DRAFT OF 5/13/97
EXHIBIT 1.1
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ORBIT/FR, INC.
2,000,000 Common Shares
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UNDERWRITING AGREEMENT
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West Conshohocken, Pennsylvania
June , 1997
Pennsylvania Merchant Group Ltd
Unterberg Harris
As Representatives of the Several
Underwriters Named in Schedule I
Attached Hereto
Four Falls Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Dear Sirs:
Orbit/FR, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell an aggregate of 2,000,000 shares of its common stock to Pennsylvania
Merchant Group Ltd and Unterberg Harris (the "Representatives") and the several
underwriters named in Schedule I hereto (collectively with the Representatives,
the "Underwriters" and individually, an "Underwriter," which terms shall also
include any Underwriter substituted as hereinafter provided in Section 11). The
shares of the Company's common stock, par value $.01 per share, are hereinafter
referred to as the "Common Shares," and the 2,000,000 Common Shares to be issued
and sold to the Underwriters by the Company are hereinafter referred to as the
"Offered Shares." The initial public offering price per Offered Share (the
"Offering Price") and the purchase price per Offered Share for the Offered
Shares to be paid by the several Underwriters shall be agreed upon by the
Company, the Selling Stockholder and the Representatives, acting on behalf of
the several Underwriters, and such agreement shall be set forth in a separate
written instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication among the
Company, the Selling Stockholder and the Representatives and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
Shares will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date
of execution and delivery of the Price Determination Agreement, this Agreement
shall be deemed to incorporate, and, unless the context otherwise indicates, all
references contained herein to "this Agreement" and to the phrases "herein" and
"hereof" shall be deemed to include the Price Determination Agreement.
In addition, the Underwriters, in order to cover over-allotments in the
sale of the Offered Shares, may purchase from Orbit-Alchut Technologies, Ltd.,
an Israeli corporation (the "Selling Stockholder") within 30 business days
after the Effective Date (as hereinafter defined), for their own account for
offering to the public at the Offering Price, up to 300,000 additional Common
Shares (the "Optional Shares"), upon the terms and conditions set forth in
Section 4 hereof. The Selling Stockholder has executed and delivered a Power of
Attorney and a Custody Agreement in the form attached hereto as Exhibit B
(collectively, the "Agreement and Power of Attorney") pursuant to which the
Selling Stockholder has placed the Optional Shares in custody and appointed the
person or persons designated therein with authority to execute and deliver this
Agreement on behalf of the Selling Stockholder and to take certain other actions
with respect thereto and hereto. The Offered Shares and the Optional Shares are
hereinafter collectively referred to as the "Shares." The Company and the
Selling Stockholder, intending to be legally bound hereby, confirm their
respective agreements with each of the Underwriters as follows:
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) The Company has prepared in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules, regulations, releases and instructions (the
"Regulations") of the Securities and Exchange Commission (the "SEC")
under the Act in effect at all applicable times and has filed with the
SEC a registration statement on Form S-1 (File No. 333-25015) and one
or more amendments thereto registering the Shares under the Act. If
the Company elects to rely on Rule 462(b) of the Regulations to
register a portion of the Shares, a registration statement on Form S-1
relating to the Shares (the "Rule 462 registration statement") has
been or will be prepared by the Company under the Act and the
Regulations and has been or will be filed with the SEC. Any
preliminary prospectus included in such registration statement or
filed with the SEC pursuant to Rule 424(a) of the Regulations is
hereinafter called a "Preliminary Prospectus." The various parts of
such initial registration statement, including all exhibits thereto
and the information contained in the form of final prospectus filed
with the SEC pursuant to Rule 424(b) of the Regulations in accordance
with Section 5(a) of this Agreement and deemed by virtue of Rule 430A
of the Regulations to be part of the registration statement at the
time it was declared effective, each as amended at the time
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the registration statement became effective, and any Rule 462
registration statement at the time it becomes or became effective, are
hereinafter collectively called the "Registration Statement." The
final prospectus in the form included in the Registration Statement
and any Rule 462 registration statement or first filed with the SEC
pursuant to Rule 424(b) of the Regulations and any amendments or
supplements thereto is hereinafter collectively called the
"Prospectus."
(ii) The Registration Statement and any Rule 462 registration
statement have become effective under the Act as of their respective
Effective Date (as defined below), and the SEC has not issued any stop
order suspending the effectiveness of such Registration Statement or
Rule 462 registration statement or preventing or suspending the use of
the Preliminary Prospectus nor, to the knowledge of the Company, has
the SEC instituted, contemplated or threatened to institute
proceedings with respect to such an order. No stop order suspending
the sale of the Shares in any jurisdiction designated by the
Representatives pursuant to Section 5(f) hereof has been issued, and
no proceedings for that purpose, to the knowledge of the Company, have
been instituted or are contemplated or threatened. The Company has
complied in all material respects with any request of the SEC, or any
state securities commission in a state designated by the
Representatives pursuant to Section 5(f) hereof, for additional
information to be included in the Registration Statement or Prospectus
or otherwise. Each Preliminary Prospectus conformed to the Act and the
Regulations as of its date in all material respects and did not as of
its date contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, except the foregoing shall not apply
to statements in or omissions from any Preliminary Prospectus in
reliance upon and in conformity with information furnished to the
Company in writing by or on behalf of any Underwriter through the
Representatives expressly for use therein. The Registration Statement
and any Rule 462 registration statement on the date on which it is
declared effective by the SEC (the "Effective Date") conformed, and
any post-effective amendment thereof on the date it shall become
effective, and the Prospectus at the time it is filed with the SEC
pursuant to Rule 424(b) and on the Closing Date (as defined in Section
3 hereof) and any Option Closing Date (as defined in Section 4(b)
hereof), will conform in all material respects to the requirements of
the Act and the Regulations, and neither the Registration Statement,
any Rule 462 registration statement, any post-effective amendment
thereof nor the Prospectus will, on any of such respective dates,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
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statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the
Registration Statement, any Rule 462 registration statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any Underwriter
through the Representatives expressly for use therein.
(iii) Each of the Company and the Subsidiaries (as defined
herein) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation with all
necessary power and authority, corporate and other, and all required
licenses, permits, certifications, registrations, approvals, consents
and franchises, to own or lease and operate its properties and to
conduct its business as described in the Prospectus. The Company has
full power and authority, corporate and other, to execute, deliver and
perform this Agreement. Each of the Company and the Subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which such qualification is required,
except where the failure so to qualify would not have a material
adverse effect on the general affairs, properties, condition
(financial or otherwise), results of operations, stockholders' equity,
business or prospects of the Company and the Subsidiaries. The Company
does not own any stock or other equity interest in any corporation,
partnership, joint venture or other entity other than Orbit Advanced
Technologies, Inc., a Delaware corporation and its wholly owned
subsidiary, Flam & Xxxxxxx, Inc., a Delaware corporation ("Flam &
Xxxxxxx") and Orbit F. R. Engineering, Ltd., an Israeli corporation
(collectively, the "Subsidiaries"). For the purposes of this
Agreement, the term "Subsidiary") shall also include Advanced
Electromagnetics, Inc. ("AEMI"), a California corporation. No
Subsidiary is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making other distributions
on such Subsidiary's capital stock, from repaying to the Company any
loans or advances to such Subsidiary or from transferring any of such
Subsidiary's property or assets to the Company or any other
Subsidiary, except as disclosed in the Prospectus. All material
transactions between the Company and the Subsidiaries and the
officers, directors and stockholder of the Company have been
accurately disclosed in the Registration Statement and the terms of
each such transaction are fair to the Company and no less favorable to
the Company than the terms that could have been obtained from
unrelated parties.
(iv) All of 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, or will be owned
beneficially in the case of AEMI upon the Closing Date, by the Company
free and clear of all liens, security interests, pledges, charges,
encum-
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brances, defects, stockholders' agreements, voting trusts, equities or
claims of any nature whatsoever.
(v) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due execution by the
Representatives, constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general
equitable principles and except as the enforceability of rights to
indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy underlying such
laws.
(vi) The issue and sale of the Shares to be issued and sold by
the Company and the execution, delivery and performance of this
Agreement by the Company does not and will not, with or without the
giving of notice or the lapse of time, or both, (A) conflict with any
terms or provisions of the Certificate of Incorporation or By-laws, as
amended to the date hereof of the Company or any of the Subsidiaries;
(B) result in a breach of, constitute a default under, result in the
termination or modification of or result in the creation or imposition
of any lien, security interest, charge or encumbrance upon any of the
properties of the Company or any of the Subsidiaries pursuant to, any
indenture, mortgage, deed of trust, contract, commitment or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of the properties of the
Company or any of the Subsidiaries are bound or affected; (C) violate
any law, rule, regulation, judgment, order or decree of any government
or governmental agency, instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of the Subsidiaries or any
of the properties or business of the Company or any of the
Subsidiaries or (D) result in a breach, termination or lapse of the
power and authority of the Company or any of the Subsidiaries to own
or lease and operate its properties and conduct its business as
described in the Prospectus.
(vii) At the date or dates indicated in the Prospectus, the
Company had the capitalization set forth under the caption
"Capitalization" in the Prospectus and will have the pro forma
capitalization and the pro forma as adjusted capitalization set forth
under the caption "Capitalization" in the Prospectus. On the Effective
Date, the Closing Date and any Option Closing Date, there will be no
options or warrants for the purchase of, other outstanding rights to
purchase, agreements or obligations to issue or agreements or other
rights to convert or exchange any obligation or security into, capital
stock of the Company or any of the Subsidiaries or securities
convertible into or exchangeable
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for capital stock of the Company or any such Subsidiary, except as
described in the Registration Statement or the Prospectus with respect
to the (A) outstanding options that have been granted to employees and
directors to purchase 492,300 Common Shares (the "Employee Options")
and (B) the Over-allotment Option granted hereunder.
(viii) The authorized capital stock of the Company, including,
without limitation, the outstanding Common Shares and the Shares being
issued on the Closing Date and any Option Closing Date, conforms in
all material respects with the descriptions thereof in the Prospectus,
and such descriptions conform in all material respects with the
descriptions thereof set forth in the instruments defining the same.
The information in the Prospectus insofar as it relates to the
Employee Options as of the Effective Date and immediately prior to the
Closing Date is true and correct in all material respects.
(ix) The outstanding Common Shares have been duly authorized
and are validly issued, fully paid and non-assessable and the Employee
Options have been duly authorized and validly issued and are legal,
valid and binding obligations enforceable against the Company in
accordance with the terms thereof. The Common Shares issuable pursuant
to the Employee Options, when issued in accordance with the terms
thereof, will be duly authorized, validly issued, fully-paid and
nonassessable. None of such outstanding Common Shares, Employee
Options or shares of capital stock of each Subsidiary were, and none
of such issuable Common Shares will be, issued in violation of any
preemptive rights of any security holder of the Company or any
Subsidiary that have not been waived. The Company has reserved a
sufficient number of Common Shares for issuance pursuant to the
Employee Options. The holders of the outstanding Common Shares are not
subject to personal liability solely by reason of being such holders,
and the holders of the Common Shares issuable pursuant to the Employee
Options will not be subject to personal liability solely by reason of
being such holders. The offers and sales of the outstanding Common
Shares, the Employee Options and the shares of capital stock of each
Subsidiary were, and the issuance of the Common Shares pursuant to the
Employee Options will be, made in conformity with applicable
registration requirements or exemptions therefrom under federal and
applicable state securities laws.
(x) The issuance and sale of the Shares by the Company have
been duly authorized and, when the Shares have been duly delivered
against payment therefor as contemplated by this Agreement, the Shares
will be validly issued, fully paid and nonassessable, and the holders
thereof will not be subject to personal liability solely by reason of
being such holders. None of the Shares will be issued in violation of
any preemptive rights of any stockholder of
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the Company. The certificates representing the Shares are in proper
legal form under, and conform in all respects to the requirements of,
the Delaware General Corporation law, as amended (the "DGCL"). Neither
the filing of the Registration Statement nor the offering or sale of
the Shares as contemplated by this Agreement gives any security holder
of the Company any rights, other than those which have been waived,
for or relating to the registration of any Common Shares or other
security of the Company.
(xi) No consent, approval, authorization, order, registration,
license or permit of any court, government, governmental agency,
instrumentality or other regulatory body or official is required for
the valid authorization, issuance, sale and delivery by the Company of
any of the Shares, or for the execution, delivery or performance by
the Company of this Agreement, except such as may be required for the
registration of the Shares under the Act, the Regulations and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which consent, approval and authorization have been obtained, and for
compliance with the applicable state securities or Blue Sky laws, or
the By-laws, rules and other pronouncements of the National
Association of Securities Dealers, Inc. ("NASD"). Upon the
effectiveness of the Registration Statement, the Common Shares will be
registered pursuant to Section 12(g) of the Exchange Act, and will be
listed on the National Market System ("NMS") of the NASD Automated
Quotation System ("Nasdaq"). The Company has taken no action designed
to, or likely to, have the effect of terminating the registration of
the Common Shares from the Nasdaq NMS, nor has the Company received
any notification that the SEC or the NASD is contemplating terminating
such registration or listing.
(xii) The statements in the Registration Statement and the
Prospectus, insofar as they are descriptions of or references to
statutes, legal and governmental proceedings or contracts, agreements
or other documents, are accurate in all material respects and present
or summarize fairly, in all material respects, the information
required to be disclosed under the Act or the Regulations, and there
are no contracts, agreements or other documents required to be
described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
under the Act or the Regulations that have not been so described,
referred to or filed, as required.
(xiii) The consolidated financial statements of the Company and
its consolidated subsidiaries and the financial statements of Flam &
Xxxxxxx (including the notes thereto) filed as part of the Preliminary
Prospectus, the Prospectus and the Registration Statement present
fairly, in all material respects, the financial position of the
Company as of the respective dates thereof, and the results of
operations and cash flows of the Company and its consolidated
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subsidiaries, on a consolidated basis, and of Flam & Xxxxxxx,
respectively at the dates and for the periods indicated therein, all
in conformity with generally accepted accounting principles
consistently applied. The supporting schedules included in the
Registration Statement fairly state in all material respects the
information required to be stated therein in relation to the basic
financial statements taken as a whole. The financial information
included in the Prospectus under the captions "Prospectus Summary" and
"Selected Consolidated Financial Data" presents fairly the information
shown therein and has been compiled on a basis consistent with that of
the audited financial statements included in the Registration
Statement. No other financial statements or schedules of any
Subsidiary are required by the Act or the Regulations to be included
in the Registration Statement or the Prospectus.
