PARLEX CORPORATION
1,332,500 Shares*
Common Stock
($0.10 par value per share)
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Underwriting Agreement
__________ __, 1997
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Xxxxxxx & Company, Inc.
As representatives of the several
Underwriters named in Schedule I hereto,
x/x Xxxxx, Xxxxxxxx & Xxxx, Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
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Parlex Corporation, a Massachusetts corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you and the several Underwriters named in Schedule I hereto (collectively,
the "Underwriters"), for whom you are acting as representatives (the
"Representatives") an aggregate of 1,000,000 shares (the "Company Firm Shares")
and, at the election of the Underwriters, up to 150,000 additional shares (the
"Company Optional Shares") of common stock of the Company, $0.10 par value per
share ("Common Stock"), and, the Selling Stockholders named in Schedule II
hereto (the "Selling Stockholders") propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of 150,000
shares (the "Selling Stockholder Firm Shares", and together with the Company
Firm Shares, the "Firm Shares") and, at the election of the Underwriters, up to
an additional 22,500 shares (the "Selling Stockholder Optional Shares," and
together with the Company Optional Shares, the "Optional Shares") of Common
Stock. The Firm Shares and the Optional Shares which the Underwriters elect to
purchase pursuant to Section 3 hereof are herein collectively called the
"Shares".
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* Includes 172,500 shares subject to an option to purchase additional
shares to cover over-allotments.
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1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-2 (File No. 333-_____) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement including any pre-effective amendments
thereto and any post-effective amendments thereto, each in the form
heretofore delivered to you and, excluding exhibits thereto, but
including all documents incorporated by reference in the prospectus
contained therein, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending
the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or, to the Company's knowledge, threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"); the various parts of the
Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto, including any exhibits
incorporated by reference in the Initial Registration Statement and the
Rule 462(b) Registration Statement, and including (i) the information
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contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 6(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective or
the Rule 462(b) Registration Statement, if any, at the time it became
effective and (ii) the documents incorporated by reference in the
prospectus contained in the Initial Registration Statement at the time
such part of the Initial Registration Statement became effective, each as
amended at the time such part of such Initial Registration Statement
became effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Act, is hereinafter called the "Prospectus"); and
any reference herein to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-2 under the Act, as of
the date of such Preliminary Prospectus or Prospectus, as the case may
be;
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain
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an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein. The Company
acknowledges that the statements set forth in the last paragraph on the
front cover page, in the penultimate two paragraphs on page 2 and under
the heading "Underwriting" in the Prospectus constitute the only
information relating to any Underwriter furnished in writing to the
Company by the Representatives specifically for inclusion in the
Registration Statement;
(c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects
to the requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(d) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through you expressly for use therein;
(e) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the rules and regulations
thereunder which have not been described or filed, or incorporated by
reference in the Registration Statement, as required; the contracts so
described in the Prospectus to which the Company or any of its
subsidiaries is a party have been duly authorized, executed and delivered
by the Company or its subsidiaries, constitute valid and binding
agreements of the Company or its subsidiaries and are enforceable against
and by the Company or its subsidiaries in accordance with their
respective terms, and are in full force and effect on the date hereof;
and neither the Company nor any of its subsidiaries, nor, to the best of
the
3
Company's knowledge, any other party is in breach of or default
under any of such contracts;
(f) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, that is in each case material to
the Company and its subsidiaries taken as a whole, otherwise than as set
forth or contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock (other
than issuances of Common Stock pursuant to Company stock option and stock
purchase plans described in the Registration Statement and Prospectus) or
long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development that is reasonably likely to result in
a material adverse change, in or affecting the business, assets,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(g) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
other properties and assets described in the Prospectus as owned by it,
in each case free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company; any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to
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be made of such property and buildings by the Company and its
subsidiaries; the Company and its subsidiaries own or lease all such
properties as are necessary to its operations as now conducted or as
proposed to be conducted, except where the failure to so own or lease
would not result in a material adverse change in or affecting the
business, assets, management, financial position, stockholders' equity or
results of operations of the Company;
(h) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of organization, each with
full power and authority (corporate and otherwise) to own its properties
and conduct its business as described in the Prospectus, and each has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
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(i) The Company has an authorized capitalization as set forth in
the Prospectus, and all the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Common Stock
contained in the Prospectus; all of the issued shares of capital stock of
each subsidiary of the Company (i) have been duly and validly authorized
and issued, are fully paid and non-assessable and (ii) except as
disclosed in the Prospectus, are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims; except as disclosed
in or contemplated by the Prospectus and the consolidated financial
statements of the Company, and the related notes thereto, included in the
Prospectus, neither the Company nor any subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations; and the description of the Company's stock option and stock
purchase plans and the options or other rights granted and exercised
thereunder set forth in the Prospectus accurately and fairly presents in
all material respects the information required to be shown with respect
to such plans, options and rights;
(j) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will
conform to the description of the Common Stock contained in the
Prospectus; no preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Shares by the
Company pursuant to this Agreement; no stockholder of the Company has any
right, which has not been waived, to require the Company to register the
sale of any shares of capital stock owned by such stockholder under the
Act in the public offering contemplated by this Agreement; and no further
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approval or authority of the stockholders or the Board of Directors of
the Company will be required for the issuance and sale of the Shares to
be sold by the Company as contemplated herein;
(k) The Company has full corporate power and authority to enter
into this Agreement; and this Agreement has been duly authorized,
executed and delivered by the Company, constitutes a valid and binding
obligation of the Company and is enforceable against the Company in
accordance with its terms;
(l) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein contemplated will not
conflict with or 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 or other material agreement or material
instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any
of the property
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or assets of the Company or any of its subsidiaries is subject, nor
will such action result in any violation of the provisions of the
Articles of Organization or By-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws or the by-laws
and rules of the National Association of Securities Dealers, Inc.
