EXHIBIT 1
WF&G DRAFT: 6/26/97
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2,224,860 SHARES
BALLANTYNE OF OMAHA, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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June __, 1997
XXXXX & COMPANY
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. The selling shareholders named in Schedule B hereto
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(collectively, the "Selling Shareholders") propose to sell, pursuant to the
terms of this Agreement, to the several underwriters named in Schedule A hereto
(the "Underwriters," or, each, an "Underwriter"), an aggregate of 2,224,860
shares of Common Stock, par value $.01 per share (the "Common Stock"), of
Ballantyne of Omaha, Inc., a Delaware corporation (the "Company"). The aggregate
of 2,224,860 shares so proposed to be sold is hereinafter referred to as the
"Firm Stock." One of the Selling Shareholders, ARC Ice Corp., a Delaware
corporation ("ARC Ice"), also proposes to sell to the Underwriters, upon the
terms and conditions set forth in Section 4 hereof, up to an additional 333,729
shares of Common Stock (the "Optional Stock"). The Firm Stock and the Optional
Stock are hereinafter collectively referred to as the "Stock." Xxxxx & Company
("Cowen") and Prudential Securities Incorporated ("Prudential") are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives."
2. Representations and Warranties of the Company, ARC Ice, Canrad
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Delaware and ARC. Each of the Company, ARC Ice, Canrad of Delaware Inc., a
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Delaware corporation ("Canrad Delaware"), and ARC International Corporation, an
Ontario corporation ("ARC"), represents and warrants to, and agrees with, the
several Underwriters that:
(a) The Company has complied with and meets the requirements
for the use of Form S-3, and a registration statement on Form S-3 (File No.
333-27779) in the form in which it became or becomes effective and also in
such form as it may be when any post-effective amendment thereto shall
become effective with respect to the Stock, including any preeffective
prospectuses
included as part of the registration statement as originally filed or as
part of any amendment or supplement thereto, or filed pursuant to Rule 424
under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, copies of which
(including all documents incorporated by reference therein) have heretofore
been delivered to you, has been carefully prepared, on behalf of the
Company, by ARC Ice, Canrad Delaware and ARC in conformity with the
requirements of the Securities Act and has been filed with the Commission
under the Securities Act; one or more amendments to such registration
statement, including in each case an amended preeffective prospectus,
copies of which amendments (including all documents incorporated by
reference therein) have heretofore been delivered to you, have been so
prepared and filed. The term "Registration Statement" as used in this
Agreement means the registration statement (including all documents
incorporated by reference therein) as amended by any post-effective
amendment filed and declared effective before the offering of the Stock
(including a registration statement (if any) filed pursuant to Rule 462(b)
under the Securities Act, all financial statements and exhibits and the
information, if any, contained in a prospectus that is deemed to be a part
of the registration statement at the time of its effectiveness pursuant to
Rule 430A or Rule 434 under the Securities Act). The term "Prospectus" as
used in this Agreement means the prospectus in the form included in the
Registration Statement, or (A) if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the
Securities Act and such information is included in a prospectus filed with
the Commission pursuant to Rule 424(b) under the Securities Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of
the Rule 430A information contained in the prospectus filed with the
Commission pursuant to Rule 424(b) and (B) if prospectuses that meet the
requirements of Section 10(a) of the Securities Act are delivered pursuant
to Rule 434 under the Securities Act, then (i) the term "Prospectus" as
used in this Agreement means the "prospectus subject to completion" (as
such term is defined in Rule 434(g) under the Securities Act) as
supplemented by (a) the addition of Rule 430A information or other
information contained in the form of prospectus delivered pursuant to Rule
434(c)(2) under the Securities Act or (b) the information contained in the
abbreviated term sheets described in Rule 434(c)(3) under the Securities
Act and (ii) the date of such prospectuses shall be deemed to be the date
of the
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abbreviated term sheets. The term "Preeffective Prospectus" as used
in this Agreement means the prospectus subject to completion in the form
included in the Registration Statement at the time of the initial filing of
the Registration Statement with the Commission, and as such prospectus
shall have been amended from time to time prior to the date of the
Prospectus. Any reference herein to any Preeffective Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the Securities
Act, as of the date of such Preeffective Prospectus or Prospectus, as the
case may be, and any reference to any amendment or supplement to any
Preeffective Prospectus or Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preeffective Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and so incorporated by reference.
(b) The Commission has not issued or threatened to issue any
order preventing or suspending the use of any Preeffective Prospectus, and,
at its date of issue, each Preeffective Prospectus conformed in all
material respects with the requirements of the Securities Act and did not
include any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and, when the Registration Statement becomes effective and at
all times subsequent thereto up to and including the Closing Dates, the
Registration Statement and the Prospectus and any amendments or supplements
thereto contained and will contain all material statements and information
required to be included therein by the Securities Act and conformed and
will conform in all material respects to the requirements of the Securities
Act and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, included or will include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the foregoing representations, warranties and agreements
shall not apply to information contained in or omitted from any
Preeffective Prospectus or the Registration Statement or the Prospectus or
any such amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Underwriter, directly or through you, specifically for use in
the preparation thereof; there
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is no franchise, lease, contract, agreement or document required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed
therein as required; and all descriptions of any such franchises, leases,
contracts, agreements or documents contained in the Registration Statement
are accurate and complete descriptions of such documents in all material
respects.