(xiv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, there has not been (A) any material adverse
change, including, whether or not insured against, any material loss
or damage to any assets, or development involving a prospective
material adverse change, in the general affairs, properties, assets,
management, condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company or any of
the Subsidiaries, (B) any transaction entered into by the Company or
any of the Subsidiaries that is material to the Company and the
Subsidiaries, (C) any dividend or distribution of any kind declared,
paid or made by the Company or any of the Subsidiaries on their
respective capital stock, (D) any liabilities or obligations, direct
or indirect, incurred by the Company or any of the Subsidiaries that
are material to the Company and the Subsidiaries or (E) any material
change in the short-term debt or long-term debt of the Company or any
of the Subsidiaries. Neither the Company nor any of the Subsidiaries
has any contingent liabilities or obligations that are material and
that are not disclosed in the Prospectus.
(xv) The Company has not distributed and, prior to the later to
occur of the Closing Date, the Option Closing Date or the completion
of the distribution of the Shares, will not distribute any offering
material in connection with the offering and sale of the Shares other
than the Registration Statement, the Preliminary Prospectus, the
Prospectus and other materials, if any, permitted by the Act and the
Regulations.
(xvi) The Company and each of the Subsidiaries has filed with
the appropriate federal state and local governmental agencies, and all
foreign countries and political subdivisions thereof, all material tax
returns that are required to be filed or has duly obtained extensions
of time for the filing thereof and has paid all taxes shown on
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such returns and all material assessments received by it to the extent
that the same have become due. The Company and each of the
Subsidiaries has not executed or filed with any taxing authority,
foreign or domestic, any agreement extending the period for assessment
or collection of any income or other taxes, is not a party to any
pending action or proceeding by any foreign or domestic governmental
agencies for the assessment or collection of taxes, and no claims for
assessment or collection of taxes have been asserted against the
Company or any of the Subsidiaries that might materially adversely
affect the general affairs, assets, properties, assets, condition
(financial or otherwise), results of operations, stockholders' equity,
business or prospects of the Company and the Subsidiaries.
(xvii) To the best of the Company's knowledge, Ernst & Young LLP,
which has certified certain financial statements of the Company and
its consolidated subsidiaries and of Flam & Xxxxxxx including in the
Registration Statement and the Prospectus, are independent public
accountants as required by the Act, the Exchange Act and the
Regulations. The statements included in the Registration Statement
with respect to Ernst & Young LLP pursuant to Rule 509 of Regulation
S-K are true and correct in all material respects.
(xviii) Neither the Company nor any of the Subsidiaries is, or
with the giving of notice or the passage of time or both would be, in
violation of, or in default under, any of the terms or provisions of
(A) its Certificate of Incorporation or By-laws, as amended to the
date hereof, or (B) except to the extent such action would not have a
material adverse effect on the general affairs, properties, assets,
condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company and the
Subsidiaries, (1) any indenture, mortgage, deed of trust, contract,
loan agreement, commitment or other agreement or instrument to which
it is a party or by which it or any of its properties is bound or
affected; (2) any law, rule, regulation, judgment, order or decree of
any government or governmental agency, instrumentality or court,
domestic or foreign, having jurisdiction over it or any of its
properties or business or (3) any license, permit, certification,
registration, approval, consent or franchise referred to in subsection
(iii) of this Section 1(a).
(xix) Other than as disclosed in the Prospectus, there are no
claims, actions, suits, proceedings, arbitrations, investigations or
inquiries pending before or, to the knowledge of the Company,
threatened or contemplated by, any governmental agency,
instrumentality, court or tribunal, domestic or foreign, or before any
private arbitration tribunal, relating to or affecting the Company or
any of the Subsidiaries or any of their respective properties or
business that might affect the issuance or validity of any of the
Shares or the validity of any of the outstanding
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Common Shares, or that, if determined adversely to the Company, would,
in any case or in the aggregate, result in any material adverse change
in the general affairs, properties, assets, condition (financial or
otherwise), results of operations, stockholders' equity, business or
prospects of the Company and the Subsidiaries; nor, to the knowledge
of the Company, is there any reasonable basis for any such claim,
action, suit, proceeding, arbitration, investigation or inquiry. There
are no outstanding orders, judgments or decrees of any court,
governmental agency, instrumentality or other tribunal enjoining the
Company or any Subsidiary from, or requiring the Company to take or
refrain from taking, any action, or to which the Company or any
Subsidiary, or their respective properties, assets or business is
bound or subject.
(xx) Except as disclosed in the Prospectus, the Company and
each of the Subsidiaries owns, or possesses adequate rights to use,
all patents, patent applications, trademarks, trademark registrations,
applications for trademark registration, trade names, service marks,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
technology, information, systems, design methodologies and devices or
procedures developed or derived from the Company's or a Subsidiary's
business), trade secrets, confidential information, processes and
formulations necessary for, used in or proposed to be used in the
conduct of its business as described in the Prospectus (collectively,
the "Intellectual Property") that, if not so owned, would materially
adversely affect the general affairs, properties, condition (financial
or otherwise), results of operations, stockholders' equity, business
or prospects of the Company and the Subsidiaries; neither the Company
nor any of the Subsidiaries has knowingly infringed, is infringing or
has received any notice of conflict with the asserted rights of others
with respect to the Intellectual Property that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the general affairs,
properties, condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company and the
Subsidiaries, and the Company does not know of any reasonable basis
therefor; and, to the knowledge of the Company, no others have
infringed upon or are in conflict with its Intellectual Property.
(xxi) The Company and each of the Subsidiaries has good and
marketable title to all personal property (tangible and intangible)
described in the Prospectus as being owned by it, free and clear of
all liens, security interests, charges or encumbrances, except such as
are described in the Prospectus or such as do not materially affect
the value or the transferability of such property and do not
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interfere in any material respect with the use made, or proposed to be
made, of such property by the Company or such Subsidiary. The Company
and each of the Subsidiaries has adequately insured with insurers of
recognized financial responsibility its personal property against loss
or damage by fire or other casualty and maintains, in adequate
amounts, insurance against such other risks as are prudent and
customary in the businesses in which they are engaged. The Company
does not own any real property, and all real property used or leased
by the Company or any of the Subsidiaries, as described in the
Prospectus (collectively, the "Premises"), is held by the Company or
such Subsidiary under a valid, subsisting and enforceable lease. The
Premises, and all operations conducted thereon, are now and, since the
Company or such Subsidiary began to use such Premises, always have
been and, to the knowledge of the Company, prior to when the Company
or such Subsidiary began to use such Premises, always had been, in
compliance with all federal, state and local statutes, ordinances,
regulations, rules, standards and requirements of common law
concerning or relating to industrial hygiene and the protection of
health and the environment (collectively, "the Environmental Laws"),
except to the extent that any failure to be in such compliance would
not materially adversely affect the general affairs, properties,
condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company and the
Subsidiaries. To the knowledge of the Company, there are no conditions
on, about, beneath or arising from the Premises that might give rise
to liability, the imposition of a statutory lien or require a
"Response," "Removal" or "Remedial Action," as defined herein, under
any of the Environmental Laws, and that would materially adversely
affect the general affairs, properties, condition (financial or
otherwise), results of operations, stockholders' equity, business or
prospects of the Company and the Subsidiaries. Neither the Company nor
any of the Subsidiaries has received notice, and does not have actual
or constructive knowledge, of any claim, demand, investigation,
regulatory action, suit or other action instituted or threatened
against it or the Premises relating to any of the Environmental Laws.
Neither the Company nor any of the Subsidiaries has received any
notice of material violation, citation, complaint, order, directive,
request for information or response thereto, notice letter, demand
letter or compliance schedule to or from any governmental or
regulatory agency arising out of or in connection with Hazardous
Substances (as defined by applicable Environmental Laws) on, about,
beneath, arising from or generated at the Premises. As used in this
subsection, the terms "Response," "Removal" and "Remedial Action"
shall have the respective meanings assigned to such terms under
Sections 101 (23)-101 (25) of the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act.
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(xxii) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that: (A) transactions are executed in
accordance with management's general or specific authorization; (B)
transactions are recorded as necessary in order to permit preparation
of the Company's consolidated financial statements in accordance with
generally accepted accounting principles and to maintain
accountability for assets; (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 existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxiii) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered under
the Act or exempt from the registration requirements of the Act by
reasons of Sections 3(b), 4(2) or 4(6) thereof and were duly
registered or the subject of an available exemption from the
registration requirements of applicable state securities or blue sky
laws.
(xxiv) Each contract or other instrument (however characterized
or described) to which the Company or any of the Subsidiaries is a
party or by which any of its properties or business is bound or
affected and to which reference has been made in the Prospectus or
which has been filed as an exhibit to the Registration Statement has
been duly and validly executed by the Company or such Subsidiary and,
to the knowledge of the Company, by the other parties thereto. Except
as described in the Prospectus, each such contract or other instrument
is in full force and effect in all material respects and, to the
knowledge of the Company, is enforceable against the parties thereto
in all material respects in accordance with its terms, and neither the
Company nor such Subsidiary is and, to the knowledge of the Company,
no other party is in material default thereunder and no event has
occurred that, with the lapse of time or the giving of notice, or
both, would constitute a material default thereunder.
(xxv) Except for the Company's 401(k), disability, health and
life insurance plans, neither the Company nor any Subsidiary has had
any employee benefit plan, profit sharing plan, employee pension
benefit plan or employee welfare benefit plan or deferred compensation
arrangements (collectively, "Plans") that are subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder ("ERISA"). All Plans
that are subject to ERISA are, and have been at all times since their
establishment, in compliance with ERISA in all material respects and,
to the extent required by the Internal Revenue Code of 1986, as
amended (the "Code"), in compliance with the Code in all material re-
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spects. Neither the Company nor any Subsidiary has had any employee
pension benefit plan that is subject to Part 3 of Subtitle B of Title
I of ERISA or any defined benefit plan or multiemployer plan. Neither
the Company nor any Subsidiary has maintained retired life and retired
health insurance plans that are employee welfare benefit plans
providing for continuing benefit or coverage for any employee or any
beneficiary of any employee after such employee's termination of
employment, except as required by Section 4980B of the Code. To the
knowledge of the Company, no fiduciary or other party in interest with
respect to any of the Plans has caused any of such Plans to engage in
a prohibited action as defined in Section 406 of ERISA. As used in
this subsection, the terms "defined benefit plan," "employee benefit
plan," "employee pension benefit plan," "employee welfare benefit
plan," "fiduciary" and "multiemployer plan" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
(xxvi) No labor dispute exists with the employees of the Company
or any of the Subsidiaries and, to the knowledge of the Company, no
such labor dispute is imminent. The Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
principal suppliers, contractors or customers that would materially
adversely affect the general affairs, properties, condition (financial
or otherwise), results of operations, stockholders' equity, business
or prospects of the Company and the Subsidiaries.
(xxvii) Except as disclosed in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in
connection with the transactions contemplated herein.
(xxviii) Except as described in the Prospectus, neither the Company
nor any Subsidiary is a party to, nor is it bound by, any agreement
pursuant to which royalties, honoraria or fees are payable by the
Company or such Subsidiary to any person by reason of the ownership or
use of any Intellectual Property that is material to the business of
the Company or such Subsidiary.
(xxix) The Company is familiar with the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future
to continue to conduct, its affairs in such a manner to ensure that it
will not become an "investment company" within the meaning of the 1940
Act and such rules and regulations.
(xxx) Neither the Company nor any of its officers, directors or
affiliates has (A) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to consti-
-13-
tute, 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 (1) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of,
the Shares or (2) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the
Company.
(xxxi) The Company has obtained for the benefit of the Company
and the Underwriters from the Selling Stockholder and each of the
Company's directors and executive officers a written agreement that
for a period of 180 days from the date of the Prospectus such Selling
Stockholder, director or executive officer will not, without the prior
written consent of the Representatives, offer, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock.
(xxxii) Neither the Company, any of the Subsidiaries, nor any
director, officer, employee or other person associated with or acting
on behalf of the Company or any Subsidiary has, directly or
indirectly: used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
Any certificate signed by any officer of the Company in such capacity
and delivered to the Representatives or to counsel for the Underwriters
pursuant to this Agreement shall be deemed a representation and warranty by
the Company to the several Underwriters as to the matters covered thereby.
(b) Representations and Warranties of the Selling Stockholder. The
Selling Stockholder represents and warrants to, and agrees with, each of
the several Underwriters and the Company that:
(i) The Selling Stockholder is a corporation in good standing
under the laws of the State of Israel. The Selling Stockholder has
full power and authority to own its assets and to conduct its business
as described in the Prospectus and is duly qualified to do business in
each jurisdiction in which it owns or leases real property or in which
the conduct of its business requires such qualification.
(ii) The Selling Stockholder has full right, power (corporate
and other) and authority to enter into this
-14-
Agreement and the Agreement and Power of Attorney and to sell, assign,
transfer and deliver to the Underwriters the Shares to be sold by the
Selling Stockholder hereunder; and the execution and delivery of this
Agreement and the Agreement and Power of Attorney have been duly
authorized by all necessary action of the Selling Stockholder.
(iii) The Selling Stockholder has duly executed and delivered
this Agreement and the Agreement and Power of Attorney and, assuming
due execution of this Agreement by the Representatives of the
Underwriters, this Agreement and the Agreement and Power of Attorney
constitute the valid and binding agreements of the Selling Stockholder
enforceable against the Selling Stockholder in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating
to or affecting the enforcement of creditors' rights generally and to
general equitable principles and, with respect to this Agreement and
the Agreement and Power of Attorney, except as the enforceability of
rights to indemnity and contribution under this Agreement may be
limited under applicable securities laws or the public policy
underlying such laws.
(iv) No consent, approval, authorization, order or declaration
of or form, or registration, qualification or filing with, any court
or governmental agency or body is required for the sale of the Shares
to be sold by the Selling Stockholder or the consummation of the
transactions contemplated by this Agreement and the Agreement and
Power of Attorney, except the registration of such Shares under the
Act (which, if the Registration Statement is not effective as of the
time of execution hereof, shall be obtained as provided in this
Agreement) and such as may be required under state securities or blue
sky laws in connection with the offer, sale and distribution of such
Shares by the Underwriters.
(v) The sale of the Shares to be sold by the Selling
Stockholder and the performance of this Agreement and the Agreement
and the Power of Attorney and the consummation of the transactions
therein and herein contemplated will not conflict with, or, with or
without the giving of notice or the passage of time or both, result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which the
Selling Stockholder or any of its subsidiaries is a party or to which
any of their respective properties or assets is subject, nor will such
action conflict with or violate any provision of the charter documents
or by-laws of the Selling Stockholder or governing instruments of any
of its subsidiaries or any statute, rule or regulation or any order,
judgement or decree of any court or governmental agency or body having
jurisdiction over the Selling Stock-
-15-
holder or any of the Selling Stockholder's properties or assets.