("NASD") in connection with the purchase and distribution of the Shares
by the Underwriters;
(m) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge,
threatened to which the Company or any of its subsidiaries is or may be a
party or of which property owned or leased by the Company or any of its
subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings, would
reasonably be expected, individually or in the aggregate, to prevent or
adversely affect the transactions contemplated by this Agreement or
result in a material adverse change in the business, assets, management,
financial position, stockholders' equity or results of operations of the
Company; no labor disturbance by the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent
that would reasonably be expected to affect materially and adversely such
business, assets, management, financial position, stockholders' equity or
results of operations; and neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
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administrative agency or other governmental body, that would reasonably
be expected to affect materially and adversely such business, assets,
management, financial position, stockholders' equity or results of
operations;
(n) The Company and its subsidiaries possess all licenses,
certificates, authorizations or permits issued by the appropriate
governmental or regulatory agencies or authorities that are necessary to
enable them to own, lease and operate their respective properties and to
carry on their respective businesses as presently conducted except, where
the failure to possess such licenses, certificates, authorization or
permits would not reasonably be expected to affect materially and
adversely such business, assets, management financial position,
stockholders' equity or results of operations, and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, would
reasonably be expected to materially and adversely affect the business,
assets, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries;
6
(o) The Company and its subsidiaries (i) are in compliance in all
material respects with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, including without limitation those relating to occupational
safety and health, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants, including without limitation those
relating to the storage, handling or transportation of hazardous or toxic
materials (collectively, "Environmental Laws") and (ii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the Company and its subsidiaries,
taken as a whole. The Company, in its reasonable judgment, has concluded
that any costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) would not, singly or in the aggregate, reasonably be
expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(p) Deloitte & Touche LLP, who have audited certain financial
statements of the Company, are independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder;
(q) The consolidated financial statements and schedules of the
Company, and the related notes thereto, included or incorporated by
reference in the Registration Statement and the Prospectus present fairly
in all material respects the financial position of the Company as of the
69
respective dates of such financial statements and schedules, and the
results of operations and cash flows of the Company for the respective
periods covered thereby; such statements, schedules and related notes
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis as certified by the independent
public accountants named in paragraph (p) above; no other financial
statements or schedules are required to be included in the Registration
Statement; and the selected financial data set forth in the Prospectus
under the captions "Capitalization" and "Selected Consolidated Financial
Data" fairly present in all material respects the information set forth
therein on the basis stated in the Registration Statement;
(r) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks,
trade names, patent rights, copyrights, licenses, approvals and
governmental authorizations to conduct their business as now conducted;
the Company has no knowledge of any material infringement by the Company
of trademark, trade name rights, patent rights, copyrights, licenses,
trade secret or other similar rights of others; and there is no claim
7
of infringement being made against the Company regarding trademark,
trade name, patent, copyright, license, trade secret or other similar
rights which would reasonably be expected to have a material adverse
effect on the business, assets, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries;
(s) The Company and each of its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and
have paid all taxes shown as due thereon; and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company or any of its subsidiaries which could
materially and adversely affect the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company;
(t) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(u) Each of the Company and its subsidiaries maintains insurance of
the types and in the amounts which it deems adequate for its business,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect;
(v) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
70
foreign, federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof;
(w) The Company has not taken and will not take, directly or
indirectly through any of its directors, officers or controlling persons,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares; and
(x) The Common Stock of the Company has been registered pursuant to
Section 12(g) of the Exchange Act and the Company is not required to take
any further action for the inclusion of the Shares on the Nasdaq National
Market.