(c) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as set
forth or contemplated in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct
or contingent, nor entered into any transactions not in the ordinary course
of business, and there has not been any material adverse change in the
condition (financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company and its
subsidiaries considered as a whole, or, except for the exercise of
outstanding options or warrants described in the Prospectus, any change in
the capital stock, short-term or long-term debt of the Company and its
subsidiaries considered as a whole.
(d) The financial statements, together with the related notes
and schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly present, on the basis stated in the
Registration Statement, the financial position and the results of
operations and changes in financial position of the Company and its
consolidated subsidiaries at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis except as may be set forth in the
Prospectus. The selected financial and statistical data set forth in the
Prospectus under the caption "Selected Consolidated Financial Data," in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 and in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 fairly present, on the basis stated in the
Registration Statement and such Annual Report and Quarterly Report, the
information set forth therein.
(e) KPMG Peat Marwick LLP, who have expressed their opinion on
the audited financial statements and related schedules included in the
Registration Statement and the Prospectus are independent public
accountants as
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required by the Securities Act and the Rules and Regulations.
(f) The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing as corporations
under the laws of their respective jurisdictions of organization, with
power and authority (corporate and other) to own or lease their properties
and to conduct their businesses as described in the Prospectus. The Company
is, and each of its subsidiaries is, in possession of and operating in
compliance with all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders required for the conduct of
its business, all of which are valid and in full force and effect; and the
Company is, and each of such subsidiaries is, duly qualified to do business
and in good standing as a foreign corporation in all other jurisdictions
where its ownership or leasing of properties or the conduct of its business
requires such qualification where the failure to so qualify would have a
material adverse effect on the Company or such subsidiary or constitute a
waiver of material rights of the Company or such subsidiary. The Company
has, and each of its subsidiaries has, all requisite power and authority,
and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all public
regulatory or governmental agencies and bodies to own, lease and operate
its properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and no such
consent, approval, authorization, order, registration, qualification,
license or permit contains a materially burdensome restriction not
adequately disclosed in the Registration Statement and the Prospectus. The
Company owns all of the issued and outstanding capital stock of Strong
International Inc., Flavor Crisp of America Inc., Ballantyne Fabricators,
Inc. and Xenotech Rental Corp., and does not own or control, directly or
indirectly, any other corporations, partnerships, limited liability
companies, associations or other entities.
(g) The Company's authorized and outstanding capital stock
(including the Stock) is on the date hereof, and, other than with respect
to exercises of currently outstanding options under the Company's stock
option plans and the purchase of Common Stock under the Company's stock
purchase plan, will be on the Closing Dates, as set forth under the heading
"Capitalization" in the Prospectus; the outstanding shares of common stock
of the Company (including the Stock) conform to the description thereof in
the Prospectus, have been duly authorized and validly issued and are fully
paid
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and nonassessable, are duly listed on the American Stock Exchange and have
been issued in compliance with all federal and state securities laws and
were not issued in violation of or subject to any preemptive rights or
similar rights to subscribe for or purchase securities. Except as disclosed
in and or contemplated by the Prospectus and the financial statements of
the Company and related notes thereto included in the Prospectus, the
Company does not have outstanding any options or warrants 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, except for options granted
subsequent to the date of information provided in the Prospectus pursuant
to the Company's employee and non-employee director stock option and
employee stock purchase plans as disclosed in the Prospectus. The
description of the Company's stock option, stock purchase and other stock
plans or arrangements, and the options or other rights granted or exercised
thereunder, as set forth in the Prospectus, accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights. All outstanding shares of capital stock
of each subsidiary of the Company have been duly authorized and validly
issued, and are fully paid and nonassessable and are owned directly by the
Company or by another wholly owned subsidiary of the Company free and clear
of any liens, encumbrances, equities or claims.
(h) Except as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries or affiliates is a party or of which any property of the
Company or any subsidiary or affiliate is subject, which, if determined
adversely to the Company or any such subsidiary or affiliate, might
individually or in the aggregate (i) prevent or adversely affect the
transactions contemplated by this Agreement, (ii) suspend the effectiveness
of the Registration Statement, (iii) prevent or suspend the use of the
Preeffective Prospectus in any jurisdiction or (iv) result in a material
adverse change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of the
Company and its subsidiaries considered as a whole; and to the best of the
Company's knowledge no such proceedings are threatened or contemplated
against the Company or any subsidiary or affiliate by governmental
authorities or others. 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,
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regulatory body or other governmental agency or body. The description of
the Company's litigation under the heading "Legal Proceedings" in the
Prospectus is true, complete and correct and complies with the Rules and
Regulations.
(i) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
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, note
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it, any of its subsidiaries or any
of its or their properties is or may be bound, the Certificate or Articles
of Incorporation, By-laws or other organizational documents of the Company
or any of its subsidiaries, or any law, 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 or will result in the
creation of a lien.