(vi) The Selling Stockholder has, and immediately prior to the
Option Closing Date (as defined in Section 4 hereof), the Selling
Stockholder will have, good and valid title to the Shares to be sold
by the Selling Stockholder hereunder, free and clear of all liens,
security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of any
nature whatsoever (other than pursuant to the Agreement and Power of
Attorney); and, upon delivery of such Shares against payment therefor
as provided herein, good and valid title to such Shares, free and
clear of all liens, security interests, pledges, charges,
encumbrances, defects, stockholders' agreements, voting trusts,
equities or claims of any nature whatsoever, will pass to the several
Underwriters.
(vii) Neither the Selling Stockholder nor any of its officers,
directors or affiliates has (A) taken, directly or indirectly, any
action designed to cause or result in, or that has constituted or
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 (1) sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of, the Shares or (2) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(viii) To the best knowledge of the Selling Stockholder, the
representations and warranties of the Company contained in Section
1(a) hereof are true and correct.
(ix) When any Preliminary Prospectus was filed with the SEC it
(A) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the
requirements of, the Act and the Regulations thereunder, and (B) did
not include 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 and at the Option Closing Date, it (A)
contained or will contain 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 and the Regulations
thereunder and (B) did not or will not include any untrue statement of
a material fact or omit to state any material fact necessary to make
the statements therein not misleading. When the Prospectus or any
amendment or supplement thereto is filed with the SEC pursuant to Rule
424(b) (or,
-16-
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), and at the Option Closing Date, the Prospectus,
as amended or supplemented at any such time, (A) contained or will
contain 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 and the Regulations thereunder and (B) did
not or will not include 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 paragraph
(viii) 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 in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein.
(x) Certificates in negotiable form for the Optional shares to
be sold hereunder by the Selling Stockholder have been placed in
custody, for the purpose of making delivery of such Optional Shares
under this Agreement, under the Agreement and Power of Attorney which
appoints ___________ as custodian (the "Custodian") for the Selling
Stockholder. The Selling Stockholder agrees that the Optional Shares
represented by the certificates held in custody for it under the
Agreement and Power of Attorney are for the benefit of and coupled
with and subject to the interest hereunder of the Custodian, the
Underwriters and the Company, that the arrangements made by the
Selling Stockholder for such custody and the appointment of the
Custodian by the Selling Stockholder are irrevocable, and that the
obligations of the Selling Stockholder hereunder shall not be
terminated by operation of law, the liquidation of the Selling
Stockholder or any other event, and after any such liquidation or
event, certificates for the Optional Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this
Agreement and any actions taken by the Custodian pursuant to the
Agreement and Power of Attorney shall be as valid as if such
liquidation or other event had not occurred, regardless of whether or
not the Custodian shall have received notice thereof.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Code, with respect to the transactions
herein contemplated, the Selling Stockholder agrees to deliver to the
Representatives prior to or at the Option Closing Date, a properly
completed and executed United States Treasury Department Form W-9 or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof.
-17-
2. Purchase and Sale of Offered Shares. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company shall sell the
Offered Shares to the several Underwriters at the Offering Price less the
underwriting discount shown on the cover page of the Prospectus (the
"Underwriting Discount"), and the Underwriters, severally and not jointly,
shall purchase from the Company on a firm commitment basis, at the Offering
Price less the Underwriting Discount, the respective Offered Shares set forth
opposite their names on Schedule I hereto. In making this Agreement, each
Underwriter is contracting severally, and not jointly, and except as provided in
Sections 4 and 11 hereof, the agreement of each Underwriter is to purchase only
that number of Offered Shares specified with respect to that Underwriter in
Schedule I. The Underwriters shall offer the Offered Shares to the public as
set forth in the Prospectus.
3. Payment and Delivery. Payment for the Offered Shares shall be made to
the Company by certified or official bank check payable to its order in
Philadelphia Clearing House funds, at the offices of Duane, Morris & Heckscher,
4200 Xxx Xxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or at such other
location as shall be agreed upon by the Company and the Representatives, or in
immediately available funds wired to such account as the Company may specify
(with all costs and expenses incurred by the Underwriters in connection with
such settlement in immediately available funds (including, but not limited to,
interest or cost of funds expenses) to be borne by the Company), against
delivery of the Offered Shares to the Representatives at the offices of The
Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, for the
respective accounts of the Underwriters. Such payment and delivery will be made
at 10:00 A.M., Philadelphia time, on the fifth business day after the date of
this Agreement or at such other time and date not later than five business days
thereafter as the Representatives and the Company shall agree upon. Such time
and date are referred to herein as the "Closing Date." The certificates
representing the Offered Shares to be sold and delivered will be in such
denominations and registered in such names as the Representatives request not
less than two full business days prior to the Closing Date, and will be made
available to the Representatives for inspection, checking and packaging at the
office of The Depository Trust Company in New York, New York or at such other
location in New York, New York as is specified by the Representatives, not less
than one full business day prior to the Closing Date.
4. Option to Purchase Optional Shares.
(a) For the purposes of covering any over-allotments in connection
with the distribution and sale of the Offered Shares as contemplated by the
Prospectus, subject to the terms and conditions herein set forth, the
several Underwriters are hereby granted an option by the Selling
Stockholder to purchase all or any part of the Optional Shares from the
Selling Stockholder (the "Over-allotment Option"). The purchase price to be
paid for the Optional Shares shall be the Offering Price less the
-18-
Underwriting Discount. The Over-allotment Option granted hereby may be
exercised by the Representatives on behalf of the several Underwriters as
to all or any part of the Optional Shares at any time and from time to time
within 30 business days after the Effective Date. No Underwriter shall be
under any obligation to purchase any Optional Shares prior to an exercise
of the Over-allotment Option.
(b) The Over-allotment Option granted hereby may be exercised by the
Representatives on behalf of the several Underwriters by giving notice to
the Selling Stockholder by a letter sent by registered or certified mail,
postage prepaid, telex, telegraph, telegram or facsimile (such notice to be
effective when sent), addressed as provided in Section 13 hereof, setting
forth the number of Optional Shares to be purchased, the date and time for
delivery of and payment for the Optional Shares and stating that the
Optional Shares referred to therein are to be used for the purpose of
covering over-allotments in connection with the distribution and sale of
the Offered Shares. If such notice is given prior to the Closing Date, the
date set forth therein for such delivery and payment shall not be earlier
than either five full business days thereafter or the Closing Date,
whichever occurs later. If such notice is given on or after the Closing
Date, the date set forth therein for such delivery and payment shall be a
date selected by the Representatives that is not later than five full
business days after the exercise of the Over-allotment Option. The date and
time set forth in such a notice is referred to herein as an "Option Closing
Date," and a closing held pursuant to such a notice is referred to herein
as an "Option Closing." The number of Optional Shares to be sold to each
Underwriter pursuant to each exercise of the Over-allotment Option shall be
the number that bears the same ratio to the aggregate number of Optional
Shares being purchased through such Over-allotment Option exercise as the
number of Offered Shares opposite the name of such Underwriter in Schedule
I hereto bears to the total number of all Offered Shares; subject, however,
to such adjustment as the Representatives may approve to eliminate
fractional shares and subject to the provisions for the allocation of
Optional Shares purchased for the purpose of covering over-allotments set
forth in Sections 9 and 12 of the Agreement Among Underwriters. Upon each
exercise of the Over-allotment Option, the Selling Stockholder shall become
obligated to issue and sell to the Representatives for the respective
accounts of the Underwriters, and on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the
terms and conditions herein set forth, the several Underwriters shall
become severally but not jointly obligated to purchase from the Selling
Stockholder, the number of Optional Shares specified in each notice of
exercise of the Over-allotment Option.
(c) Payment for the Optional Shares shall be made to the Selling
Stockholder by certified or official bank check payable to its order in
Philadelphia Clearing House funds, at the offices of Duane, Morris &
Heckscher, 4200 Xxx Xxxxxxx Xxxxx,
-00-
Xxxxxxxxxxxx, XX 00000, or such other location as shall be agreed upon by
the Selling Stockholder and the Representatives, or in immediately
available funds wired to such account as the Selling Stockholder may
specify (with all costs and expenses incurred by the Underwriters in
connection with such settlement in immediately available funds (including,
but not limited to, interest or cost of funds expenses) to be borne by the
Selling Stockholder), against delivery of the Optional Shares to the
Representatives at the offices of The Depository Trust Company, 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, for the respective accounts of the
Underwriters. The certificates representing the Optional Shares to be
issued and delivered will be in such denominations and registered in such
names as the Representatives request not less than two full business days
prior to the Option Closing Date, and will be made available to the
Representatives for inspection, checking and packaging at the office of
The Depository Trust Company in New York, New York or at such other
location in New York, New York as is specified by the Representatives not
less than one full business day prior to the Option Closing Date.
5. Certain Covenants and Agreements of the Company and the Selling
Stockholder.
(a) Covenants of the Company. The Company covenants and agrees
with the several Underwriters as follows:
(i) If Rule 430A of the Regulations is employed, the Company
will timely file the Prospectus pursuant to and in compliance with
Rule 424(b) of the Regulations and will advise the Representatives of
the time and manner of such filing.
(ii) The Company will not at any time, whether before or after
the Registration Statement shall have become effective, during such
period as, in the opinion of counsel for the Underwriters, the
Prospectus is required by law to be delivered in connection with
sales by the Underwriters or a dealer, file or publish any amendment
or supplement to the Registration Statement or the Prospectus of
which the Representatives have not been previously advised and
furnished a copy, or which is not in compliance with the Regulations,
or, during the period before the distribution of the Offered Shares
and the Optional Shares is completed, file or publish any amendment
or supplement to the Registration Statement or the Prospectus to
which the Representatives reasonably object in writing.
(iii) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to
become effective and will advise the Representatives immediately, and
confirm such advice in writing, (A) when the Registration Statement,
or any post-effective amendment to the Registration Statement, is
filed
-20-
with the SEC, (B) of the receipt of any comments from the SEC, (C)
when the Registration Statement has become effective and when any
post-effective amendment thereto becomes effective, or when any
supplement to the Prospectus or any amended Prospectus has been
filed, (D) of any request of the SEC for amendment or supplementation
of the Registration Statement or Prospectus or for additional
information, (E) during the period when the Prospectus is required to
be delivered under the Act and Regulations, of the happening of any
event which in the Company's judgment makes any material statement in
the Registration Statement or the Prospectus untrue or which requires
any changes to be made in the Registration Statement or the
Prospectus in order to make any material statements therein not
misleading and (F) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus, the suspension of the qualification of any of the
Shares for offering or sale in any jurisdiction in which the
Underwriters intend to make such offers or sales, or of the
initiation or threatening of any proceedings for any of such
purposes. The Company will use its best efforts to prevent the
issuance of any such stop order or of any order preventing or
suspending such use and, if any such order is issued, to obtain as
soon as possible the lifting thereof.
(iv) The Company has delivered to the Representatives, without
charge, and will continue to deliver from time to time until the
Effective Date, as many copies of each Preliminary Prospectus as the
Representatives may reasonably request. The Company will deliver to
the Representatives, without charge, as soon as possible after the
Effective Date, and thereafter from time to time during the period
when delivery of the Prospectus is required under the Act, such
number of copies of the Prospectus (as supplemented or amended, if
the Company makes any supplements or amendments to the Prospectus) as
the Representatives may reasonably request. The Company hereby
consents to the use of such copies of the Preliminary Prospectus and
the Prospectus for the purposes permitted by the Act, the Regulations
and the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the
Prospectus is required by the Act to be delivered in connection with
sales by any Underwriter or dealer. The Company has furnished or will
furnish to the Representatives two signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether
filed before or after the Effective Date, two copies of all exhibits
filed therewith and two signed copies of all consents and
certificates of experts, and will deliver to the Representatives such
number of conformed copies of the Registration State-
-21-
ment, including financial statements and exhibits, and all
amendments thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act, the Regulations, the
Exchange Act and the rules and regulations thereunder so as to permit
the continuance of sales of and dealings in the Shares for as long as
may be necessary to complete the distribution of the Shares as
contemplated hereby. The Company will comply with all of the
provisions of any undertakings contained in the Registration
Statement.
(vi) The Company will furnish such information as may be
required and otherwise cooperate in the registration or qualification
of the Shares, or exemption therefrom, for offering and sale by the
several Underwriters and by dealers under the securities or Blue Sky
laws of such jurisdictions in which the Representatives determine to
offer the Shares, after consultation with the Company, and will file
such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification;
provided, however, that no such qualification shall be required in
any jurisdiction where, solely as a result thereof, the Company would
be subject to taxation or qualification as a foreign corporation
doing business in such jurisdiction where it is not now so qualified
or to take any action which would subject it to service of process
in suits, other than those arising out of the offering or sale of the
Shares, in any jurisdiction where it is not now so subject. The
Company will, from time to time, prepare and file such statements and
reports as are or may be required to continue such qualification in
effect for so long a period as is required under the laws of such
jurisdictions for such offering and sale.
(vii) Subject to subsection (ii) of this Section 5(a), in case
of any event, at any time within the period during which, in the
opinion of counsel for the Underwriters, a prospectus is required to
be delivered under the Act and the Regulations, as a result of which
event any Preliminary Prospectus or the Prospectus, as then amended
or supplemented, would contain in the judgment of the Company or in
the opinion of counsel for the Underwriters an untrue statement of a
material fact, or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, if it is necessary at any
time to amend any Preliminary Prospectus or the Prospectus to comply
with the Act and the Regulations or any applicable securities or Blue
Sky laws, the Company promptly will prepare and file with the SEC,
and any applicable state securities commission, an amendment or
supplement that will correct such statement or omission or an
amendment that will effect such compliance and will furnish to the
Representatives such
-22-
number of copies of such amendment or amendments or supplement or
supplements to the Prospectus, in form and substance satisfactory to
the Representatives and counsel for the Underwriters, as the
Representatives may reasonably request. For purposes of this
subsection, the Company will furnish such information to the
Representatives, the Underwriters' counsel and counsel to the
Company as shall be necessary to enable such persons to consult with
the Company with respect to the need to amend or supplement the
Prospectus, and shall furnish to the Representatives and the
Underwriters' counsel such further information as each may from time
to time reasonably request. If the Company and the Representatives
agree that the Prospectus should be amended or supplemented, the
Company, if requested by the Representatives, will, if and to the
extent required by law, promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or
supplement.