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2. Representations of the Selling Stockholders. Each of the Selling
Stockholders, severally and not jointly, represents and warrants to, and agrees
with, each of the Underwriters that:
(a) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement and the Power- of-Attorney and Custody Agreement (the "Custody
Agreement") hereinafter referred to, and for the sale and delivery of the
Shares to be sold by such Selling Stockholder hereunder, have been
obtained; and such Selling Stockholder has full right, power and
authority to enter into this Agreement and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder;
(b) This Agreement and the Custody Agreement have each been duly
authorized, executed and delivered by such Selling Stockholder and each
such document constitutes a valid and binding obligation of such Selling
Stockholder, enforceable in accordance with its terms;
(c) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body with
respect to such Selling Stockholder is required in connection with the
sale of the Shares by such Selling Stockholder or the consummation by
such Selling Stockholder of the transactions on his or its part
contemplated by this Agreement and the Custody Agreement, except such as
have been obtained under the Act or the rules and regulations thereunder
and such as may be required under state securities or Blue Sky laws or
the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares;
(d) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the performance by such Selling Stockholder of this
Agreement and the Custody Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, or give any party a right to terminate any of its
71
obligations under, or result in the acceleration of any obligation under,
any indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract, agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder or
any of his or its properties is bound or affected, or violate or conflict
with any judgment, ruling, decree, order, statute, rule or regulation of
any court or other governmental agency or body applicable to such Selling
Stockholder;
(e) Such Selling Stockholder has, and at the First Time of Delivery
(as defined in Section 5 hereof) will have, good and valid title to the
Shares to be sold by such Selling Stockholder hereunder, free and clear
of all liens, encumbrances, equities or claims; and, upon delivery of
such Shares and payment therefor pursuant hereto,
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good and valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to each of the several
Underwriters who have purchased such Shares in good faith and without
notice of any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial Code;
(f) Such Selling Stockholder will not, directly or indirectly,
offer, sell or otherwise dispose of any shares of Common Stock within 90
days after the date of the Prospectus otherwise than hereunder, or as a
bona fide gift or gifts to, or in trust for, a person or entity who or
which agrees in writing to be bound by this restriction or with your
written consent;
(g) Such Selling Stockholder has not taken and will not at any time
take, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of shares of Common Stock to facilitate the
sale or resale of any of the Shares; and
(h) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in
conformity with written information about such Selling Stockholder
furnished to the Company by such Selling Stockholder expressly for use
therein, such Preliminary Prospectus and the Registration Statement did,
and the Prospectus and any further amendments or supplements to the
Registration Statement and the Prospectus will, when they become
effective or are filed with the Commission, as the case may be, conform
in all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and not 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 the
light of the circumstances under which they were made, not misleading.
In addition to the foregoing representations, Xxxxxxx X. Xxxxxxx, a
Selling Stockholder, represents and warrants to, and agrees with, each of the
Underwriters that he has reviewed the Registration Statement and Prospectus
72
and, although he has not independently verified the accuracy or completeness of
all the information contained therein, nothing has come to his attention that
would lead him to believe that on the Effective Date, the Registration
Statement contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and, on the Effective Date the
Prospectus contained and, at each Time of Delivery, contains any untrue
statement of a material fact or omitted or omits 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.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated, each Selling Stockholder
agrees to deliver to you prior to or
10
at the First Time of Delivery 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).
Each of the Selling Stockholders represents and warrants that a
certificate in negotiable form representing all of the Shares to be sold by
such Selling Stockholder has been placed in custody under the Custody
Agreement, in the form heretofore furnished to you, duly executed and delivered
by such Selling Stockholder to the Custodian (as defined in the Custody
Agreement), and that such Selling Stockholder has duly executed and delivered a
power-of-attorney, in the form heretofore furnished to you and included in the
Custody Agreement (the "Power-of-Attorney"), appointing ______ and ______, and
each of them, as such Selling Stockholder's attorney-in-fact (the
"Attorney-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Stockholder, to determine (subject to the provisions of
the Custody Agreement) the purchase price to be paid by the Underwriters to
such Selling Stockholder as provided in Section 3 hereof, to authorize the
delivery of the Shares to be sold by such Selling Stockholder hereunder and
otherwise to act on behalf of such Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
Each of the Selling Stockholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Stockholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Stockholder for such
custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power-of-Attorney, are to that extent irrevocable.
Each of the Selling Stockholders specifically agrees that the obligations of
such Selling Stockholder hereunder shall not be terminated by operation of law,
whether by the death or incapacity of such Selling Stockholder or, in the case
of an estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by the
occurrence of any other event. If such Selling Stockholder or any such executor
or trustee should die or become incapacitated, or if any such estate or trust
should be dissolved, or if such corporation or partnership should be dissolved,
or if any other such event should occur, before the delivery of the Shares
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hereunder, certificates representing the Shares to be sold by such Selling
Stockholder shall be delivered by or on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement and of the Custody
Agreement, and actions taken by the Attorneys-in-Fact pursuant to the
Powers-of-Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or not the
Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of
such death, incapacity, termination, dissolution or other event.
3. Shares Subject to Sale. (a) On the basis of the representations,
warranties and agreements of the Company and the Selling Stockholders contained
herein, and subject to the terms and conditions of this Agreement, (i) the
Company agrees to issue and sell the Company Firm Shares to the several
Underwriters, (ii) each of the Selling Stockholders agrees
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to sell its Selling Stockholder Firm Shares to the several Underwriters and
(iii) each of the Underwriters agrees, severally and not jointly, to purchase
from the Company and the Selling Stockholders, at a purchase price per share of
$_____, the respective number of Firm Shares (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Firm Shares by a fraction, the numerator of which is the aggregate number of
Firm Shares to be purchased by such Underwriter as set forth opposite the name
of such Underwriter in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased by all the Underwriters and (b)
in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided below, (i) the Company agrees
to issue and sell the Optional Shares to the several Underwriters and (ii) each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (a) of this
Section 3, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by
a fraction, the numerator of which is the maximum number of Optional Shares
which such Underwriter is entitled to purchase as set forth opposite the name
of such Underwriter in Schedule I hereto and the denominator of which is the
maximum number of the Optional Shares which all of the Underwriters are
entitled to purchase hereunder.