(j) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except such as
may be required by the National Association of Securities Dealers, Inc.
(the "NASD") or under the Securities Act or the securities or "Blue Sky"
laws of any jurisdiction in connection with the purchase and distribution
of the Stock by the Underwriters.
(k) The Company has the full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder, and
this Agreement has been duly and validly authorized, executed and delivered
by the Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that rights to indemnity and contribution hereunder may be limited
by federal or state securities laws or the public policy underlying such
laws.
(l) The Company and its subsidiaries are in all material
respects in compliance with, and conduct their businesses in conformity
with, all applicable federal, state, local and foreign laws, rules and
regulations of any court or governmental agency or body; to the knowledge
of the Company, otherwise than as set forth in the Registration Statement
and the Prospectus, no prospective change in any of such federal or state
laws, rules or regulations has been adopted which, when made effective,
would have a material adverse effect on
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the operations of the Company and its subsidiaries. In the ordinary course
of business, employees of the Company conduct periodic reviews of the
effect of Environmental Laws (as defined below) on the business operations
and properties of the Company and its subsidiaries, in the ordinary course
of which they seek to identify and evaluate associated costs and
liabilities. Except as disclosed in the Registration Statement, the Company
and its subsidiaries are in compliance with all applicable existing
federal, state, local and foreign laws and regulations relating to the
protection of human health or the environment or imposing liability or
requiring standards of conduct concerning any Hazardous Materials
("Environmental Laws"), except for such instances of noncompliance which,
either singly or in the aggregate, would not have a material adverse
effect. The term "Hazardous Material" means (i) any "hazardous substance"
as defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (iii) any petroleum
or petroleum product, (iv) any polychlorinated biphenyl and (v) any
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other Environmental Law.
(m) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns and have paid all taxes shown as due thereon or with respect to any
of their properties, and there is no tax deficiency that has been, or to
the knowledge of the Company is likely to be, asserted against the Company
or any of its subsidiaries or any of their respective properties or assets
that would adversely affect the financial position, business or operations
of the Company and its subsidiaries.
(n) No person or entity has the right to require registration
of shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement, except for persons
and entities who have expressly waived such right or who have been given
proper notice and have failed to exercise such right within the time or
times required under the terms and conditions of such right. Except as
described in the Prospectus, no person or entity has the right to require
registration of shares of Common Stock or other securities of the Company.
(o) Neither the Company nor any of its officers, directors or
affiliates has taken or will
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take, directly or indirectly, any action designed or intended to stabilize
or manipulate the price of any security of the Company, or which caused or
resulted in, or which might in the future reasonably be expected to cause
or result in, stabilization or manipulation of the price of any security of
the Company.
(p) The Company has provided you with all financial statements
since December 31, 1991 to the date hereof that are available to the
officers of the Company, including financial statements for the three
months ended March 31, 1997 and the months of April and May 1997.
(q) The Company and its subsidiaries own or possess rights to
use all patents, trademarks (including "Strong," "Simplex," "Century,"
"Optimax," "Ballantyne," "Super Trouper," "Gladiator," "Roadie," "Flavor
Crisp," "Flavor Pit," "Britelights," "Xenotech" and "ISCO-Optic"),
trademark registrations, service marks, service xxxx registrations,
tradenames, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses, and the Company
is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and its subsidiaries with respect to
the foregoing. The Company's business as now conducted and as proposed to
be conducted does not and will not infringe or conflict with in any
material respect patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses or other intellectual property or
franchise rights of any person. No claim has been made against the Company
alleging the infringement by the Company of any patent, trademark, service
xxxx, tradename, copyright, trade secret, license or other intellectual
property right or franchise right of any person.
(r) The Company and its subsidiaries have performed all
material obligations required to be performed by them under all contracts
required by Item 601(b)(10) of Regulation S-K under the Securities Act to
be filed as exhibits to the Registration Statement, and neither the Company
nor any of its subsidiaries nor any other party to such contract is in
default under or in breach of any such obligations. Neither the Company nor
any of its subsidiaries has received any notice of such default or breach.
(s) The Company is not involved in any labor dispute nor is any
such dispute threatened. The Company is not aware that (A) any executive,
key employee or significant group of employees of the Company or any
subsidiary plans to terminate employment with the Company or any
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such subsidiary or (B) any such executive or key employee is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreement that would be violated by the present or proposed
business activities of the Company and its subsidiaries. Neither the
Company nor any subsidiary has or expects to have any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any subsidiary makes or
ever has made a contribution and in which any employee of the Company or
any subsidiary is or has ever been a participant. With respect to such
plans, the Company and each subsidiary are in compliance in all material
respects with all applicable provisions of ERISA.
(t) The Company has obtained the written agreement described in
Section 9(k) of this Agreement from each of its officers, directors and
holders of Common Stock or options to purchase Common Stock listed on
Schedule C hereto.