(viii) The Company will make generally available to its security
holders as soon as practicable and in any event not later than 45
days after the end of the period covered thereby, an earnings
statement of the Company, which need not be audited unless required
by the Act or the Regulations, that shall comply with Section 11(a)
of the Act and Rule 158 under the Regulations and cover a period of
at least 12 consecutive months beginning not later than the first day
of the Company's fiscal quarter next following the Effective Date.
(ix) For a period of five years from the Effective Date, the
Company will deliver to the Representatives: (i) a copy of each
report or document, including, without limitation, reports on Forms
8-K, 10-Q and 10-K (or such similar forms as may be designated by the
SEC), registration statements and any exhibits thereto, filed or
furnished to the SEC or any securities exchange or the NASD, on the
date each such report or document is so filed or furnished; (ii) as
soon as practicable, copies of any reports or communications
(financial or other) of the Company mailed to its security holders
and (iii) every material press release in respect of the Company or
its affairs that was released or prepared by the Company.
(x) For a period of three years from the Effective Date, the
Company will deliver to the Representatives, subject to execution of
an appropriate confidentiality agreement, such additional information
concerning the business and financial condition of the Company as the
Representatives may from time to time reasonably request in writing,
and which can be prepared or obtained by the Company without
unreasonable effort or expense.
(xi) Neither the Company nor any of its officers, directors or
affiliates will (A) take, directly or indi-
-23-
rectly, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to cause or to
result in, or that 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, (B) sell, bid
for, purchase or pay anyone any compensation for soliciting purchases
of, the Shares or (C) pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company.
(xii) The Company will cause each person listed on Schedule II
hereto to execute a legally binding and enforceable agreement (a
"lock-up agreement") in the form of Exhibit C hereto to, for a period
of 180 days from the Effective Date, not sell, offer to sell,
contract to sell, grant any option for the sale of or otherwise
transfer or dispose of any Common Shares, any options to purchase
Common Shares or any securities convertible into or exchangeable for
Common Shares (excluding the issuance of Common Shares pursuant to
the Employee Options) without the prior written consent of the
Representatives, which consent will not be unreasonably withheld,
which lock-up agreement shall be in form and substance satisfactory
to the Representatives and the Underwriters' counsel, and shall
deliver such agreement to the Representatives prior to the Effective
Date. Appropriate stop transfer instructions with respect to any
Common Shares held by such person will be issued by the Company to
the transfer agent for the Common Shares.
(xiii) The Company will not sell, issue, contract to sell, offer
to sell or otherwise dispose of any Common Shares, options to
purchase Common Shares or any other security convertible into or
exchangeable for Common Shares, from the date of the Effective Date
through the period ending 180 days after the Effective Date, without
the prior written consent of the Representatives, which consent shall
not be unreasonably withheld, except for (i) the sale of the Shares
as contemplated by this Agreement and the granting of options, (ii)
the issuance of Common Shares upon the exercise of options under the
Company's 1997 Equity Incentive Plan described in the Prospectus
and (iii) in connection with the acquisition of AEMI.
(xiv) The Company will use all reasonable efforts to maintain
the listing of the Common Shares on the Nasdaq NMS.
(xv) The Company shall, at its sole cost and expense, supply
and deliver to the Representatives and the Underwriters' counsel (in
the form they require), within a reasonable period from the Closing
Date, six transaction binders, each of which shall include the
Registration Statement, as amended or supplemented, all exhibits to
the
-24-
Registration Statement, the Prospectus, the Preliminary Blue Sky
Memorandum and any supplement thereto and all other underwriting and
closing documents.
(xvi) Upon the Representatives' request, individually and not
as the Representatives of the several Underwriters, the Company shall
make available its stock transfer records for examination by the
Representatives at the offices of the Company's transfer agent for a
period of 12 months after the Effective Date.
(xvii) The Company will use the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance
with the description set forth in the Prospectus and shall file such
reports with the SEC with respect to the sale of such Shares and the
application of the proceeds therefrom as may be required in
accordance with Rule 463 under the Act.
(xviii) Following the Closing Date, the Company shall nominate
as directors for election by the Company's stockholders and, to the
extent permitted by applicable law, shall use its best efforts to
effectuate such election so that for the three years following the
Effective Date, the Company's Board of Directors shall include three
individuals who are not affiliates of the Company or its affiliates.
(xix) If at any time during the period beginning on the
Effective Date and ending on the later of (A) the date 30 days after
such Effective Date and (B) the date that is the earlier of (1) the
date on which the Company first files with the SEC a Quarterly Report
on Form 10-Q after the Effective Date and (2) the date on which the
Company first issues a quarterly financial report to stockholders
after the Effective Date, (x) any publication or event relating to or
affecting the Company shall occur as a result of which in the
reasonable opinion of the Representatives the market price of the
Shares has been or is likely to be materially affected, regardless of
whether such publication or event necessitates an amendment of or
supplement to the Prospectus, the Company will, after written notice
from the Representatives advising the Company to the effect set forth
above, forthwith prepare, consult with the Representatives
concerning the substance of, and disseminate a press release or other
public statement, reasonably satisfactory to the Representatives,
responding to or commenting on such publication or event and (y) any
rumor relating to or affecting the Company shall occur as a result of
which in the reasonable opinion of the Representatives the market
price of the Shares has been or is likely to be materially affected,
regardless of whether such rumor necessitates an amendment of or
supplement to the Prospectus, the Company will consult with the
Representatives concerning the necessity of a press release or other
public statement, and, if
-25-
the Company determines that a press release or other public statement
is necessary, the Company will forthwith prepare, consult with the
Representatives concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to the
Representatives, responding to or commenting on such rumor.
(xx) For a period of three years following the Closing Date,
the Company grants Pennsylvania Merchant Group Ltd the right of first
refusal to act as the managing underwriter for any and all future
public offerings (excluding offerings to Company employees or to
others as consideration for the purchase of assets for use in the
Company's business or in one or more business combinations) of any
equity securities of the Company, or any successor to or any
subsidiary of the Company. Pennsylvania Merchant Group Ltd shall
notify the Company of the decision whether or not to exercise this
right of first refusal within 30 days of receipt of written notice of
the intention of the Company or its successor or subsidiary to offer
equity securities for sale.
(b) Covenants of the Selling Stockholder. The Selling Stockholder
covenants and agrees with each of the Underwriters:
(i) The Selling Stockholder will execute a lock-up agreement,
which lock-up agreement shall be in form of Exhibit C hereto, and
shall deliver such agreement to the Representatives prior to the
Effective Date. Appropriate stop transfer instructions with respect
to the Common Shares held by the Selling Stockholder, other than the
Optional Shares, will be issued by the Company to the transfer agent
for the Common Shares.
(ii) Neither the Selling Stockholder nor any of its officers,
directors or affiliates will (A) take, directly or indirectly, prior
to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to cause or to result in, or that
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facili-
xxxx the sale or resale of any of the Shares, (B) sell, bid for,
purchase or pay anyone any compensation for soliciting purchases of,
the Shares or (C) pay to or agree to pay any person any compensation
for soliciting another to purchase any other securities of the
Company.
(iii) The Selling Stockholder will not, without the prior
written consent of the Representatives, make any bid for or purchase
any Common Shares during the 180-day period following the date
hereof.
-26-
6. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are
consummated and regardless of the reason this Agreement is terminated, the
Company and the Selling Stockholder will pay or cause to be paid, and bear or
cause to be borne, all costs and expenses incident to the performance of their
respective obligations under this Agreement pro rata based on the number of
Shares to be sold by the Company and the Selling Stockholder, including: (i) the
fees and expenses of the accountants and counsel for the Company incurred in
the preparation of the Registration Statement and any post-effective amendments
thereto (including financial statements and exhibits), the Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto; (ii)
printing and delivery expenses associated with the Registration Statement and
any post-effective amendments thereto, the Preliminary Prospectus, the
Prospectus, this Agreement, the Agreement Among Underwriters, the Underwriters'
Questionnaire, the Power of Attorney, the Selected Dealer Agreement and related
documents and the Preliminary Blue Sky Memorandum and any supplement thereto;
(iii) the costs (other than fees and expenses of the Underwriters' counsel
except in connection with Blue Sky filings or exemptions as provided herein)
incident to the authentication, issuance, sale and delivery of the Shares to the
Underwriters; (iv) all taxes, if any, on the issuance, delivery and transfer of
the Shares to be sold by the Company and the Selling Stockholders; (v) the fees,
expenses and all other costs of qualifying the Shares for sale under the
securities or Blue Sky laws of those states in which the Shares are to be
offered or sold, including the reasonable fees and disbursements of
Underwriters' counsel and such local counsel as may have been reasonably
required and retained for such purpose; (vi) the fees, expenses and other costs
of, or incident to, securing any review or approvals by or from the NASD
exclusive of fees of the Underwriters' counsel; (vii) the filing fees of the
SEC; (viii) the cost of furnishing to the Underwriters copies of the
Registration Statement, the Preliminary Prospectuses and the Prospectuses as
herein provided; (ix) the Company's travel expenses in connection with meetings
with the brokerage community and institutional investors; (x) the costs and
expenses associated with settlement in same day funds (including, but not
limited to, interest or cost of funds expenses), if desired by the Company or
the Selling Stockholder; (xi) the fees for listing the Shares on the Nasdaq NMS;
(xii) the cost of printing certificates for the Shares; (xiii) the cost and
charges of any transfer agent; (xiv) the costs of advertising the offering,
including any "tombstone" advertisements and (xv) all other costs and expenses
reasonably incident to the performance of their respective obligations hereunder
that are not otherwise specifically provided for in this Section 6, provided
that except as specifically set forth in subsection (c) of this Section 6 the
Underwriters shall be responsible for their out-of-pocket expenses, including
those associated with meetings with the brokerage community and institutional
investors, other than the Company's travel ex-
-27-
penses, and the fees and expenses of their counsel for other than Blue Sky work.
(b) The Company shall pay as due any state registration, qualification
and filing fees and any accountable out-of-pocket disbursements in connection
with such registration, qualification or filing in the states in which the
Representatives determine, after consultation with the Company, to offer or sell
the Shares.
(c) In order to reimburse the Representatives for those costs and
expenses customarily incurred during the registration process: (i) if the
issuance and sale of the Offered Shares to the Underwriters is consummated as
contemplated by this Agreement, then the Company will pay the Representatives
on the Closing Date a non-accountable expense allowance in the amount of
$100,000 and (ii) in the event that the Underwriters are willing to proceed with
the offering of the Offered Shares at an initial public offering price per share
equal to or above the low end of the offering price range stated on the cover of
the Preliminary Prospectus circulated to the public and the Company elects not
to proceed with the offering of the Offered Shares for any reason, the Company
will reimburse the Representatives for their out-of-pocket expenses relating to
the offering of the Offered Shares (including but not limited to the fees and
disbursements of its counsel) in an amount not to exceed $150,000.
7. Conditions of the Underwriters' Obligations. The obligation of each
Underwriter to purchase and pay for the Offered Shares that it has agreed to
purchase hereunder on the Closing Date, and to purchase and pay for any Optional
Shares as to which it exercises its right to purchase under Section 4 on any
Option Closing Date, is subject at the date hereof, the Closing Date and any
Option Closing Date to the continuing accuracy of the respective representations
and warranties of the Company and of the Selling Stockholder set forth herein,
to the performance by the Company and by the Selling Stockholder of their
respective covenants and obligations hereunder and to the following additional
conditions precedent:
(a) The Registration Statement shall have become effective not
later than 5:30 p.m., Philadelphia time, on the date of this Agreement, or
at such later time or on such later date as the Representatives may agree
to in writing; if required by the Regulations, the Prospectus shall have
been filed with the SEC pursuant to Rule 424(b) of the Regulations within
the applicable time period prescribed for such filing by the Regulations
and in accordance with subsection (a) of Section 5 hereof; on or prior to
the Closing Date or any Option Closing Date, as the case may be, no stop
order or other order preventing or suspending the effectiveness of the
Registration Statement or the sale of any of the Shares shall have been
issued under the Act or any state securities law and no proceedings for
that purpose shall have been initiated or shall be pending or, to the
Representatives' knowledge or the knowledge of the Company, shall be
contemplated
-28-
by the SEC or by any authority in any jurisdiction designated by the
Representatives pursuant to subsection (f) of Section 5 hereof and any
request on the part of the SEC for additional information shall have been
complied with to the reasonable satisfaction of counsel to the
Underwriters.
(b) All corporate proceedings and other matters incident to the
authorization, form and validity of this Agreement, the Shares and the form
of the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated
hereby, shall be satisfactory in all respects to counsel to the
Underwriters; the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters; and the Representatives shall have received from
the Underwriters' counsel, Duane, Morris & Heckscher, a favorable opinion,
dated as of the Closing Date and any Option Closing Date, as the case may
be, and addressed to the Representatives individually and as the
Representatives of the several Underwriters with respect to the due
authorization, execution and delivery of this Agreement, that the issuance
and sale of the Shares have been duly authorized by the Company and the
Selling Stockholder, that when the Offered Shares have been duly delivered
against payment therefor as contemplated by this Agreement, they will be
validly issued, fully paid and nonassessable and that the Registration
Statement has become effective under the Act.
(c) The NASD shall have indicated that it has no objection to the
underwriting arrangements pertaining to the sale of any of the Shares.
(d) The Representatives shall have received copies of the lock-up
agreements described in subsection (xii) of Section 5(a) and subsection (i)
of Section 5(b) signed by those persons set forth on Schedule II annexed
hereto.
(e) The Representatives shall have received at or prior to the
Closing Date from the Underwriters' counsel a memorandum or summary, in
form and substance satisfactory to the Representatives, with respect to
the qualification for offering and sale by the Underwriters of the Shares
under the securities or Blue Sky laws of such jurisdictions designated by
the Representatives pursuant to subsection (vii) of Section 5(a) hereof.
(f) On the Closing Date and any Option Closing Date, there shall
have been delivered to the Representatives a signed opinion of Blank Rome
Xxxxxxx & XxXxxxxx, counsel for the Company ("Company Counsel"), dated as
of each such date and addressed to the Representatives individually and as
the Representatives of the several Underwriters to the effect that:
(i) The Company has been incorporated and is validly existing
and in good standing under the laws of Delaware, with corporate power
and authority to own or lease and
-29-
operate its properties and to conduct its business as described in
the Prospectus and to execute, deliver and perform this Agreement.
The Company is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions in which it owns or
leases properties, or conducts any business, so as to require such
qualification, except where the failure so to qualify would not have
a material adverse effect on the general affairs, properties,
condition (financial or otherwise), results of operations,
stockholders' equity or business of the Company. To the knowledge of
Company Counsel, the Company does not own any stock or other equity
interest in any corporation, partnership or other entity other than
the Subsidiaries.