The Company and the Selling Stockholders, as and to the extent indicated
in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to 172,500 Optional
Shares at the purchase price per share set forth in the paragraph above, for
the sole purpose of covering overallotments in the sale of the Firm Shares. Any
such election to purchase Optional Shares shall be made in proportion to the
maximum number of Optional Shares to be sold by the Company and each of the
Selling Stockholders. Any such election to purchase Optional Shares may be
exercised on one occasion by written notice from you to the Company, given
within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you
but in no event earlier than the First Time of Delivery or, unless you and the
Company otherwise agree in writing, earlier than two or later than three
business days after the date of such notice.
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4. Offering. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
5. Closing. Certificates in definitive form for the Shares to be
purchased by each Underwriter hereunder, and in such denominations and
registered in such names as Xxxxx, Xxxxxxxx & Xxxx, Inc. may request upon at
least forty-eight hours' prior notice to the Company and the Attorneys-in-Fact,
shall be delivered by or on behalf of the Company and each of the Selling
Stockholders to you for the account of such Underwriter, against payment by
such Underwriter or on its behalf of the purchase price therefor by wire
transfer of same
12
day funds, all at the office of Xxxxx, Xxxxxxxx & Xxxx, Inc., 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000. The time and date of such delivery and payment
shall be, with respect to the Firm Shares, 9:30 a.m., Boston time, on _________
__, 1997 or such other time and date as you and the Company may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., Boston time, on
the date specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as you and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of Delivery,"
such time and date for delivery of the Optional Shares, if not the First Time
of Delivery, is herein called the "Second Time of Delivery," and each such time
and date for delivery is herein called a "Time of Delivery." Such certificates
will be made available for checking and packaging at least twenty four hours
prior to each Time of Delivery at such location as you may specify.
6. Covenants of the Company. The Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus which shall be reasonably disapproved by you promptly giving
reasonable notice thereof; to advise you, promptly after it receives
notice thereof, of the time when the Registration Statement, or any
amendment thereto, has been filed or becomes effective or any supplement
to the Prospectus or any amended Prospectus has been filed and to furnish
you copies thereof; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
75
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
13
(c) To furnish the Underwriters with copies of the Prospectus in
such quantities as you may from time to time reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issuance of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include 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 when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to
amend or supplement the Prospectus in order to comply with the Act, to
notify you and upon your request to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many copies as you
may from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required by law to deliver a prospectus in connection with sales of any
of the Shares at any time nine months or more after the time of issue of
the Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than the forty-fifth (45th) day
following the end of the full fiscal quarter first occurring after the
first anniversary of the effective date of the Registration Statement (as
defined in Rule 158(c)), an earning statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date 90 days after the date of the Prospectus, not
to offer, sell, contract to sell or otherwise dispose of any securities
of the Company which are substantially similar to the Shares, without
your prior written consent other than (i) the sale of the Shares to be
sold by the Company hereunder and (ii) the Company's issuance of shares
and the award of options under its stock plans in amounts not in excess
of the amount shown as available for grant in the Prospectus;
(f) Not to grant options to purchase shares of Common Stock which
would become exercisable during a period beginning from the date hereof
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and continuing to and including the date 90 days after the date of the
Prospectus;
(g) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flow of the Company
and its consolidated subsidiaries certified by independent public
accountants) and to make available (within the
14
meaning of Rule 158(b) under the Act) as soon as practicable after
the end of each of the first three quarters of each fiscal year
(beginning with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;
(h) During a period of five years from the effective date of the
Registration Statement, to furnish to you upon your request copies of all
reports or other communications (financial or other) furnished to
stockholders generally, and deliver to you as soon as they are available,
copies of any reports and financial statements furnished to or filed with
the Commission, the Nasdaq National Market or any national securities
exchange on which any class of securities of the Company is listed (such
financial statements to be on a combined or consolidated basis to the
extent the accounts of the Company and its subsidiaries are combined or
consolidated in reports furnished to its stockholders generally or to the
Commission);
(i) To use the net proceeds acquired by it from the sale of the
Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds" and in a manner such that the Company will not become an
"investment company" as that term is defined in the Investment Company
Act; and
(j) Not to accelerate the vesting of any option issued under any
stock option plan such that any such option may be exercised within 90
days from the date of the Prospectus.
7. Covenants of the Selling Stockholders. Each Selling Stockholder agrees
to pay or cause to be paid all taxes, if any, on the transfer and sale of the
Shares to be sold by such Selling Stockholder hereunder and the fees and
expenses, if any, of counsel and accountants retained by such Selling
Stockholders. The Company agrees with the Selling Stockholder to pay all costs
and expenses incident to the performance of the obligations of the Selling
Stockholders under this Agreement (except as set forth above), including, but
not limited to, all expenses incident to the delivery of the certificates for
the Shares to be sold by such Selling Stockholder, the costs and expenses
incident to the preparation, printing and filing of the Registration Statement
(including all exhibits thereto) and the Prospectus and any amendments or
supplements thereto, the expenses of qualifying the Shares to be sold by the
Selling Stockholders under the state securities or Blue Sky laws, all filing
fees and the reasonable fees and expenses of counsel for the Underwriters
payable in connection with the review of the offering of the Shares by the
NASD, and the cost of furnishing to the Underwriters the required copies of the
77
Registration Statement and Prospectus and any amendments or supplements
thereto; provided that each Selling Stockholder agrees to pay or cause to be
paid its pro rata share (based on the percentage which the number of Shares
sold by such Selling Stockholder bears to the total number of Shares sold) of
all underwriting discounts and commissions.
