable or inadvisable to proceed with
completion of the sale of and payment for the Shares as provided in this
Agreement.
Any termination pursuant to this Section shall be
without liability on the part of any Underwriter to the Company or the
Selling Shareholders, or on the part of the Company or the Selling Shareholders
to any Underwriter, except for expenses to be paid by the Company and/or the
Selling Shareholders pursuant to Section 8 hereof or reimbursed by the Company
and/or the Selling Shareholders pursuant to Section 7(f) hereof and except as to
indemnification to the extent provided in Section 11 hereof.
15. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties, covenants and other
statements of the Company, of its officers or directors, of the Selling
Shareholders and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, the Selling Shareholders
or the Company or any of its or their partners,
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officers, directors or any controlling person, as the case may be, and
will survive delivery of and payment for the Shares sold hereunder.
16. Notices. All communications hereunder will be in writing
and, if sent to the Representative, will be mailed, delivered,
telecopied (with receipt confirmed) or telegraphed and confirmed to Cleary Gull
Reiland & McDevitt Inc. at 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, Attention: Joseph F. Hickey, Jr., Principal, with a copy to James M.
Bedore, Esq., Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., 1000
North Water Street, Milwaukee, Wisconsin 53202-0900; and if sent to the Company,
will be mailed, delivered, telecopied (with receipt confirmed) or telegraphed
and confirmed to the Company at Osmonics, Inc., 5951 Clearwater Drive,
Minnetonka, Minnesota 55343, Attention: D. Dean Spatz, Chief Executive Officer,
with a copy to Russell F. Lederman, Esq., Maslon Edelman Borman & Brand, 3300
Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402-4140; and, if
sent to the Selling Shareholders, will be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to the Attorneys-in-Fact, or
either of them, in care of the Company, with copies to Russell F. Lederman,
Esq., Maslon Edelman Borman & Brand, 3300 Norwest Center, 90 South Seventh
Street, Minneapolis, MN 55402-4140.
17. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in Section 11 hereof and no other person
will have any right or obligation hereunder. The term
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"successors" shall not include any purchaser of the Shares as such from
any of the Underwriters merely by reason of such purchase.
18. Partial Unenforceability. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
19. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Wisconsin
without reference to conflict of law principles thereunder. This Agreement may
be signed in various counterparts which together shall constitute one and the
same instrument, and shall be effective when at least one counterpart hereof
shall have been executed by or on behalf of each party hereto.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon
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it will become a binding agreement among the Company, the Selling
Shareholders and the several Underwriters, including the Representative, all in
accordance with its terms.
Very truly yours,
OSMONICS, INC.
(the "Company")
BY_________________________________
SELLING SHAREHOLDERS
_______________________
_______________________
_______________________
_______________________
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
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Cleary Gull Reiland & McDevitt
Inc.
Acting as Representative of the
several Underwriters (including
themselves) identified in
Schedule I annexed hereto.
BY CLEARY GULL
REILAND & MCDEVITT
INC.
BY
__________________________
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OSMONICSS, INC.
EXHIBIT A
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