(ii) Each Subsidiary has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority to own or lease its properties and conduct its business as
described in the Prospectus. Each Subsidiary is duly qualified to
transact business as a foreign corporation and is in good standing
under the laws of each other jurisdiction in which it owns or leases
property, or conducts any business, so as to require such
qualification, except where the failure so to qualify would not have
a material adverse effect on the general affairs, properties,
condition (financial or otherwise), results of operations,
stockholders' equity or business of the Company and its Subsidiaries.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company.
(iv) The execution, delivery and performance of this Agreement
by the Company and the Selling Stockholder does not and will not,
with or without the giving of notice or the lapse of time, or both,
(A) conflict with any terms or provisions of the Certificate of
Incorporation or By-laws, as amended to the date hereof of each of
the Company, the Selling Stockholder or the Subsidiaries; (B) result
in a breach of, or constitute a default under, result in the
termination or modification of or result in the creation or
imposition of any lien, security interest, charge or encumbrance
upon any of the properties of the Company, the Selling Stockholder or
any Subsidiary pursuant to, any indenture, mortgage, deed of trust,
contract, commitment or other agreement or instrument, known to
Company Counsel, to which the Company, the Selling Stockholder or any
Subsidiary is a party or by which any of the properties or assets of
the Company, the Selling Stockholder or any Subsidiary is bound or
subject or (C) violate any law, rule or regulation, or any judgment,
order or decree, known to Company Counsel, of any government or
governmental agency, instrumentality or court, domestic or foreign,
having jurisdiction over the Company, the Selling Stockholder or any
-30-
Subsidiary or any of the properties of the Company, the Selling
Stockholder or any Subsidiary.
(v) The Company has the authorized and outstanding
capitalization as set forth in the Prospectus. There are no options
or warrants for the purchase of, other outstanding rights to
purchase, agreements or obligations to issue or agreements or other
rights to convert or exchange any obligation or security into,
capital stock of the Company or securities convertible into or
exchangeable for capital stock of the Company, except as described in
the Registration Statement or the Prospectus.
(vi) The authorized capital stock of the Company, including,
without limitation, the outstanding Common Shares and the Shares
being issued on the Closing Date and any Option Closing Date,
conforms in all material respects with the descriptions thereof in
the Prospectus, and such descriptions conform in all material
respects with the descriptions thereof set forth in the instruments
defining the same. The information in the Prospectus insofar as it
relates to the Employee Options is true and correct in all material
respects.
(vii) The Common Shares outstanding immediately prior to the
Closing Date, including the Common Shares to be sold by the Selling
Stockholder, have been duly authorized and are validly issued, fully
paid and nonassessable; the Employee Options have been duly
authorized and validly issued and are legal, valid and binding
obligations, enforceable against the Company in accordance with
their respective terms; the Common Shares issuable pursuant to the
Employee Options, when issued in accordance with the respective terms
thereof, will be duly authorized and validly issued, fully-paid and
nonassessable; the Company has reserved a sufficient number of Common
Shares for issuance pursuant to the Employee Options, and none of
such outstanding Common Shares or Employee Options are, and none of
such issuable Common Shares will be, issued in violation of any
preemptive rights, known to Company Counsel, of any security holder
of the Company that have not been waived.
(viii) All of the issued shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable, and, except for AEMI, are, and, in the
case of AEMI, will be, owned beneficially by the Company free and
clear of all liens, security interests, pledges, charges,
encumbrances, stockholders agreements, voting trusts, defects,
equities or claims of any nature whatsoever. To such counsel's
knowledge, other than the subsidiaries listed on Exhibit 21.1 to the
Registration Statement, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint
venture or other association.
-31-
(ix) The issuance and sale of the Shares by the Company have
been duly authorized and, when the Shares have been duly delivered
against payment therefor as contemplated by this Agreement, the
Shares will be validly issued, fully paid and nonassessable. None of
the Shares will be issued in violation of any preemptive rights of
any stockholder of the Company pursuant to the Certificate of
Incorporation or By-laws, as amended to the date hereof, of the
Company and, to the knowledge of Company Counsel, there are no
contractual preemptive rights that have not been waived that exist
with respect to the Shares. The certificates representing the Shares
are in proper legal form under, and conform in all respects to the
requirements of, the DGCL. To the knowledge of Company Counsel,
neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives any
security holder of the Company any rights, other than those which
have been waived, for or relating to the registration of any Common
Shares and there are no contracts, agreements or understandings known
to such counsel between the Company and any person granting such
person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person.
(x) No consent, approval, authorization, order, registration,
license or permit of any court, government, governmental agency,
instrumentality or other regulatory body or official is required for
the valid authorization, issuance, sale and delivery by the Company
or the Selling Stockholder of any of the Shares or for the execution,
delivery or performance by the Company or the Selling Stockholder of
this Agreement, except such as may be required for the registration
of the Shares under the Act, the Regulations or the Exchange Act, or
for compliance with the applicable state securities or Blue Sky laws,
or the By-laws, rules and other pronouncements of the NASD.
(xi) The descriptions contained in the Registration Statement
and the Prospectus of statutes or regulations, legal and governmental
proceedings and of contracts and other documents are accurate in all
material respects and fairly present in all material respects the
information required to be shown. To Company Counsel's knowledge,
there are no contracts, agreements or other documents required to be
described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
under the Act or the Regulations that have not been so described,
referred to or filed as required.
(xii) To Company Counsel's knowledge, there are no claims,
actions, suits, proceedings, arbitrations, investigations or
inquiries pending before, or threatened or contemplated by, any
governmental agency, instrumentality,
-32-
court or tribunal, domestic or foreign, or before any private
arbitration tribunal, to which the Company is a party or is
threatened to be made a party that, if determined adversely to the
Company, would, in any case or in the aggregate, result in any
material adverse change in the general affairs, properties, condition
(financial or otherwise), results of operations, stockholders'
equity or business of the Company and the Subsidiaries.
(xiii) The Registration Statement has become effective under
the Act, as of the Effective Date, and, to Company Counsel's
knowledge, the SEC has not issued any stop order suspending the
effectiveness of the Registration Statement, nor has the SEC
instituted or threatened to institute proceedings with respect to any
such order. Any and all filings required to be made by Rule 424 and
Rule 430A under the Act have been made.
(xiv) The Registration Statement and the Prospectus, as of the
Effective Date, and each amendment or supplement thereto as of its
effective or issue date (except for the financial statements and
notes thereto, and related schedules, included therein or omitted
therefrom, as to which Company Counsel need not express an opinion)
comply as to form in all material respects with the applicable
requirements of the Act and Regulations.
(xv) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940.
(xvi) Company Counsel has participated in the preparation of
the Registration Statement and the Prospectus, including reviews and
discussions of the contents thereof, and while such Counsel has no
particular expertise with respect to the financial statements and
notes thereto and related schedules and the technical and scientific
information contained in the Prospectus, and is not passing upon the
accuracy or completeness of the statements contained in the
Registration Statement or the Prospectus, other than those
specifically referred to in the other clauses of this subsection (f)
of this Section 7, in the course of such reviews and discussions, no
facts came to its attention that would cause it to have reason to
believe that (A) the Registration Statement or any post-effective
amendment thereto, on the date it became effective and on the Closing
Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that (B)
the Prospectus on the Effective Date, on the date it was filed
pursuant to Rule 424(b) and on the Closing Date or Option Closing
Date, as the case may
-33-
be, contained any untrue statement of material fact or omitted any
material fact necessary to make the statements therein, in light of
the circumstances under which made, not misleading.
(xvii) Nothing has come to the attention of Company Counsel
which causes it to believe that there exists any defect in title or
leasehold interest, or any lien, claim or encumbrance which would
materially affect the use made and, to such Counsel's knowledge,
proposed to be made, of any of the personal or real property of the
Company and the Subsidiaries.
(xviii) Nothing has come to the attention of Company Counsel
that causes it to believe that each of the Company and the
Subsidiaries does not have all licenses, permits, certifications,
registrations, approvals, consents and franchises (collectively,
"Permits") required to own or lease and operate its properties and to
conduct its business as described in the Prospectus in all material
respects or that there are any proceedings pending or threatened
against the Company or any Subsidiary that may cause any such Permit
that is material to the conduct of the business of the Company or any
of the Subsidiaries as presently conducted to be revoked, withdrawn,
canceled, suspended or not renewed.
(xix) The Common Shares have been approved for inclusion on the
Nasdaq National Market.
The foregoing opinion may be limited to the laws of the United States
and the DGCL and Company Counsel may rely as to certain legal matters on
other counsel to the Company provided that in each case, Company Counsel
shall state that they believe that they and the Underwriters are justified
in relying on such other counsel and shall deliver signed copies of any
such opinion to the Representatives and as to questions of fact upon the
representations of the Company set forth in this Agreement and upon
certificates of officers of the Company and of government officials, all
of which certificates must be reasonable and satisfactory in form and scope
to counsel to the Underwriters provided that in each case, Company Counsel
shall deliver signed copies of any such certificate to the Representatives.
(g) On the Closing Date and any Option Closing Date, there shall
have been delivered to the Representatives a signed opinion of Blank Rome
Xxxxxxx & XxXxxxxx, counsel to the Selling Stockholder, dated as of each
such date and addressed to the Representatives, individually and as
Representatives of the several Underwriters, in form and substance
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Selling Stockholder is an existing corporation in good
standing under the laws of the State of Israel. The Selling
Stockholder has full power and authority
-34-
to own its assets and to conduct its business as described in the
Prospectus and is duly qualified to do business in each jurisdiction
in which it owns or leases real property or in which the conduct of
its business requires such qualification.
(ii) This Agreement and the Agreement and Power of Attorney
have been duly authorized, executed and delivered by or on behalf of
the Selling Stockholder; to the best of such counsel's knowledge, the
sale of the Shares to be sold by the Selling Stockholder at the
Option Closing Date and the performance of this Agreement and the
Agreement and Power of Attorney and the consummation of the
transactions therein and herein contemplated will not, in any
material respect, conflict with, or, with or without the giving of
notice or the passage of time or both, result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which such
Selling Stockholder is a party or to which any of its properties or
assets is subject, nor will such action conflict with or violate any
provision of the charter documents or Bylaws of the Selling
Stockholder or any statute, rule or regulation or, to the best of
such counsel's knowledge, any order, judgment or decree of any court
or governmental agency or body having jurisdiction over the Selling
Stockholder or any of the Selling Stockholder's properties or
assets.
(iii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing
with, any court or governmental agency or body is required for the
issue and sale of the Shares being sold by the Selling Stockholder or
the consummation of the transactions contemplated by this Agreement
and the Agreement and Power of Attorney, except the registration of
such Shares under the Act and such as may be required under the state
securities or blue sky laws in connection with the offer, sale and
distribution of such Shares by the Underwriters.
(iv) To the best of such counsel's knowledge, the Selling
Stockholder has, and immediately prior to the Option Closing Date the
Selling Stockholder will have, good and valid title to the Shares to
be sold by the Selling Stockholder hereunder, free and clear of all
liens, security interests, pledges, charges, encumbrances, defects,
stockholders' agreements, voting trusts, equities or claims of any
nature whatsoever; and, upon delivery of such Shares against payment
therefor as provided herein, good and valid title to such Shares,
free and clear of all liens, security interests, pledges, charges,
encumbrances, defects, stockholders' agreements, voting trusts,
equities or claims of any nature whatsoever, will pass to the several
Underwriters.
-35-
(v) There are no transfer or similar taxes payable in
connection with the sale and delivery of the Optional Shares by the
Selling Stockholder to the Underwriters.
In rendering such opinion, such counsel may relay as to certain legal
matters on other legal counsel to the Selling Stockholder provided
that, in each case, such counsel shall state that they believe that
they and the Underwriters are justified in relying on such other
counsel and shall deliver signed copies of any such opinion to the
Representatives and, as to questions of fact, upon the
representations of the Selling Stockholder set forth in this
Agreement and upon certificates of officers of the Selling
Stockholder and of government officials, all of which certificates
must be reasonable and satisfactory in form and scope to counsel to
the Underwriters provided that in each case, such counsel shall
deliver signed copies of any such certificate to the Representatives.
(h) At the Closing Date and any Option Closing Date: (i) the
Registration Statement and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto shall contain all
statements that are required to be stated therein in accordance with the
Act and the Regulations and in all material respects shall conform to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor any post-effective amendment thereto nor the Prospectus and
any amendments or supplements thereto shall contain 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, in light of the
circumstances under which they were made, not misleading; (ii) since the
respective dates as of which information is given in the Registration
Statement and any post-effective amendment thereto and the Prospectus and
any amendments or supplements thereto, except as otherwise stated therein,
there shall have been no material adverse change in the properties,
condition (financial or otherwise), results of operations, stockholders'
equity, business or management of the Company and the Subsidiaries from
that set forth therein, whether or not arising in the ordinary course of
business, other than as referred to in the Registration Statement or the
Prospectus; (iii) since the respective dates as of which information is
given in the Registration Statement and the Prospectus or any amendment or
supplement thereto, there shall have been no transaction, contract or
agreement entered into by the Company or any Subsidiary, other than in the
ordinary course of business and as set forth in the Registration Statement
or the Prospectus, that has not been, but would be required to be, set
forth in the Registration Statement or the Prospectus and (iv) no action,
suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary
that would be required to be set forth in the Prospectus, other than as set
forth therein, and no proceedings shall be pending or, to the knowledge of
the Company, threatened against the Company or any Subsidiary before or by
any federal, state or other commission,
-36-
board or administrative agency wherein an unfavorable decision, ruling or
finding would materially adversely affect the properties, condition
(financial or otherwise), results of operations, stockholders' equity or
business of the Company and the Subsidiaries other than as set forth in
the Prospectus. The Representatives shall have received at the Closing
Date certificates of the Chief Executive Officer and the Chief Financial
Officer of the Company dated as of the date of the Closing Date or Option
Closing Date, as the case may be, and certificates of the Chief Executive
Officer and the Chief Financial Officer of the Selling Stockholder dated as
of the date of any Option Closing Date, and addressed to the
Representatives, individually and as the Representatives of the several
Underwriters, to the effect, to the knowledge of such persons, that the
conditions set forth in this subsection have been satisfied and as to the
accuracy and performance, to the knowledge of such persons, as of the
Closing Date or the Option Closing Date, as the case may be, of the
agreements, representations and warranties of the Company set forth herein
and as to the accuracy and performance to the knowledge of such persons, as
of the Option Closing Date, the agreements, representations and warranties
of the Selling Stockholder set forth herein.