(u) The Company and its subsidiaries have, and the Company and
its subsidiaries as of the Closing Dates will have, good and marketable
title in fee simple to all real property and good and marketable title to
all personal property owned or proposed to be owned by them which is
material to the business of the Company or of its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as would not have a material
adverse effect on the Company and its subsidiaries considered as a whole;
and any real property and buildings held under lease by the Company and its
subsidiaries or proposed to be held after giving effect to the transactions
described in the Prospectus are, or will be as of the Closing Dates, held
by them under valid, subsisting and enforceable leases with such exceptions
as would not have a material adverse effect on the Company and its
subsidiaries considered as a whole, in each case except as described in or
contemplated by the Prospectus.
(v) Except to the extent the Company and its affiliates are
self-insured as described in the Prospectus, the Company and its
subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are customary in the
businesses in which they are engaged or propose to engage after giving
effect to the
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transactions described in the Prospectus; and neither the Company nor any
subsidiary of the Company has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries considered as a
whole, except as described in or contemplated by the Prospectus.
(w) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company
any brokerage or finder's fee or other fee or commission as a result of any
of the transactions contemplated by this Agreement.
(x) The Company has complied with all provisions of Section
517.075 Florida Statutes (Chapter 92-198; Laws of Florida).
(y) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(z) Neither the Company nor any of its subsidiaries nor any
employee or agent of the Company or any of its subsidiaries has made any
payment of funds of the Company or any of its subsidiaries or received or
retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(aa) Neither the Company nor any of its subsidiaries is an
"investment company" or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company Act of 1940, as
amended.
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(bb) To the best of the Company's knowledge, the Company and
each of its subsidiaries has paid all tariff, custom, import, export and
other duties required to be paid by it (if any) in connection with the
exportation of products from the country of manufacture, the importation of
products into the United States, the exportation of products from the
United States and the importation of products into another country and has
provided all appropriate authorities with the requisite information, all of
which, to the best of the Company's knowledge, is true and correct,
necessary for the proper determination of the foregoing.
(cc) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company as to the matters
covered thereby.
(dd) The Company and Canrad Inc. have entered into an amendment
to the management agreement between them, which amendment is valid and in
full force and effect and which reduces the monthly management fee payable
thereunder, effective July 1, 1997, from $25,000 to $12,500.
3. Representations and Warranties and Agreements of the Selling Shareholders
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and Certain of Their Affiliates. Each Selling Shareholder represents and
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warrants to, and agrees with, the several Underwriters that such Selling
Shareholder (and, in the case of Canrad Delaware and ARC, for the purposes of
making the representations, warranties and agreements set forth in Sections
3(c), 3(f) and 3(g) below, each of Canrad Delaware and ARC represents and
warrants to, and agrees with the several Underwriters that, each of Canrad
Delaware and ARC):
(a) Now has (except, in the case of ARC Ice, as provided in the
last sentence of this Section 3(a)), and on the Closing Dates (as
hereinafter defined) will have, valid and marketable title to the Stock to
be sold by such Selling Shareholder, free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation, any
restriction on transfer, and has full right, power and authority to enter
into this Agreement, the Power of Attorney (as hereinafter defined) and the
Custody Agreement (as hereinafter defined), and, to the extent such Selling
Shareholder is a corporation, has been duly organized and is validly
existing and in good standing as a corporation under the laws of its
jurisdiction of organization. It is understood that the Stock to be sold by
ARC Ice is subject to a security interest granted to BNY Financial
Corporation and BNY Financial Corporation-Canada (together, "BNY") pursuant
to the
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Revolving Credit and Security Agreement, dated as of May 12, 1997,
among ARC, certain of its affiliates and BNY that will be released on or
prior to the First Closing Date, in the case of the Firm Stock, and on or
prior to the Option Closing Date, in the case of the Optional Stock. It is
further understood that the Stock being sold by the Selling Shareholders,
other than ARC Ice and Arnmart Investments Limited, is being issued by the
Company to such Selling Stockholders pursuant to the exercise, concurrently
with the execution of this Agreement, of outstanding stock options and a
warrant.
(b) Now has (except, in the case of ARC Ice, as provided in the
last sentence of Section 3(a) above), and on each of the Closing Dates will
have, upon delivery of and payment for each share of Stock hereunder, full
right, power and authority, and any approval required by law to sell,
transfer, assign and deliver the Stock being sold by such Selling
Shareholder hereunder, and each of the several Underwriters will acquire
valid and marketable title to all of the Stock being sold to the
Underwriters by such Selling Shareholder, free and clear of any liens,
encumbrances, equities claims, restrictions on transfer or other defects
whatsoever.
(c) For a period of 90 days after the date of this Agreement,
without the consent of Cowen, such Selling Shareholder (and Canrad Delaware
and ARC, as applicable) will not offer to sell, sell, contract to sell or
otherwise dispose of any shares of Common Stock or securities convertible
into or exchangeable for shares of Common Stock, including, without
limitation, shares of Common Stock which may be deemed to be beneficially
owned by such Selling Shareholder (or Canrad Delaware or ARC, as
applicable) in accordance with the Rules and Regulations, except for the
Stock being sold hereunder (except as may be specifically contemplated in
any lock-up agreement entered into in connection with the offering
contemplated by this Agreement for the benefit of the Underwriters).