15
8. Expenses. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants
in connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of reproducing any
Agreement among Underwriters, this Agreement, the Blue Sky Memorandum and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses and filing fees in connection with the
qualification of the Shares for offering and sale under state securities
laws as provided in Section 6(b) hereof and securing any required review
bythe NASD of the terms of the sale of the Shares, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and review and in connection with the Blue Sky survey, subject
to a maximum of $5,000; (iv) the cost of preparing stock certificates; (v) the
cost and charges of any transfer agent or registrar; and (vi) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, Section 10
and Section 13 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
9. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company and each
Selling Stockholder herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and each Selling Stockholder shall each
have performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 6(a) hereof; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by
the Commission; and all requests for additional information on the part
of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxx and Xxxx LLP, counsel to the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
78
with respect to this Agreement, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request;
16
(c) Ropes & Xxxx, counsel to the Company and special counsel to the
Selling Stockholders, shall have furnished to you their written opinion,
dated such Time of Delivery, in form and substance reasonably
satisfactory to you, with respect to the matters set forth in Annex I
hereto;
(d) Xxxxxxxxxx Xxxxxxxx Xxxxxxxx & Xxxxx, intellectual property
counsel to the Company, shall have furnished to you their written
opinion, dated such time of delivery in form and substance reasonably
satisfactory to you, with respect to the matters set forth in Annex II
hereto;
(e) At 10:00 a.m., Boston time, on the effective date of the
Registration Statement and the effective date of the most recently filed
post-effective amendment to the Registration Statement and also at each
Time of Delivery, Deloitte & Touche LLP, shall have furnished to you a
letter or letters, dated the respective date of delivery thereof, in form
and substance reasonably satisfactory to you, to the effect set forth in
Annex III hereto;
(f) (i) Neither the Company nor any of its subsidiaries have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, that is in each case
material to the Company and its subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus,
there shall not have been any change in the capital stock (other than
issuances of Common Stock pursuant to Company stock option and stock
purchase plans described in the Registration Statement and Prospectus) or
long-term debt of the Company or any change, or any development that is
reasonably likely to result in a material adverse change, in or affecting
the business, assets, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause (i) or (ii), is in your
judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred any
of the following: (i) additional material governmental restrictions, not
in force and effect on the date hereof, shall have been imposed upon
trading in securities generally or minimum or maximum prices shall have
been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
79
Exchange or in the over the counter market by the NASD, or a general
banking moratorium shall have been established by federal or New York
authorities, (ii) an
17
outbreak of major hostilities or other national or international
calamity or any substantial change in political, financial or economic
conditions shall have occurred or shall have accelerated or escalated to
such an extent, as, in the judgment of the Representatives, to affect
materially and adversely the marketability of the Shares, or (iii) there
shall be any action, suit or proceeding pending or threatened, or there
shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or
any of its subsidiaries or the transactions contemplated by this
Agreement, which, in the judgment of the Representatives, has materially
and adversely affected the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Shares;
(h) The Shares to be sold by the Company at such Time of Delivery
shall have been accepted for quotation, subject to notice of issuance, on
the Nasdaq National Market System;
(i) Each director and officer of the Company and each Selling
Stockholder shall have executed and delivered to you agreements
in which such holder undertakes, for 90 days or, after the date of the
Prospectus, subject to certain exceptions stated therein, not to offer,
sell, contract to sell or otherwise dispose of any shares of Common
Stock, or any securities convertible into or exchangeable for, or any
rights to purchase or acquire, shares of Common Stock, without the prior
written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc.; and
(j) The Company and each Selling Stockholder shall have furnished
or caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of such Selling Stockholder, respectively, in
their capacities as such, satisfactory to you, as to the accuracy of the
representations and warranties of the Company and of such Selling
Stockholder, respectively, herein at and as of such Time of Delivery, as
to the performance by the Company and of such Selling Stockholder,
respectively, of all of its or his obligations hereunder to be performed
at or prior to such Time of Delivery, and as to such other matters as you
may reasonably request and the Company shall have furnished or caused to
be furnished certificates as to the matters set forth in subsections (a)
and (f) of this Section, and as to such other matters as you may
reasonably request.
10. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter and each person, if any, who controls such
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
80
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
18
of the circumstances in which they were made, not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through you expressly
for use therein.
(b) Each of the Selling Stockholders, severally and not jointly, will
indemnify and hold harmless each Underwriter and any person, if any, who
controls such Underwriter, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information about such Selling Stockholder
furnished to the Company by such Selling Stockholder expressly for use therein,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or each Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through you expressly for use therein; and will reimburse the
Company and the Selling Stockholder for any legal or other expenses reasonably
incurred by the Company or the Selling
81
19
Stockholder in connection with investigating or defending any such action or
claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party. No
indemnifying party shall be liable for any settlement of any action or claim
effected without its written consent, which consent shall not be unreasonably
withheld.
(e) If the indemnification provided for in this Section 10 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders 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 if the indemnified party failed to give the notice required
under subsection (d) above, 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 Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
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20
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 Stockholders, respectively,
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 statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or any Selling Stockholder on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(e) 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
which does not take account of the equitable considerations referred to above
in this subsection (e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (e) 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 (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Selling Stockholder shall be
liable for contribution under this Section 10 in circumstances where such
Selling Stockholder would not be required to provide indemnification if
indemnification were available. 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 (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section 10 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriter under this Section
10 shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls
the Company or any Selling Stockholder within the meaning of the Act.