(i) At the time this Agreement is executed and at the Closing Date
and any Option Closing Date, the Representatives shall have received a
letter addressed to the Representatives, individually and as the
Representatives of the several Underwriters, and in form and substance
satisfactory to the Representatives in all respects, including the non-
material nature of the changes or decreases, if any, referred to in clause
(iv) below, from Ernst & Young LLP dated as of the date of this Agreement,
the Closing Date or any Option Closing Date, as the case may be:
(i) confirming that they are independent public accountants
with respect to the Company and its consolidated subsidiaries within
the meaning of the Act and the Regulations and stating that the
section of the Registration Statement under the caption "Experts" is
correct insofar as it relates to them;
(ii) stating that, in their opinion, the consolidated financial
statements of the Company and the Subsidiaries (other than AEMI)
audited by them and included in the Registration Statement and in the
Prospectus comply in form in all material respects with the
applicable accounting requirements of the Act and the Regulations;
(iii) the consolidated financial statements of the Company and
the Subsidiaries (other than AEMI) as of and for the three-month
period ended March 31, 1997, were reviewed by them in accordance with
the standards established by the American Institute of Certified
Public Accountants and based upon their review they are not aware of
any material modifications that should be made to such
-37-
financial statements for them to be in conformity with generally accepted
accounting principles, and such financial statements comply as to form in
all material respects with the applicable accounting requirements of the
Act and the Regulations thereunder;
(iv) stating that, on the basis of specified procedures, not
constituting an audit in accordance with generally accepted accounting
principles, which included a reading of the unaudited interim consolidated
financial statements of the Company and the Subsidiaries (other than AEMI)
for period ended March 31, 1997, a reading of the minutes of the meetings
of the stockholders and the Board of Directors of the Company and audit and
compensation committees of such Board, if any, and inquiries to certain
officers and other employees of the Company who are responsible for
financial and accounting matters and other specified procedures and
inquiries, nothing has come to their attention that would cause them to
believe that (A) the unaudited consolidated financial statements and
related schedules of the Company and the Subsidiaries included in the
Registration Statement, if any (1) do not comply in form in all material
respects with the applicable accounting requirements of the Act and the
Regulations or (2) were not fairly presented in conformity with generally
accepted accounting principles on a basis substantially consistent with
that of the audited consolidated financial statements and related schedules
included in the Registration Statement or (B)(1) at a specified date, not
more than five business days prior to the date of such letter, there was
more than a 10% change in the capital stock, inventories or short-term or
long-term debt of the Company and the Subsidiaries or any decrease
(increase) of more than 10% in net current assets, total assets or
stockholders' equity compared with the amounts shown in the March 31, 1997
consolidated balance sheet of the Company included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement and the Prospectus, or if there was any such change or decrease
(increase), setting forth the amount of such change or decrease
(increase), and (2) during the period from March 31, 1997 to a specified
date not more than five business days prior to the date of such letter,
there has been any decrease of more than 10% in revenues or any increase of
more than 10% in loss before interest income (expense), net and taxes or
net loss of the Company and the Subsidiaries on a consolidated basis other
than as set forth in or contemplated by the Registration Statement or the
Prospectus; and
(v) stating that they have compared specific dollar amounts,
percentages, numbers of shares and other information (including pro forma
information) pertaining to the Company and the Subsidiaries set forth in
the Registration Statement and the Prospectus that have been specified by
the Representatives prior to the date of this Agreement, to
-38-
the extent that such amounts, percentages, numbers and information may be
derived from the general accounting or other records of the Company and the
Subsidiaries, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures, which procedures do
not constitute an audit in accordance with generally accepted auditing
standards, set forth in the letter, and found them to be in agreement.
(vi) in the event that the letters referred to in this Section 7(i)
set forth any changes, decreases or increases in the items specified in
subsection (v) of this Section 7(i), it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied
by a written explanation by the Company as to the significance thereof,
unless the Representatives deem such explanation unnecessary, and (B) such
changes, decreases or increases do not, in their sole judgment, make it
impractical or inadvisable to proceed with the purchase, sale and delivery
of the Shares being delivered at the Closing Date or any Option Closing
Date, as the case may be, as contemplated by the Registration Statement,
as amended as of the date of such letter.
(j) At the time the Agreement is executed and at the Closing Date and any
Option Closing Date, the Representatives shall have received a letter addressed
to the Representatives individually and as the Representatives of the several
Underwriters, and in form and substance satisfactory to the Representatives in
all respects, from Messina, Ceci, Xxxxxx & Company, P.C. dated as of the date of
this Agreement, the Closing Date or any Option Closing Date, as the case may be:
(i) confirming that they are independent public accountants with
respect to Flam & Xxxxxxx within the meaning of the Act and the Regulations
and stating that the section of the Registration Statement under the
caption "Experts" is correct insofar as it relates to them; and
(ii) stating that, in their opinion, the financial statements of Flam
& Xxxxxxx audited by them and included in the Registration Statement and in
the Prospectus comply in form in all material respects with the applicable
accounting requirements of the Act and the Regulations.
(k) There shall have been duly tendered to the Representatives for the
respective accounts of the Underwriters certificates representing all of the
Shares to be purchased by the Underwriters on the Closing Date or any Option
Closing Date, as the case may be.
(l) At the Closing Date and any Option Closing Date, the Representatives
shall have been furnished such additional documents and certificates as they
shall reasonably request.
-39-
(m) No action shall have been taken by the NASD the effect of which is to
make it improper, at any time prior to the Closing Date or any Option Closing
Date, for members of the NASD to execute transactions as principal or as agent
in the Shares or to trade or deal in the Shares, and no proceedings for the
purpose of taking such action shall have been instituted or shall be pending or,
to the Company's or the Representatives' knowledge, shall be contemplated by the
NASD.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or any Option Closing Date, as the case may be,
is not fulfilled, the Representatives may on behalf of the several Underwriters
terminate this Agreement or, if they so elect, waive any such conditions which
have not been fulfilled or extend the time for their fulfillment.
8. Indemnification.
(a) The Company and the Selling Stockholder, jointly and severally, shall
indemnify and hold harmless each Underwriter, and each person, if any, who
controls each Underwriter within the meaning of the Act or the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever,
whether joint or several, to which such Underwriter may become subject, under
the Act or otherwise, including, but not limited to, any and all expense
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever or in connection
with any investigation or inquiry of, or action or proceeding that may be
brought against, the respective indemnified parties, arising out of or based
upon any untrue statements or alleged untrue statements of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any application or other document (in this Section 8
collectively called "application") executed by the Company and based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify all or any part of the Shares under the
securities laws thereof or filed with the SEC or the NASD, or the omission or
alleged omission therefrom of 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; provided, however, that the foregoing
indemnity of the Company and the Selling Stockholder (i) shall not apply in
respect of any statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
the Representatives expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment thereto or
supplement thereof, or in any application or in any communication to the SEC,
as the case may be, (ii) with respect to any Preliminary Prospectus, shall not
inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Shares
that are the subject thereof (or to the benefit of any person
-40-
controlling such Underwriter) if at or prior to the written confirmation of
the sale of such Shares a copy of an amended Preliminary Prospectus or the
Prospectus (or the Prospectus as amended or supplemented) was not sent or
delivered to such person and the untrue statement or omission of a material
fact contained in such Preliminary Prospectus was corrected in the amended
Preliminary Prospectus or Prospectus (or the Prospectus as amended or
supplemented) and (iii) the Selling Stockholder's total liability under
this Section 8 shall be limited to an amount equal to the purchase price
received by the Selling Stockholder from the sale of the Optional Shares by
it pursuant to this Agreement. Neither the Company nor the Selling Stock-
holder will, without the prior written consent of the Underwriters, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of action
or portion thereof) in respect of which indemnification may be sought
hereunder, whether or not any Underwriter is a party to such claim, action,
suit or proceeding, unless such settlement, compromise or consent includes
an unconditional release of each Underwriter from all liability arising out
of such claim, action, suit or proceeding (or related cause of action or
portion thereof). This indemnity agreement will be in addition to any
liability the Company or the Selling Stockholder may otherwise have.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and the Selling Stockholder, each of the
directors of the Company and the Selling Stockholder, each of the officers
of the Company who shall have signed the Registration Statement and each
other person, if any, who controls the Company or the Selling Stockholder
within the meaning of the Act or the Exchange Act to the same extent as the
foregoing indemnities from the Company and the Selling Stockholder to the
several Underwriters, but only with respect to any loss, liability, claim,
damage or expense resulting from statements or omissions, or alleged
statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereto or
supplement thereof or any application in reliance upon, and in conformity
with written information furnished to the Company by any Underwriter
through the Representatives with respect to any Underwriter by or on behalf
of such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereto or
supplement thereof or any application, as the case may be, or from the
failure of any Underwriter at or prior to the written confirmation of the
sale of Shares to send or deliver a copy of an amended Preliminary
Prospectus or the Prospectus (or the Prospectus as amended or supplemented)
to the person asserting any such losses, claims, damages, liabilities or
expenses who purchased the Shares that are the subject thereof and the
untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the amended Preliminary Prospectus
or Prospectus (or the Prospectus as amended or supplemented). This
indemnity
-41-
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) If any action, inquiry, investigation or proceeding is brought
against any person in respect of which indemnity may be sought pursuant to
any of the two preceding paragraphs, such person (hereinafter called the
"indemnified party") shall, promptly after formal notification of, or
receipt of service of process for, such action, inquiry, investigation or
proceeding, notify in writing the party or parties against whom
indemnification is to be sought (hereinafter called the "indemnifying
party") of the institution of such action, inquiry, investigation or
proceeding and the indemnifying party, upon the request of the indemnified
party, shall assume the defense of such action, inquiry, investigation or
proceeding, including the employment of counsel, reasonably satisfactory to
such indemnified party, and payment of expenses. No indemnification
provided for in this Section 8 shall be available to any indemnified party
who shall fail to give such notice if the indemnifying party does not have
knowledge of such action, inquiry, investigation or proceeding and shall
have been materially prejudiced by the failure to give such notice, but the
omission so to notify the indemnifying party shall not relieve the
indemnifying party otherwise than under this Section 8. Such indemnified
party or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless the employment of such
counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action or the indemnifying party shall
not have employed counsel to have charge of the defense of such action,
inquiry, investigation or proceeding or such indemnified party or parties
shall have been advised by counsel that there is a conflict of interest
that would prevent counsel to the indemnifying party from representing both
parties, in any of which events the reasonable fees and expenses of such
counsel shall be borne by the indemnifying party. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses
of more than one separate counsel, in addition to one local counsel in each
jurisdiction in which any proceeding may be brought, for all indemnified
parties. In the case of any such separate counsel for the Underwriters,
such firm shall be designated in writing by the Representatives. Expenses
covered by the indemnification in this subsection (c) of this Section 8
shall be paid by the indemnifying party as they are incurred by the
indemnified party. Anything in this subsection to the contrary notwith-
standing, the indemnifying party shall not be liable for any settlement of
any such claim effected without its written consent. The indemnifying party
shall promptly notify the indemnified party of the commencement of any
litigation, inquiry, investigation or proceeding against the indemnifying
party or any of its officers or directors in connection with the issue and
sale of any of the Shares or in connection with such
-42-
Preliminary Prospectus, Registration Statement or Prospectus, or any
amendment thereto or supplement thereof or any such application.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsections (a) or (b) of this Section 8 in respect of any losses,
liabilities, claims, damages or expenses (or actions, inquiries,
investigations or proceedings in respect thereof) referred to therein
except either by reason of the proviso set forth in subsection (a) or the
failure to give notice as required in subsection (c) (provided that the
indemnifying party does not have knowledge of the action, inquiry,
investigation or proceeding and has been materially prejudiced by the
failure to give such notice), then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, liabilities, claims, damages or expenses (or actions, inquiries,
investigations or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Stockholder on the one hand and the Underwriters on the other
from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or
the indemnified party failed to give the notice required under subsection
(c) then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Stockholder on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted
in such losses, liabilities, claims or reasonable expenses (or actions,
inquiries, investigations or proceedings in respect thereof), as well as
any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company and the Selling Stockholder bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company and the Selling Stockholder on the one
hand or the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to above
-43-
in this subsection (d). The amount paid or payable by an indemnified party
as a result of the losses, liabilities, claims, damages or reasonable
expenses (or actions, inquiries, investigations or proceedings in respect
thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public 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 in
this subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
9. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date and any Option Closing Date; and such
representations, warranties and agreements of the Underwriter, the Company and
the Selling Stockholder, including without limitation the indemnity and
contribution agreements contained in Section 8 hereof and the agreements
contained in Sections 6, 9, 10 and 13 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling person thereof, and shall survive delivery of the
Shares and termination of this Agreement, whether before or after the Closing
Date or any Option Closing Date. With respect to any obligation of the Company
and the Selling Stockholder hereunder to make any payment, to indemnify for any
liability or to reimburse for any expense, notwithstanding the fact that such
obligation is a joint and several obligation of the Company and the Selling
Stockholder, the Underwriters, or any other person to whom such payment,
indemnification or reimbursement is owed, may pursue the Company with respect
thereto prior to pursuing the Selling Stockholder.
10. Effective Date of this Agreement and Termination Thereof.
(a) This Agreement shall become effective immediately as to Sections
6, 8, 9, 10 and 13 and, as to all other provisions, (i) if at the time of
execution and delivery of this Agreement the Registration Statement has not
become effective, at 11:00 a.m., Philadelphia time, on the first business
day following the Effective Date, or (ii) if at the time of execution and
delivery of this Agreement the Registration Statement has been declared
effective, at 11:00 a.m., Philadelphia time, on the date of execution of
this Agreement; but this Agreement shall nevertheless become effective at
such earlier time after the Registra-
-44-
tion Statement becomes effective as the Representatives may determine by
notice to the Company or by release of any of the Shares for sale to the
public. For the purposes of this Section 10, the Shares shall be deemed to
have been so released upon the release for publication of any newspaper
advertisement relating to the Shares or upon the release by the
Representatives of telegrams (i) advising the Underwriters that the Shares
are released for public offering or (ii) offering the Shares for sale to
securities dealers, whichever may occur first. The Representatives may
prevent the provisions of this Agreement (other than those contained in
Sections 6, 8, 9, 10 and 13) from becoming effective without liability of
any party to any other party, except as noted below, by giving the notice
indicated in subsection (c) of this Section 10 before the time the other
provisions of this Agreement become effective.