(d) Has duly executed and delivered a power of attorney, in
substantially the form heretofore delivered by the Representatives (the
"Power of Attorney"), appointing Xxxxxx X. Xxxxxx and Xxxxxx X. Etna, and
each of them, as attorney-in-fact (the "Attorneys-in-fact") with authority
to execute and deliver this Agreement on behalf of such Selling
Shareholder, to authorize the delivery of the shares of Stock to be sold by
such Selling Shareholder hereunder and otherwise to act on behalf of such
Selling Shareholder in connection with the transactions contemplated by
this Agreement.
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(e) Has duly executed and delivered a custody agreement, in
substantially the form heretofore delivered by the Representatives (the
"Custody Agreement"), with Xxxxxx Xxxxxx Butowsky Xxxxxxx Xxxxxx & Xxxx as
custodian (the "Custodian"), pursuant to which certificates in negotiable
form for the shares of Stock to be sold by such Selling Shareholder
hereunder have been placed in custody for delivery under this Agreement.
(f) Has, by execution and delivery of each of this Agreement,
the Power of Attorney and the Custody Agreement, as applicable, created
valid and binding obligations of such Selling Shareholder (or Canrad
Delaware and ARC, as applicable), enforceable against such Selling
Shareholder (or Canrad Delaware and ARC, as applicable) in accordance with
its terms, except to the extent that rights to indemnity hereunder may be
limited by federal or state securities laws or the public policy underlying
such laws.
(g) The performance of this Agreement, the Custody Agreement
and the Power of Attorney, as applicable, and the consummation of the
transactions contemplated hereby and thereby will not result in a breach or
violation by such Selling Shareholder of any of the terms or provisions of,
or constitute a default by such Selling Shareholder (or Canrad Delaware or
ARC, as applicable) under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or other
agreement or instrument to which such Selling Shareholder (or Canrad
Delaware or ARC, as applicable) is a party or by which such Selling
Shareholder (or Canrad Delaware or ARC, as applicable) or any of its
properties is bound, or any judgment of any court or governmental agency or
body applicable to such Selling Shareholder or any of its properties, or to
such Selling Shareholder's knowledge (or the knowledge of Canrad Delaware
or ARC, as applicable), any statute, decree, order, rule or regulation of
any court or governmental agency or body applicable to such Selling
Shareholder (or Canrad Delaware or ARC, as applicable) or any of its
properties.
Each Selling Shareholder agrees that the shares of Stock represented by the
certificates held in custody under the Custody Agreement are for the benefit of
and coupled with and subject to the interests of the Underwriters, the other
Selling Shareholders and the Company hereunder, and that the arrangement for
such custody and the appointment of the Attorneys-in-fact are irrevocable; that
the obligations of such Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the death or incapacity, liquidation or
distribution of such
-14-
Selling Shareholder, or any other event, that if such Selling Shareholder should
die or become incapacitated or is liquidated or dissolved or any other event
occurs, before the delivery of the Stock hereunder, certificates for the Stock
to be sold by such Selling Shareholder shall be delivered on behalf of such
Selling Shareholder in accordance with the terms and conditions of this
Agreement and the Custody Agreement, and action taken by the Attorneys-in-fact
or each of them under the Power of Attorney shall be as valid as if such death,
incapacity, liquidation or dissolution or other event had not occurred, whether
or not the Custodian, the Attorneys-in-fact or any of them shall have notice of
such death, incapacity, liquidation or dissolution or other event.
4. Purchase by, and Sale and Delivery to, Underwriters--Closing Dates. The
------------------------------------------------------------------
Selling Shareholders agree to sell to the Underwriters the Firm Stock, and on
the basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase the Firm Stock from
the Selling Shareholders, the number of shares of Firm Stock to be purchased by
each Underwriter being set opposite its name in Schedule A, subject to
adjustment in accordance with Section 13 hereof. The number of shares of Stock
to be purchased by each Underwriter from each Selling Shareholder hereunder
shall bear the same proportion to the total number of shares of Stock to be
purchased by such Underwriter hereunder as the number of shares of Stock being
sold by each Selling Shareholder bears to the total number of shares of Stock
being sold by all Selling Shareholders, subject to adjustment by the
Representatives to eliminate fractions.
The purchase price per share to be paid by the Underwriters to the
Selling Shareholders will be $_____ per share (the "Purchase Price").
The Selling Shareholders will deliver the Firm Stock to the
Representatives for the respective accounts of the several Underwriters in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Custodian given at
or prior to 12:00 Noon, New York Time, on the second full business day preceding
the First Closing Date (as defined below) or, if no such direction is received,
in the names of the respective Underwriters or in such other names as Cowen may
designate (solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate Purchase
Price therefor by certified or official bank checks in Clearing House funds
(next day funds), payable to the order of (i) ARC Ice, in the case of Stock sold
by it; (ii) Xxxxxx Bank Ltd, in the case of Stock sold by it and (iii) the
Company, in the case of Stock sold by the other Selling Shareholders, all at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000. The time and date of the delivery and closing shall
be
-15-
at 10:00 a.m., New York Time, on July __, 1997, in accordance with Rule 15c6-1
under the Exchange Act. The time and date of such payment and delivery are
herein referred to as the "First Closing Date." The First Closing Date and the
location of delivery of, and the form of payment for, the Firm Stock may be
varied by agreement between the Company and Cowen. The First Closing Date may be
postponed pursuant to the provisions of Section 13. Delivery of the Firm Stock
may be effected through the facilities of the Depository Trust Company ("DTC"),
if requested by the Representatives.
