i. underwriting agreements

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I. UNDERWRITING AGREEMENTS What is the purpose of the <strong>underwriting</strong> agreement • It documents the agreement among the parties regarding the economic and legal terms of the transaction • Nature, amount and price of the securities being sold • Type of transaction – primary, secondary or combination • Nature of the underwriters’ commitment to purchase • firm or best efforts • each underwriter’s obligation to purchase is several and not joint with the other underwriters’ obligations in order to limit each underwriter’s liability exposure • Issuer’s and/or selling shareholders’ commitment to sell • Allocation of liability among the issuer, any selling shareholders and the underwriters 2
I. UNDERWRITING AGREEMENTS Parties, Form and Timing • Parties: issuer, any selling shareholders and lead bookrunners on behalf of the <strong>underwriting</strong> syndicate • Negotiation is usually not an adversarial process • Drafted by underwriters’ counsel, typically starting with the form agreement of the lead left bookrunner • Required to be filed as an exhibit to the registration statement because it is a material agreement; however, a form may be filed • Not executed until the pricing date, after the entire registration process and most of the offering process is complete • Until execution, there is no contractual arrangement between the issuer, selling shareholders and underwriters • Engagement letters negotiated at the time of mandate are not standard in the U.S. market, although occasionally signed in the IPO context 3
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