(g) Notwithstanding anything to the contrary contained herein, the
aggregate liability of each Selling Stockholder under this Agreement shall not
exceed the total initial public offering price of the Shares sold by the
Selling Stockholder under this Agreement, less underwriters' discounts.
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11. Termination. (a) If any Underwriter shall default in its obligation
to purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company and the Selling Stockholders
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase such
Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company and the Selling Stockholders that you have so
arranged for the purchase of such Shares, or the Company and the Selling
Stockholders notify you that they have so arranged for the purchase of such
Shares, you or the Company and the Selling Stockholders shall have the right to
postpone such Time of Delivery for a period of not more than 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 or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person
had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-tenth of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the
number of Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-tenth of the aggregate number of all the Shares
to be purchased at such Time of Delivery, or if the Company shall not exercise
the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter, the Company or any Selling Stockholder, except
for the expenses to be borne by the Company, any Selling Stockholder and the
Underwriters as provided in Section 8 hereof and the indemnity and contribution
agreements in Section 10 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
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22
12. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company, each Selling Stockholder and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Company or any Selling Stockholder, or any
officer or director or controlling person of the Company or any Selling
Stockholder, and shall survive delivery of and payment for the Shares.
13. Expenses of Termination. If this Agreement shall be terminated
pursuant to Section 11 hereof, neither the Company nor any Selling Stockholder
shall then have any liability to any Underwriter except as provided in Section
8 and Section 10 hereof; but, if for any other reason this Agreement is
terminated (other than solely as a result of a failure to meet the conditions
set forth in paragraph (b) or clauses (i) or (ii) of paragraph (d) of
Section 9), the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so
delivered, but neither the Company nor any Selling Stockholder shall have
any further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Section 8 and Section 10 hereof.
14. Notice. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by you jointly or by Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf of you as
the Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the Representatives in care of Xxxxx,
Xxxxxxxx & Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxx; if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: President; and if to any Selling Stockholder
shall be delivered or sent by mail, telex or facsimile transmission to the
address of such Selling Stockholder set forth in Schedule II hereto; provided,
however, that any notice to an Underwriter pursuant to Section 10(d) hereof
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriter's Questionnaire or
telex constituting such Questionnaire, which address will be supplied to the
Company by you on request. Any such statements, requests, notices or agreements
shall take effect upon receipt thereof.
15. Miscellaneous. (a) This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Stockholders and, to the extent provided in Sections 10 and 12 hereof, the
officers and directors of the Company and each person who controls the Company,
any Selling Stockholder or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
85
23
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
(b) Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and the Selling Stockholders. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company for examination, upon request, but without warranty on
your part as to the authority of the signors thereof.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
24
Any person executing and delivering this Agreement as Attorney-in-Fact
for the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in- Fact by each Selling Stockholder pursuant to a
validly existing and binding Power-of- Attorney which authorizes such
Attorney-in-Fact to take such action.
Very truly yours,
PARLEX CORPORATION
By:________________________________
Xxxxx X. Xxxxxx
President and Chief Executive Officer
SELLING STOCKHOLDERS
(Named in Schedule II to the Agreement)
By:_________________________
Name:
Title: Attorney-in-Fact
86
Accepted as of the date
hereof at Boston, Massachusetts
XXXXX, XXXXXXXX & XXXX, INC.
XXXXXXX & COMPANY, INC.
By:______________________________
(Xxxxx, Xxxxxxxx & Xxxx, Inc.
On behalf of each of
the Underwriters)
25
SCHEDULE I
Number of
Optional Shares
Total Number to be Purchased
of Firm Shares if Maximum
to be Purchased Option Exercised
-----------------------------------
Xxxxx, Xxxxxxxx & Xxxx, Inc...............................
Xxxxxxx & Company, Inc....................................
--------- -------
TOTAL: 1,150,000 172,500
========= =======
26
SCHEDULE II
87
Total
Total Number of
Number of Optional
Firm Shares Shares to
to be Sold be Sold
------------------------
The Company 1,000,000 150,000
The Selling Stockholders:
Xxxxxxx X. Xxxxxxx................................ 75,000 11,250
Xxxxxx Xxxxxxx.................................... 75,000 11,250
----------------------
TOTAL................................................... 1,150,000 172,500
======================
27
ANNEX I
Form of Ropes & Xxxx Opinion
1. The Company is a corporation duly incorporated, validly existing and
in good standing with the Secretary of State of The Commonwealth of
Massachusetts with corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus. The Company
is duly qualified to do business and is in good standing in each jurisdiction
within the United States in which it owns or leases real property or maintains
an office.
2. The authorized capitalization of the Company as of June 30, 1997 is as
set forth under the caption "Capitalization" in the Prospectus. All of the
issued and outstanding shares of capital stock have been duly authorized and
validly issued and are fully paid and nonassessable and have not been issued in
violation of any statutory preemptive right or, to such counsel's knowledge,
any other similar right. The Shares have been duly authorized and, when issued
and delivered in accordance with the Underwriting Agreement, will be validly
issued, fully paid and nonassessable and will conform in all material respects
to the description of the capital stock contained in the Prospectus.