The Selling Shareholders shall make the certificates for the Stock
available to the Representatives for examination on behalf of the Underwriters
not later than 10:00 a.m., New York Time, on the business day preceding the
First Closing Date at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
It is understood that Cowen or Prudential, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Selling Shareholders on behalf of any Underwriter or
Underwriters, for the Stock to be purchased by such Underwriter or Underwriters.
Any such payment by Cowen or Prudential shall not relieve such Underwriter or
Underwriters from any of its or their other obligations hereunder.
The several Underwriters agree to make an initial public offering of
the Firm Stock at the initial public offering price set forth in the Prospectus
as soon after the effectiveness of the Registration Statement as in their
judgment is advisable. The Representatives shall promptly advise the Company
and the Selling Shareholders of the making of the initial public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, ARC
Ice hereby grants to the Underwriters an option to purchase, severally and not
jointly, up to the aggregate number of shares of Optional Stock. The price per
share to be paid for the Optional Stock shall be the Purchase Price. The option
granted hereby may be exercised as to all or any part of the Optional Stock at
any time, and from time to time, not more than thirty (30) days subsequent to
the effective date of this Agreement. No Optional Stock shall be sold and
delivered unless the Firm Stock previously has been, or simultaneously is, sold
and delivered. The right to purchase the Optional Stock or any portion thereof
may be surrendered and terminated at any time upon notice by the Underwriters to
ARC Ice.
The option granted hereby may be exercised by the Underwriters by
giving written notice from Cowen to ARC Ice and the Custodian setting forth the
number of shares of the Optional Stock to be purchased by them and the date and
time for delivery of and payment for the Optional Stock. Each date and time for
delivery of and payment for the Optional Stock (which may be the First Closing
-16-
Date, but not earlier) is herein called the "Option Closing Date" and shall in
no event be earlier than two (2) business days nor later than ten (10) business
days after written notice is given. (The Option Closing Date and the First
Closing Date are herein called the "Closing Dates.") Optional Stock shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Stock set forth opposite such Underwriter's name in
Schedule A hereto bears to the total number of shares of Firm Stock (subject to
adjustment by the Underwriters to eliminate odd lots). Upon exercise of the
option by the Underwriters, ARC Ice agrees to sell to the Underwriters the
number of shares of Optional Stock set forth in the written notice of exercise
and the Underwriters agree, severally and not jointly and subject to the terms
and conditions herein set forth, to purchase the number of such shares
determined as aforesaid.
ARC Ice will deliver the Optional Stock to the Underwriters in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to ARC Ice and the
Custodian given at or prior to 12:00 Noon, New York Time, on the second full
business day preceding the Option Closing Date or, if no such direction is
received, in the names of the respective Underwriters or in such other names as
Cowen may designate (solely for the purpose of administrative convenience) and
in such denominations as Cowen may determine, against payment of the aggregate
Purchase Price therefor by certified or official bank check or checks in
Clearing House funds (next day funds), payable to the order of ARC Ice, all at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. ARC Ice shall make the certificates for the
Optional Stock available to the Underwriters for examination not later than
10:00 a.m., New York Time, on the business day preceding the Option Closing Date
at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The Option Closing Date and the location of delivery of, and the form of payment
for, the Option Stock may be varied by agreement between ARC Ice and Cowen. The
Option Closing Date may be postponed pursuant to the provisions of Section 13.
Delivery of the Optional Stock may be effected through the facilities of DTC, if
requested by the Representatives
5. Covenants and Agreements of the Company. The Company covenants and agrees
---------------------------------------
with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives
have determined not to proceed pursuant to Rule 430A, use its best efforts
to cause the Registration Statement to become effective, (ii) if the
Company and the Representatives have determined to proceed pursuant to Rule
430A, use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and Rule 424 of
the Rules and Regulations and (iii) if the Company and the Representatives
have determined to
-17-
deliver Prospectuses pursuant to Rule 434 of the Rules and Regulations, to
use its best efforts to comply with all the applicable provisions thereof.
The Company will advise the Representatives promptly as to the time at
which the Registration Statement becomes effective, will advise the
Representatives promptly of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible the lifting thereof, if issued. The Company will advise
the Representatives promptly of the receipt of any comments of the
Commission or any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information and will not at any time file any amendment to the
Registration Statement or supplement to the Prospectus which shall not
previously have been submitted to the Representatives a reasonable time
prior to the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the
Securities Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon the request of the Representatives, any amendments or
supplements to the Registration Statement or the Prospectus which in the
opinion of the Representatives may be necessary to enable the several
Underwriters to continue the distribution of the Stock and will use its
best efforts to cause the same to become effective as promptly as possible.
The Company will promptly file all reports and any definitive proxy or
information statements required to be filed with the Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Stock.