(b) The Representatives shall have the right to terminate this
Agreement at any time prior to the Closing Date as provided in Sections 7
and 11 hereof or if any of the following have occurred: (i) since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting
the condition, financial or otherwise, of the Company and the Subsidiaries,
or the earnings, business affairs, management or business prospects of the
Company and the Subsidiaries, whether or not arising in the ordinary course
of business; (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic, political or
financial market conditions if such outbreak, calamity, crisis or change
would, in the Representatives' reasonable judgment, have a material adverse
effect on the Company, the financial markets of the United States or the
offering or delivery of the Shares; (iii) suspension of trading generally
in securities on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities or the
promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in the Representatives'
reasonable opinion materially and adversely affects trading on such
Exchange or the over-the-counter market; (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation,
rule or order of any court or other governmental authority which in the
Representatives' reasonable opinion materially and adversely affects or
will materially or adversely affect the business or operations of the
Company and the Subsidiaries; (v) declaration of a banking moratorium by
either federal or state authorities; (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Representatives' reasonable opinion has a
material adverse effect on the securities markets in the United States;
(vii) declaration of a moratorium in foreign exchange trading by major
international banks or other institutions or (viii) trading in
-45-
any securities of the Company shall have been suspended or halted by the
NASD or the SEC.
(c) If the Representatives elect to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this
Section 10, the Representatives shall notify the Company and the Selling
Stockholder thereof promptly by telephone, telex, telegraph, telegram or
facsimile, confirmed by letter.
11. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Offered Shares or Optional Shares hereunder, and if
the Offered Shares or Optional Shares with respect to which such default
relates do not exceed the aggregate of 10% of the number of Offered Shares
or Optional Shares, as the case may be, that all Underwriters have agreed
to purchase hereunder, then such Offered Shares or Optional Shares to which
the default relates shall be purchased severally by the non-defaulting
Underwriters in proportion to their respective commitments hereunder.
(b) If such default relates to more than 10% of the Offered Shares or
the Optional Shares, as the case may be, the Representatives may in their
discretion arrange for another party or parties (including a non-defaulting
Underwriter) to purchase such Offered Shares or Optional Shares to which
such default relates, on the terms contained herein. In the event that the
Representatives do not arrange for the purchase of the Offered Shares or
the Optional Shares to which a default relates as provided in this Section
11, this Agreement may be terminated by the Representatives or by the
Company, in the case of the Offered Shares, or by the Representatives or by
the Selling Stockholder, in the case of the Optional Shares, without
liability on the part of the several Underwriters (except as provided in
Section 8 hereof) or the Company or the Selling Stockholder (except as
provided in Sections 6 and 8 hereof), but nothing herein shall relieve a
defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company or the Selling Stockholder for damages
occasioned by its default hereunder.
(c) If the Offered Shares or Optional Shares to which the default
relates are to be purchased by the non-defaulting Underwriters, or are to
be purchased by another party or parties as aforesaid, the Representatives
or the Company shall have the right to postpone the Closing Date or the
Representatives or the Selling Stockholder shall have the right to postpone
any Option Closing Date, as the case may be, for a reasonable period but
not in any event exceeding seven days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company
agrees to file promptly any amendment to the Registration Statement or
supplement to the
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Prospectus which in the opinion of counsel for the Underwriters may thereby
be made necessary. The terms "Underwriters" and "Underwriter" as used in
this Agreement shall include any party substituted under this Section 11
with like effects as if it had originally been a party to this Agreement
with respect to such Offered Shares or Optional Shares.
12. Information Furnished by Underwriters. The statement set forth on the
inside cover page regarding stabilization and under the caption "Underwriting"
in any Preliminary Prospectus and the Prospectus constitutes the written
information furnished by or on behalf of any Underwriter referred to in
subsection (ii) of Section 1(a) hereof and subsection (a) and (b) of Section 8
hereof.
13. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to any Underwriter,
shall be mailed, delivered, telexed, telegrammed, telegraphed or telecopied and
confirmed to such Underwriter, c/o Pennsylvania Merchant Group Ltd, Xxxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xx. Xxxxxxx
X. Xxxxxx, with a copy to Duane, Morris & Heckscher, 0000 Xxx Xxxxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxxxx X. Xxxxxx, Esquire; or if
sent to the Company or the Selling Stockholder shall be mailed, delivered,
telexed, telegrammed, telegraphed or telecopied and confirmed to Orbit/FR, Inc.,
000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxxx,
with a copy to Blank Rome Xxxxxxx & XxXxxxxx, 0000 Xxxx Xxxx Xxxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, Esquire.
14. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the several Underwriters, the Company, the Selling
Stockholder and the controlling persons, directors and officers referred to in
Section 8 hereof, and their respective successors, assigns, heirs and legal
representatives, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provision herein contained. The terms "successors" and
"assigns" shall not include any purchaser of the Shares merely because of such
purchase.
15. Definition of Business Day. For purposes of this Agreement, "business
day" means any day on which the New York Stock Exchange, Inc. is opened for
trading.
16. Counterparts. This Agreement may be executed in one or more
counterparts and all such counterparts will constitute one and the same
instrument.
17. Waiver of Jury Trial. The Company, the Selling Stockholder and the
Underwriters each hereby irrevocably waive any right they may have to a trial by
jury in respect of any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
18. Construction. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsyl-
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vania applicable to agreements made and performed entirely within such
Commonwealth.
If the foregoing correctly sets forth the understanding among the
Underwriters, the Company and the Selling Stockholder, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement by and among the Underwriters, the Company and the Selling
Stockholder.
Very truly yours,
ORBIT/FR, INC.
By:
----------------------------
Xxxxx Xxxxxxxx, President
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By:
----------------------------
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
By: Pennsylvania Merchant Group Ltd
Acting severally on behalf of itself
and the several Underwriters named
in Schedule I hereto
By:
--------------------------
Authorized Officer
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SCHEDULE I
Schedule of Underwriters
Number of Offered
Underwriter Shares to be Purchased
----------- ----------------------
Pennsylvania Merchant Group Ltd......................
Unterberg Harris.....................................
---------
Total...................... 2,000,000
=========
SCHEDULE II
List of Persons Who Are to Deliver 180-Day Lock-Up Agreements
Called for Sections 5(a)(xii), 5(b)(i) and 7(d)
Name
----
Xxxxxx Aviv
Xxxxx Xxxxxxxx
Xxxxx Pinkasy
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxxx
Xxxx Xxxxx
Xxxxx Xxx-Xxxxxx
Orbit-Alchut Technologies, Ltd.
EXHIBIT A
---------
PRICE DETERMINATION AGREEMENT
June __, 1997
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
As Representatives of the
several Underwriters
Four Falls Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
Dear Sirs:
Reference is made to the Underwriting Agreement, dated June __, 1997 (the
"Underwriting Agreement"), among Orbit/FR, Inc., a Delaware corporation (the
"Company"), Orbit-Alchut Technologies, Ltd. (the "Selling Stockholder") and the
several Underwriters named in Schedule I thereto or hereto (the "Underwriters"),
for whom Pennsylvania Merchant Group Ltd and Unterberg Harris are acting as
representatives (the "Representatives"). The Underwriting Agreement provides
for the purchase by the Underwriters from the Company, subject to the terms and
conditions set forth therein, of an aggregate of 2,000,000 shares (the "Offered
Shares") of the Company's Common Stock, $.01 par value per share (the "Common
Shares") and for the purchase by the Underwriters, at their sole option to cover
over-allotments in the sale of the Offered Shares, from the Selling Stockholder,
subject to the terms and conditions set forth therein, of an aggregate of
300,000 Common Shares (the "Optional Shares"). This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to the Underwriting Agreement, the undersigned agree with the
Representatives as follows:
1. The initial public offering price per share for the Offered Shares and
the Optional Shares shall be $_____.
2. The purchase price per share for the Offered Shares and, if the
Representatives shall exercise their option as to the Optional Shares, for the
Optional Shares to be paid by the several Underwriters shall be $____
representing an amount equal to the initial public offering price set forth
above, less $____ per share.
The Company represents and warrants to each of the Underwriters that the
representations and warranties of the Company set forth in Section 1(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
A-1
The Selling Stockholder represents and warrants to each of the Underwriters
that the representations and warranties of the Selling Stockholder set forth in
Section 1(b) of the Underwriting Agreement are accurate as though expressly made
at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule I is a
completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
If the foregoing is in accordance with your understanding of the agreement
among the Underwriters, the Company and the Selling Stockholder, please sign and
return to the Company a counterpart hereof, whereupon this instrument along with
all counterparts and together with the Underwriting Agreement, shall be a
binding agreement among the Underwriters, the Company and the Selling
Stockholder in accordance with its terms and the terms of the Underwriting
Agreement.
Very truly yours,
ORBIT/FR, INC.
By:
---------------------------------
Xxxxx Xxxxxxxx, President
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By:
---------------------------------
Confirmed as of the date
first above mentioned:
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
By: PENNSYLVANIA MERCHANT GROUP LTD
Acting severally and on behalf
of and the several Underwriters
named in Schedule I hereto
By:
------------------------------
Authorized Officer
A-2
EXHIBIT B
---------
AGREEMENT AND POWER OF ATTORNEY
ORBIT/FR, INC.
Common Stock
---------------------------
---------------------------
---------------------------
c/o Orbit/FR, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Dear Sirs:
The undersigned understands that Orbit/FR, Inc., a Delaware corporation
(the "Company"), has filed a registration statement (together with any
subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act") relating to the prior
registration statement, the "Registration Statement") under the Act, in
connection with the proposed public offering and sale by the Company and
Orbit-Alchut Technologies, Ltd. (the "Selling Stockholder") of the Company's
Common Stock, par value $.01 per share (the "Common Shares").
The Selling Stockholder desires to sell certain Common Shares and to
include such shares among the shares covered by the Registration Statement. The
number of Common Shares which the undersigned desires to sell (the "Shares") are
set forth beneath the signature of the Selling Stockholder below.
Concurrently with the execution and deliver of this Agreement and Power of
Attorney (the "Power of Attorney"), the undersigned is delivering to you, or
requesting the Company to deliver to you, certificates for the Shares, which you
are authorized to deposit with _________________________, as custodian (the
"Custodian"), pursuant to a custody agreement in the form attached as
Attachment A hereto (the "Custody Agreement").
1. In connection with the foregoing, the Selling Stockholder hereby
makes, constitutes and appoints you collectively, and each of you, individually
(a "Member") and each of your respective substitutes under Section 3, the true
and lawful attorneys-in-fact of the undersigned (the Members or any of them or
their respective substitutes being herein referred to collectively as the
"Committee"), with full power and authority, in the name and on behalf of the
Selling Stockholder:
B-1
(a) To enter into the Custody Agreement and deposit with the Custodian
pursuant thereto the certificates for the Shares delivered to the Committee
concurrently herewith;
(b) For the purpose of effecting the sale of the Shares, to execute and
deliver (i) an Underwriting Agreement ( the "Underwriting Agreement"), by and
among the Company, the Selling Stockholder and the representatives (the
"Representatives") of the several Underwriters (the "Underwriters") and (ii) a
Price Determination Agreement (as defined in the Underwriting Agreement) by and
among the Company, the Selling Stockholder and the Representatives of the
several Underwriters;
(c) To endorse, transfer and deliver certificates for the Shares to or on
the order of the Representatives or their nominee or nominees, and to give such
orders and instructions to the Custodian as the Committee may in its sole
discretion determine with respect to (i) the transfer on the books of the
Company of the Shares in order to effect such sale, including the names in which
new certificates for such Shares are to be issued and the denominations thereof,
(ii) the delivery to or for the account of the Representatives of the
certificates for the Shares against receipt by the Custodian of the full
purchase price to be paid therefor, (iii) the remittance to the Selling
Stockholder of the Selling Stockholder's share of the proceeds, after payment of
the expenses described in the Underwriting Agreement, from any sale of Shares
and (iv) the return to the Selling Stockholder of certificates representing the
number of Shares, if any, deposited with the Custodian but not sold by the
Selling Stockholder under the Registration Statement for any reason;
(d) To take for the Selling Stockholder all steps deemed necessary or
advisable by the Committee in connection with the registration of the Shares
under the Act, including without limitation filing amendments to the
Registration Statement, filing a registration statement under Rule 462(b)
relating to the Registration Statement, requesting acceleration of the
effectiveness of the Registration Statement, informing the Securities and
Exchange Commission (the "SEC") that the Selling Stockholder has no knowledge of
any material adverse information with regard to the current and prospective
operations of the Company which is not stated in the Registration Statement, and
such other steps as the Committee may in its absolute discretion deem necessary
or advisable;
(e) To make, acknowledge, verify and file on the behalf of the Selling
Stockholder applications, consents to service of process and such other
undertakings or reports as may be required by law with state commissioners or
officers administering state securities or Blue Sky laws and to take any other
action required to facilitate the qualification of the Shares under the
securities or Blue Sky laws of the jurisdictions in which the Shares are to be
offered;
B-2
(f) If necessary, to endorse (in blank or otherwise) on behalf of
the Selling Stockholder the certificate or certificates representing the
Shares, or a stock power or powers attached to such certificate or
certificates; and
(g) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions, certificates,
letters and other writings and, in general, to do all things and to take
all action which the Committee in its sole discretion may consider
necessary or proper in connection with or to carry out the aforesaid sale
of Shares, as fully as could the Selling Stockholder if personally present
and acting.
2. This Power of Attorney and all authority conferred hereby is granted
and conferred subject to and in consideration of the interest of the Company,
the Representatives and the Underwriters and, for the purpose of completing the
transactions contemplated by this Power of Attorney, this Power of Attorney and
all authority conferred hereby shall be irrevocable and shall not be terminated
by any act of the Selling Stockholder or by operation of law, whether by the
liquidation of the Selling Stockholder or by the occurrence of any other event
or events, and if, after the execution hereof, the Selling Stockholder shall be
liquidated, or if any other such event or events shall occur before the
completion of the transactions contemplated by this Power of Attorney, the
Committee shall nevertheless be authorized and directed to complete all such
transactions as if such liquidation or other event or events had into occurred
and regardless of notice thereof.
3. Each Member shall have the full power to make and substitute any
person in the place and stead of such Member, and the Selling Stockholder hereby
ratifies and confirms all that each Member or substitute or substitutes shall do
by virtue of these presents. All actions hereunder may be taken by any one
Member or his substitute. In the event of the death, disability or incapacity of
any Member, the remaining Member or Members shall appoint a substitute therefor.
4. The Selling Stockholder hereby represents, warrants and covenants
that:
(a) All information furnished to the Company by or on behalf of the
Selling Stockholder for use in connection with the preparation of the
Registration Statement is and will be true and correct in all material
respects and does not and will not omit any material fact necessary to
make such information not misleading;
(b) The Selling Stockholder, having full right, power and
authority to do so, has duly executed and delivered this Power of Attorney.