3. Each domestic subsidiary of the Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization. All of the issued and outstanding shares of
capital stock of each such subsidiary (i) have been duly authorized and validly
issued and are fully paid and nonassessable and (ii) except as disclosed in the
Prospectus, are owned of record and, to such counsel's knowledge, beneficially
by the Company or another subsidiary of the Company, free and clear of all
liens, encumbrances, equities or claims other than those imposed by applicable
securities laws (such counsel being entitled to rely in respect of the opinion
in this clause upon opinions of local counsel and in respect of matters of fact
88
upon certificates of officers of the Company and its subsidiaries, provided
that such counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates). Each domestic
subsidiary of the Company is duly qualified to do business and is in good
standing in each jurisdiction within the United States in which it owns or
leases real property or maintains an office.
4. The Company has the corporate power and authority to enter into the
Underwriting Agreement and the Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
5. The issuance and sale by the Company of the Shares and the performance
by the Company of its obligations under the Underwriting Agreement does not and
will not (i) violate the articles of organization or by-laws of the Company,
(ii) breach or result in a default under any agreement, indenture or other
instrument filed as an exhibit to the Registration Statement or any document
incorporated by reference into the Registration
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Statement to which the Company is a party or by which it is bound, or to which
any of its properties is subject, or (iii) violate any existing Massachusetts
or federal law, rule, administrative regulation or any decree known to such
counsel of any court or any governmental agency or body having jurisdiction
over the Company or any of its properties, except that such counsel need
express no opinion as to state securities or "Blue Sky" laws or as to
compliance with the antifraud provisions of federal and state securities laws.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States or The Commonwealth of Massachusetts is required for the issuance and
sale of the Shares by the Company or the consummation by the Company of the
transactions contemplated by the Underwriting Agreement, except the
registration under the Act of the Shares.
7. The Company is not subject to regulation as an "investment company"
under the Investment Company Act of 1940, as amended.
8. The Shares have been authorized for inclusion on the Nasdaq National
Market System, subject to notice of issuance.
9. The documents incorporated by reference in the Prospectus (other than
the financial statements and related schedules therein, as to which such
counsel need express no opinion), when they were filed with the Commission,
complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder.
10. The Underwriting Agreement has been duly authorized, executed and
delivered by each of the Selling Stockholders (by such Selling Stockholder or
his or its duly authorized attorney-in-fact).
11. A Custody Agreement has been duly authorized, executed and delivered
by each of the Selling Stockholders and, pursuant to such Custody Agreement,
each Selling Stockholder has authorized its attorney-in-fact to carry out the
transactions contemplated in the Underwriting Agreement on its behalf and to
89
deliver the Shares being sold by such Selling Stockholder pursuant to the
Underwriting Agreement.
12. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States or The Commonwealth of Massachusetts is required to be obtained by any
Selling Stockholder to sell, assign, transfer and deliver the Shares to be sold
by such Selling Stockholder in the manner provided in the Underwriting
Agreement and the Custody Agreement, other than as have been obtained or made
under the Act.
13. Immediately prior to the Closing, each Selling Stockholder was the
sole registered owner and, to our knowledge, the sole beneficial owner of the
Shares to be sold by such
I-2
Selling Stockholder. Upon payment by the Underwriters of the purchase price in
accordance with the Underwriting Agreement, and upon registration of the Shares
in the names of the Underwriters in the stock records of the Company (or in the
name of a nominee for DTC in such stock records, with appropriate entries to
the account of the Underwriters having been made in the records of DTC), the
Underwriters will have acquired all the rights in the Shares that such Selling
Stockholder had or had the power to transfer, free of any claim by any other
person that such person has a property interest in the Securities and that it
is a violation of such other person's rights for the Underwriters to hold,
transfer or deal with the Shares (assuming that the Underwriters are without
notice of any such claim).
Such counsel shall also state that in the course of the preparation by
the Company of the Registration Statement and the Prospectus, they have
participated in discussions with your representatives and those of the Company
and its independent accountants in which the business and affairs of the
Company and the contents of the Registration Statement and Prospectus were
discussed. Such counsel shall state that on the basis of information that such
counsel has gained in the course of such counsel's representation of the
Company in connection with its preparation of the Registration Statement and
Prospectus and such counsel's participation in the discussions referred to
above, such counsel believes that the Registration Statement, as of its
effective date, and the Prospectus, as of its date, complied as to form in all
material respects with the requirements of the Act and the published rules and
regulations of the Commission thereunder and such counsel does not know of any
legal or governmental proceedings pending to which the Company is a party or of
which any property of the Company is the subject that are required to be
described in the Registration Statement or Prospectus that are not so described
or of any contracts or any other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be described or
incorporated by reference in the Registration Statement or Prospectus that are
not filed, described or incorporated by reference as required. Further, such
counsel shall state that based on such information and participation, nothing
came to the attention of such counsel that caused such counsel to believe that
(i) the Registration Statement as of its effective date contained an untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
that the Prospectus as of its date contained or as of such Time of Delivery
90
contains any untrue statement of a material fact or omitted or omits to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (iii) it is
necessary to amend the Registration Statement. Such counsel need express no
opinion, however, as to the financial statements, including the notes and
schedules thereto, or any other financial or accounting information set forth
or referred to in the Registration Statement and Prospectus.