(c) If, at any time after the effective date of the
Registration Statement when a prospectus relating to the Stock is required
to be delivered under the Securities Act, any event relating to or
affecting the Company or any of its subsidiaries occurs as a result of
which the Prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Securities
Act, the Company will promptly notify the Representatives thereof
-18-
and will prepare an amended or supplemented prospectus or make on
appropriate filing pursuant to Section 13 or 14 of the Exchange Act which
will correct such statement or omission; and in case any Underwriter is
required to deliver a prospectus relating to the Stock nine (9) months or
more after the effective date of the Registration Statement, the Company
upon the request of the Representatives and at the expense of such
Underwriter will prepare promptly such prospectus or prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of
the Securities Act.
(d) The Company will deliver to the Representatives, at or
before the Closing Dates, signed copies of the Registration Statement, as
originally filed with the Commission, and all amendments thereto and all
documents theretofore incorporated by reference therein, including all
financial statements and exhibits thereto and will deliver to the
Representatives such number of copies of the Registration Statement,
including such financial statements and all documents theretofore
incorporated by reference therein but without exhibits, and all amendments
thereto, as the Representatives may reasonably request. The Company will
deliver or mail to or upon the order of the Representatives, from time to
time until the effective date of the Registration Statement, as many copies
of the Preeffective Prospectus as the Representatives may reasonably
request. The Company will deliver or mail to or upon the order of the
Representatives on the date of the initial public offering of the Stock,
and thereafter from time to time during the period when delivery of a
prospectus relating to the Stock is required under the Securities Act, as
many copies of the Prospectus, in final form or as thereafter amended or
supplemented as the Representatives may reasonably request; provided,
however, that the expense of the preparation and delivery of any prospectus
required for use nine (9) months or more after the effective date of the
Registration Statement shall be borne by the Underwriters required to
deliver such prospectus.
(e) The Company will make generally available to its
shareholders as soon as practicable, but not later than fifteen (15) months
after the effective date of the Registration Statement, an earnings
statement which will be in reasonable detail (but which need not be
audited) and which will comply with Section 11(a) of the Securities Act,
covering a period of at least twelve (12) months beginning after the
"effective date" (as defined in Rule 158 under the Securities Act) of the
Registration Statement.
-19-
(f) The Company will cooperate with the Representatives to
enable the Stock to be registered or qualified for offering and sale by the
Underwriters and by dealers under the securities laws of such jurisdictions
as the Representatives may designate and at the request of the
Representatives will make such applications and furnish such consents to
service of process or other documents as may be required of it as the
issuer of the Stock for that purpose; provided, however, that the Company
shall not be required to qualify to do business or to file a general
consent (other than that arising out of the offering or sale of the Stock)
to service of process in any such jurisdiction where it is not now so
subject. The Company will, from time to time, prepare and file such
statements and reports as are or may be required of it as the issuer of the
Stock to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for the distribution of the Stock.
The Company will advise the Representatives promptly after the Company
becomes aware of the suspension of the qualifications or registration of
(or any such exception relating to) the Common Stock of the Company for
offering, sale or trading in any jurisdiction or of any initiation or
threat of any proceeding for any such purpose, and in the event of the
issuance of any orders suspending such qualifications, registration or
exception, the Company will, with the cooperation of the Representatives
use its best efforts to obtain the withdrawal thereof.
(g) The Company will furnish to its shareholders annual reports
containing financial statements certified by independent public accountants
and with quarterly summary financial information in reasonable detail which
may be unaudited. During the period of five (5) years from the date hereof,
the Company will deliver to the Representatives and, upon request, to each
of the other Underwriters, as soon as they are available, copies of each
Annual Report of the Company (containing the balance sheet of the Company
as of the close of such fiscal year and statements of income, stockholders'
equity and cash flows for the year then ended and the opinion thereon of
the Company's independent public accountants) and each other report or
communication furnished by the Company to its shareholders and will deliver
to the Representatives, (i) as soon as they are available, copies of any
other reports (financial or other) which the Company shall publish or
otherwise make available to any of its shareholders as such, (ii) as soon
as they are available, copies of each proxy statement, Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other
report or financial statements
-20-
furnished to or filed with the Commission, the NASD or securities exchange
and (iii) from time to time such other information concerning the Company
as you may reasonably request. So long as the Company has active
subsidiaries, such financial statements will be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its shareholders generally. Separate
financial statements shall be furnished for all subsidiaries whose accounts
are not consolidated but which at the time are significant subsidiaries as
defined in the Rules and Regulations.
(h) The Company will use its best efforts to list the Stock,
subject to official notice of issuance, on the American Stock Exchange
concurrently with the effectiveness of the Registration Statement.
(i) The Company will maintain a transfer agent and registrar
for its Common Stock.
(j) The Company will not offer, sell, assign, transfer,
encumber, contract to sell, grant an option to purchase or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock (including, without
limitation, Common Stock of the Company which may be deemed to be
beneficially owned by the undersigned in accordance with the Rules and
Regulations) during the ninety (90) days following the date on which the
price of the Common Stock to be purchased by the Underwriters is set, other
than (i) the Company's issuance of Common Stock upon the exercise of
warrants and stock options which are presently outstanding and described in
the Prospectus and (ii) the Company's issuance of Common Stock pursuant to
its stock purchase plan as described in the Prospectus.