(c) The Selling Stockholder has carefully reviewed the Registration
Statement and will carefully review each amendment
B-3
thereto immediately upon receipt thereof from the Company and will promptly
advise the Company in writing if:
(i) The name and address of the Selling Stockholder is not
properly set forth in each preliminary prospectus (collectively, the
"Preliminary Prospectus") contained in the Registration Statement at
the time it becomes effective;
(ii) The Selling Stockholder has reason to believe the (A)
any information furnished to the Company by or on behalf of the
Selling Stockholder for use in connection with the Registration
Statement, the Preliminary Prospectus or the final prospectus (the
"Prospectus") is not true and complete; and (B) any Preliminary
Prospectus, the Prospectus or any supplements thereto contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading;
(iii) The Selling Stockholder knows of any material adverse
information with regard to the current or prospectus operations of
the Company or any of its subsidiaries which is not disclosed in any
Preliminary Prospectus, the Prospectus or the Registration Statement;
or
(iv) Except as indicated in the Prospectus, the Selling
Stockholder knows of any arrangements made or to be made by any
person, or of any transaction already effected, (A) to limit or
restrict the sale of the Common Shares during the period of the
public distribution, (B) to stabilize the market for the Common
Shares or (C) to withhold commissions or otherwise to hold any other
person responsible for the distribution of the Shares;
(d) In connection with the offering of the Shares, the Selling
Stockholder has not taken and will not knowingly take, directly or
indirectly, any action intended to, or which might reasonably be expected
to, cause or result in stabilization or manipulation of the price of the
Shares or the Common Shares to facilitate the sale or resale of the Shares;
(e) The Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares other than a Preliminary Prospectus, the
Prospectus or other material permitted by the Act;
(f) The Selling Stockholder will notify the Company in writing
immediately of any changes in the foregoing information which should be
made as a result of developments occurring after the date hereof and prior
to the Closing Date and any Option Closing Date under the Underwriting
Agreement, and the Committee
B-4
may consider that there has not been any such development unless advised to
the contrary;
(g) The Selling Stockholder has, and at the time of delivery of the
Shares to the Representatives it will have, full power and authority to
enter into this Power of Attorney, to carry out the terms and provisions
hereof and to make all the representations, warranties and covenants
contained herein; and
(h) This Power of Attorney is the valid and binding agreement of
the Selling Stockholder and is enforceable against the Selling Stockholder
in accordance with its terms, except as such enforceability may be limited
by general principles of equity, whether applied in a court of law or a
court of equity, and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
5. The representations, warranties and covenants of the Selling
Stockholder in this Power of Attorney are made for the benefit of, and may be
relied upon by the Committee, the Company and its counsel, and their
representatives, agents and counsel, the Custodian, the Underwriters and the
Representatives.
6. The Committee shall be entitled to act and rely upon any statement,
request, notice or instructions respecting this Power of Attorney given to it by
the Selling Stockholder, not only as to the authorization, validity and
effectiveness thereof, but also as to truth and acceptability of any information
therein contained.
It is understood that the Committee assumes no responsibility or liability
to any person other than to deal with the Shares deposited with it and the
proceeds from the sale of the Shares in accordance with the provisions hereof.
The Committee makes no representations with respect to and shall have no
responsibility for the Registration Statement, the Prospectus or any Preliminary
Prospectus nor, except as herein expressly provided, for any aspect of the
offering of the Common Shares, and it shall not be liable for any error of
judgment or for any act done or omitted or for any mistake of fact or law except
for its own negligence or bad faith. The Selling Stockholder agrees to
indemnify the Committee for and to hold the Committee harmless against any loss,
claim, damage or liability incurred on its part arising out of or in connection
with it acting as the Committee under this Power of Attorney, as well as the
cost and expense of investigating and defending against any such loss, claim,
damage or liability, except to the extent such loss, claim, damage or liability
is due to the negligence or bad faith of the Member seeking indemnification;
provided that the maximum amount for which the Selling Stockholder shall
be liable under this Agreement shall be the net proceeds from the offering
received by such Selling Stockholder less any amounts for which such Selling
Stockholder is liable under Section 8 of the Underwriting Agreement and Section
7 of the Custodian Agreement. The Selling Stockholder agrees that the Committee
may consult with the counsel of its own choice, who may be counsel for the
Company, and it shall have full and complete authorization
B-5
and protection for any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel.
7. It is understood that the Committee shall serve entirely without
compensation.
8. This Power of Attorney shall be governed by the laws of the
Commonwealth of Pennsylvania.
This Power of Attorney may be signed in two or more counterparts with the
same effect as if the signature thereto and hereto upon the same instrument.
In case any provision in this Power of Attorney shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Power of Attorney shall be binding upon the Committee and the Selling
Stockholder and the legal representatives, distributees, successors and assigns
of the Selling Stockholder.
Dated: ________________, 1997
Very truly yours,
--------------------------------
--------------------------------
Signature of Selling Stockholder
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By:
-----------------------------
SHARES TO BE SOLD:
_________ shares of Common Stock
ACKNOWLEDGED AND ACCEPTED
THE COMMITTEE:
-------------------------
-------------------------
NOTE: SIGNATURES MUST BE NOTARIZED
B-6
ATTACHMENT A
------------
CUSTODY AGREEMENT
CUSTODY AGREEMENT, dated ________________, 1997, among ___________________,
as Custodian (the "Custodian"), and Orbit-Alchut Technologies, Ltd. (the
"Selling Stockholder").
Orbit/FR, Inc., a Delaware corporation (the "Company"), has filed a
registration statement (together with any subsequent registration statement
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act") relating to the prior registration statement, the "Registration
Statement") with the Securities and Exchange Commission to register for sale to
the public under the Act, shares of the Company's Common Stock, par value $.01
per share (the "Common Shares").
The shares to be covered by the Registration Statement shall consist of
(a) up to 2,000,000 Common Shares to be sold by the Company and (b) up to
300,000 Common Shares (the "Shares") to be sold by the Selling Stockholder.
The Selling Stockholder has executed and delivered a Power of Attorney (the
"Power of Attorney") naming _______________________ and _______________________,
and each of them, as its attorney-in-fact (the "Committee"), for certain
purposes, including the execution, delivery and performance of this Agreement in
its name, place and stead, in connection with the proposed sale by the Selling
Stockholder of the Shares.
1. A custody arrangement is hereby established by the Selling
Stockholder with the Custodian with respect to the Shares, and the Custodian is
hereby instructed to act in accordance with the Agreement and any amendments or
supplements hereto authorized by the Committee.
2. There are herewith delivered to the Custodian, and the Custodian
hereby acknowledges receipt of, certificates representing the Shares, which
certificates have been endorsed in blank or are accompanied by duly executed
stock powers, in each case with all signatures accompanied by the signature of
another officer of the Selling Stockholder. Such certificates are to be held by
the Custodian for the account of the Selling Stockholder and are to be disposed
of by the Custodian in accordance with this Agreement.
3. The Custodian is authorized and directed by the Selling Stockholder:
(a) To hold the certificates representing the Shares delivered by
the Selling Stockholder in the Custodian's custody;
(b) On or prior to any closing date for any Shares sold pursuant to
the Registration Statement (an "Option Closing Date"), to cause such Shares to
be transferred on the books of
B-7
the Company into such names as the Custodian shall have been instructed by
the representatives (the "Representatives") of the several Underwriters
(the "Underwriters"); to cause to be issued, against surrender of the
certificates for the Shares, a new certificate or certificates for such
Shares, free of any restrictive legend, registered in such name or names;
to deliver such new certificates in such name or names, to deliver such new
certificates representing such Shares to the Representatives, as instructed
by the Representatives on the Option Closing Date for their account or
accounts against full payment therefor and to give receipt for such
payment; and
(c) To disburse such payments in the following manner: (i) to itself,
as agent for the Selling Stockholder, a reserve amount to be designated in
writing by the Committee from which amount the Custodian shall pay, as soon
as reasonably practicable, any applicable stock transfer taxes and (ii) to
the Selling Stockholder, pursuant to the written instructions of the
Committee, (A) on the Option Closing Date, a sum equal to the proceeds to
which the Selling Stockholder is entitled, as determined by the Committee,
less the reserve amount designated by the Committee and (B) promptly after
all proper charges, disbursements, costs and expenses shall have been paid,
any remaining balance of the amount reserved under clause (i) above. Before
making any payment from the amount reserved under clause (i) above, except
payments made pursuant to subclause (B) of clause (ii) above, the Custodian
shall request and receive the written approval of the Committee.
4. Subject in each case to the indemnification obligations set forth in
Section 7, in the event Shares of the Selling Stockholder are not sold prior to
August 31, 1997, the Custodian shall deliver to the Selling Stockholder as soon
as practicable after the earlier to occur of such date and termination of the
offering of the Shares, certificates representing such Shares deposited by the
Selling Stockholder. Certificates returned to the Selling Stockholder shall be
returned with any related stock powers, and any new certificates issued to the
Selling Stockholder with respect to such Shares shall bear any appropriate
legend reflecting the unregistered status thereof under the Act.
5. This Agreement is for the express benefit of the Company and the
Selling Stockholder, the Underwriters and the Representatives. The obligations
and authorizations of the Selling Stockholder hereunder are irrevocable and
shall not be terminated by any act of the Selling Stockholder or by operation of
law, whether by the incapacity of the Selling Stockholder or by the occurrence
of any other event or events, and if after the execution hereof the Selling
Stockholder shall be incapacitated, or if any other event or events shall occur
before the delivery of the Selling Stockholder's Shares hereunder to the
Representatives, such Shares shall be delivered to the Representatives in
accordance with the terms and conditions of this Agreement, as if such event had
not occurred, regardless of whether or not the Custodian shall have received
notice of such event.
B-8
6. Until payment of the purchase price for the Shares has been made to
the Selling Stockholder or to the Custodian, the Selling Stockholder shall
remain the owner of, and shall retain the right to receive dividends and
distributions on, and to vote, the number of Shares delivered by it to the
Custodian hereunder. Until such payment in full has been made or until the
offering of Shares has been terminated, the Selling Stockholder agrees that it
will not give, assign, sell, agree to sell, pledge, hypothecate, grant any lien
on, transfer, or otherwise dispose of the Shares or any interests therein.
7. The Custodian shall assume no responsibility to any person other than
to deal with the certificates for the Shares and the proceeds from the sale of
the Shares represented thereby in accordance with the provisions hereof, and
the Selling Stockholder hereby agrees to indemnify the Custodian for and to
hold the Custodian harmless against any and all losses, claims, damages or
liabilities incurred on its part arising out or in connection with it acting as
the Custodian pursuant hereto, as well as the costs and expenses of
investigating and defending any such losses, claims, damages or liabilities,
except to the extent such losses, claims, damages or liabilities are due to the
negligence or bad faith of the Custodian; provided that the maximum amount for
which the Selling Stockholder shall be liable under this Agreement shall be the
net proceeds from the offering received by the Selling Stockholder less any
amounts for which the Selling Stockholder is liable for indemnification under
Section 8 of the Underwriting Agreement and Section 6 of the Agreement and Power
of Attorney. The Selling Stockholder agrees that the Custodian may consult with
counsel of its own choice, who may be counsel for the Company, and the Custodian
shall have full and complete authorization and protection for any action taken
or suffered by the Custodian hereunder in good faith and in accordance with the
opinion of such counsel.
8. The Selling Stockholder hereby represents and warrants that: (a) it
has, and at the time of delivery of its Shares to the Representatives it will
have, full power and authority to enter into this Agreement and the Power of
Attorney, to carry out the terms and provisions hereof and thereof and to make
all of the representations, warranties and agreements contained herein and
therein and (b) this Agreement and the Power of Attorney are the valid and
binding agreements of the Selling Stockholder and are enforceable against the
Selling Stockholder in accordance with their respective terms.
9. The Custodian's acceptance of this Agreement by the Custodian's
execution hereof shall constitute an acknowledgment by the Custodian of the
authorization herein conferred and shall evidence the Custodian's agreement to
carry out and perform this Agreement in accordance with its terms.
10. The Custodian shall be entitled to act and rely upon any statement,
request, notice or instruction with respect to this Agreement given to it on
behalf of the Selling Stockholder if the same shall be made or given to the
Custodian by the Committee, not only as to the authorization, validity and
effectiveness thereof, but
B-9
also as to the truth and acceptability of any information therein contained.
11. This Agreement may be executed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument. Execution by the Custodian of one counterpart hereof and its
delivery thereof to the Committee shall constitute the valid execution of this
Agreement by the Custodian.
12. This Agreement shall be binding upon the Custodian, the Selling
Stockholder and the respective, legal representatives, distributees, successors
and assigns of the Selling Stockholder.
13. This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
14. Any notice given pursuant to this Agreement shall be deemed given if in
writing and delivered in person, or if given by telephone or telegraph if
subsequently confirmed by letter: (i) if to the Selling Stockholder, to it, c/o
Orbit/FR, Inc., 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 and (ii) if to
the Custodian, to it at ______________________________________________________.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
-------------------------------
By:
----------------------------
ORBIT-ALCHUT TECHNOLOGIES, LTD.
By:
----------------------------
B-10
EXHIBIT C
---------
June , 1997
--
PENNSYLVANIA MERCHANT GROUP LTD
UNTERBERG HARRIS
As Representatives of the
several Underwriters
Xxxx Xxxxx Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
Dear Sirs:
In consideration of the agreement (the "Underwriting Agreement") of the
several Underwriters for which Pennsylvania Merchant Group Ltd and Unterberg
Harris (the "Representatives"), intend to act as Representatives, to underwrite
a proposed public offering (the "Offering") of 2,000,000 shares of Common Stock,
$.01 par value (the "Common Shares") of Orbit/FR, Inc., a Delaware corporation
(the "Company"), as contemplated by a registration statement with respect to
such shares filed with the Securities and Exchange Commission on Form S-1
(Registration No. 333-25015), the undersigned hereby agrees that the undersigned
will not, for a period of 180 days after the commencement of the public offering
of such shares, without the prior written consent of the Representatives, (i)
directly or indirectly assign, transfer, offer, sell, agree to sell, hypothecate
or otherwise dispose of any Common Shares of the Company or securities
convertible into or exchangeable for or any rights to acquire Common Shares or
(ii) in any other way reduce his risk of ownership or investment in any Common
Shares; provided, however, that bona fide gifts to persons who agree in writing
with the Representatives to be bound by the provisions hereof, and sales of
Common Shares pursuant to the Underwriting Agreement, shall not be prohibited.
Very truly yours,
By:
-----------------------------
--------------------------------
[Print Name]
C-1