Such counsel may state that the limitations inherent in the independent
verification of factual matters and the character of the determinations
involved in such counsel's review are such that such counsel does not assume
any responsibility for the accuracy, completeness or fairness of the statements
made or the information contained in the Registration Statement and Prospectus
except for those made under the captions "Description of Capital Stock" and
I-3
"Underwriting", which accurately summarize in all material respects the
provisions of the laws and documents referred to therein.
Such counsel shall also include a statement in such opinion as to the
matters set forth in this paragraph. The Registration Statement has become
effective under the Act. To the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued by
the Commission nor has any proceeding been instituted or contemplated for that
purpose under the Act. The Prospectus has been filed with the Commission
pursuant to Rule 424(b) of the rules and regulations under the Act within the
time period required thereby.
I-4
ANNEX II
Matters to be Covered in the Opinion of
Xxxxxxxxxx Schurgin Xxxxxxxx & Xxxxx
Such counsel are generally familiar with the technology used by the
Company and its subsidiaries in their businesses and the manner of its use
thereof and have read the Registration Statement and the Prospectus,
including particularly the portions of the Registration Statement and the
Prospectus referring to trademarks, trade names, patents, licenses, trade
secrets or other intellectual property rights and:
(i) such counsel have no reason to believe that the Registration
Statement or the Prospectus (A) contains any untrue statement of a
material fact with respect to trademarks, trade names, patents,
licenses, trade secrets or other intellectual property rights owned
or used by the Company or any of its subsidiaries, or the manner of
its use thereof, or any allegation on the part of any person that
the Company or any of its subsidiaries is infringing any trademarks,
trade names, patent rights, licenses, trade secrets or other
91
intellectual property rights of any such person or (B) omits to
state any material fact relating to trademarks, trade names, patents,
licenses, trade secrets or other intellectual property rights owned
or used by the Company or any of its subsidiaries, or the manner of
its use thereof, or any allegation of which such counsel have
knowledge, that is required to be stated in the Registration Statement
or the Prospectus or is necessary to make the statements therein not
misleading;
(ii) to the best of such counsel's present knowledge and except
as set forth in the Prospectus under the captions "Risk Factors-
Intellectual Property" and "Business-Intellectual Property," there are no
legal or governmental proceedings pending relating to trademarks, trade
names, patent rights, licenses, trade secrets or other intellectual
property rights of the Company or any of its subsidiaries, and to
the best of such counsel's knowledge no such proceedings are
threatened or contemplated by governmental authorities or others;
(iii) to the best of such counsel's present knowledge, the
Company and its subsidiaries duly and properly hold the patents, and
have duly and properly filed the patent applications, listed
in the Prospectus under the caption "Business-Intellectual Property";
(iv) such counsel have no present knowledge of any contracts or
other documents relating to the Company's or any of its subsidiaries'
trademarks, trade names, patents, licenses, trade secrets or other
intellectual property rights of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus that are not filed or described
as required;
II-1
(v) to the best of such counsel's present knowledge, neither the
Company nor any of its subsidiaries is infringing or otherwise
violating any trademarks, trade names, patents, licenses, trade
secrets or other intellectual property rights of others, and to the best
of such counsel's knowledge there are no infringements by others of any
of the Company's or any of its subsidiaries' trademarks, trade names,
patents, licenses, trade secrets or other intellectual property rights
which in the judgment of such counsel could affect materially the
use thereof by the Company or any of its subsidiaries; and
(vi) to the best of such counsel's present knowledge, the Company
owns or possesses sufficient licenses or other rights to use all
trademarks, trade names, patents, licenses, trade secrets or other
intellectual property rights necessary to conduct the business now
being or proposed to be conducted by the Company and its subsidiaries
as described in the Prospectus.
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ANNEX III
Pursuant to Section 9(e) of the Underwriting Agreement, Deloitte & Touche
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
pro forma financial information) examined by them and included or
incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, if applicable, and the
related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma
financial information and/or condensed financial statements derived from
audited financial statements of the Company for the periods specified in
such letter, as indicated in their reports thereon, copies of which have
been separately furnished to the Representatives;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's Quarterly Reports on Form
10-Q incorporated by reference into the Prospectus as indicated in their
reports thereon, copies of which have been separately furnished to the
Representatives; and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
and included or incorporated by reference in Item 6 of the Company's
Annual Report on Form 10-K for the most recent fiscal year, agrees with
the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years
which were included or incorporated by reference in the Company's Annual
Reports on Form 10-K for such fiscal years;
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93
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of
the latest audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the Company and
its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not comply
as to form in all material respects with the applicable accounting
requirements of the Exchange Act as it applies to Form 10-Q and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus or
included in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus, for them to be
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
in the Prospectus or incorporated by reference to the Company's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause (A)
and any unaudited income statement data and balance sheet items
included in the Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for
the audited consolidated financial statements included in the
Prospectus or incorporated by reference to the Company's Annual
Report on Form 10-K for the most recent fiscal year;
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94
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus
do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published
rules and regulations thereunder or the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of convertible
securities, in each case which were outstanding on the date of the
latest financial statements included or incorporated by reference
in the Prospectus) or any increase in the combined long-term debt
of the Company and its subsidiaries, or any decreases in combined
net current assets or net assets or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included or incorporated by reference in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus
to the specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other
items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared
with the comparable period of the preceding year and with any other
period of corresponding length specified by the representatives,
except in each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus, or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement.
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