(k) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(l) Prior to the Closing Dates, the Company will furnish to
you, as soon as they have been prepared, copies of any unaudited interim
consolidated financial statements of the Company and its subsidiaries for
any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(m) Prior to the Closing Dates, the Company will issue no press
release or other communications directly or indirectly and hold no press
conference with
-21-
respect to the Company or any of its subsidiaries, the financial condition,
results of operation, business, prospects, assets or liabilities of any of
them, or the offering of the Stock, without your prior written consent. For
a period of twelve (12) months following the First Closing Date, the
Company will use its best efforts to provide to you copies of each press
release or other public communications with respect to the financial
condition, results of operations, business, prospects, assets or
liabilities of the Company reasonably promptly after the public issuance
thereof.
6. Payment of Expenses. (a) ARC Ice will pay (directly or by reimbursement)
-------------------
(and ARC will cause ARC Ice to pay), for itself or on behalf of the Company or
the other Selling Shareholders, all costs, fees and expenses incurred in
connection with expenses incident to the performance of the obligations of the
Company, ARC, Canrad Delaware and the Selling Shareholders under this Agreement
and in connection with the transactions contemplated hereby, including but not
limited to (i) all expenses and taxes incident to the issuance, sale and
delivery of the Stock to the Representatives and the Underwriters; (ii) all
expenses incident to the registration of the Stock under the Securities Act;
(iii) the costs of preparing stock certificates (including printing and
engraving costs); (iv) all fees and expenses of the registrar and transfer agent
of the Stock, and the Custodian and the Attorneys-in-fact; (v) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Stock to the Underwriters; (vi) fees and expenses of the Company's
counsel and the Company's independent accountants; (vii) all costs and expenses
incurred in connection with the preparation, printing filing, shipping and
distribution of the Registration Statement, each Preeffective Prospectus and the
Prospectus (including all exhibits and financial statements) and all amendments
and supplements provided for herein, the Selling Shareholders' Powers of
Attorney, the Custody Agreement, the "Agreement Among Underwriters" between the
Representatives and the Underwriters, the Master Selected Dealers' Agreement,
the Underwriters' Questionnaire and the Blue Sky memoranda and this Agreement;
(viii) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with exemptions from the qualifying or
registering (or obtaining qualification or registration of) all or any part of
the Stock for offer and sale and determination of its eligibility for investment
under the Blue Sky or other securities laws of such jurisdictions as the
Representatives may designate; (ix) all fees and expenses paid or incurred in
connection with filings made with the NASD; and (x) all other costs and expenses
incident to the performance of their obligations hereunder which are not
otherwise specifically provided for in this Section.
(b) Each Selling Shareholder will pay (directly or by
reimbursement) all fees and expenses incident to the performance of such
Selling Shareholder's obligations under this Agreement which are not
otherwise specifically provided for herein, including
-22-
but not limited to any fees or expenses of counsel for such Selling
Shareholder.
(c) In addition to their other obligations under Sections 7(a)
hereof, ARC, ARC Ice, Canrad Delaware, Arnmart Investments Limited
("Arnmart"), Xxxxxx X. Xxxxxx ("Xxxxxx") and Xxxxxxx X. Xxxxxx ("Xxxxxx")
(individually, an "ARC Party," and collectively, the "ARC Parties") and the
Company, jointly and severally, agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon (i) any statement or omission or
any alleged statement or omission or (ii) any breach or inaccuracy in the
representations and warranties of the Company and the Selling Shareholders,
they will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's and
each ARC Party's obligation to reimburse each Underwriter for such expenses
and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company and each ARC Party, as
the case may be, together with interest, compounded daily, determined on
the basis of the prime rate (or other commercial lending rate for borrowers
of the highest credit standing) announced from time to time by Citibank,
N.A., New York, New York (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter in a timely manner as
provided below shall bear interest at the Prime Rate from the due date for
such reimbursement. This expense reimbursement agreement will be in
addition to any other liability which the Company and the ARC Parties may
otherwise have. The request for reimbursement will be sent to the Company
and ARC, as representative of all the ARC Parties. In the event the Company
fails to make such reimbursement payment within thirty (30) days of the
reimbursement request, the Representatives shall notify the ARC Parties of
their obligation to make such reimbursement payments within fifteen (15)
days; provided, however, that each ARC Party shall be required to advance
at such time only its pro rata portion of the reimbursement payment. To the
extent any ARC Party fails to pay its pro rata portion in timely response
to the Underwriters' request, the other ARC Parties shall be jointly and
severally liable for such reimbursement payment and each shall render such
payment to the Representatives within fifteen (15) days of written demand
therefor by the Representatives. Notwithstanding the foregoing, the
liability of Xxxxxx, Arnmart and Chelin under this Section 6(c) and Section
7(a) shall not exceed an amount equal to the net proceeds (before deducting
offering expenses) received by them from the sale of Stock in the offering.
(d) In addition to its other obligations under Section 7(b)
hereof, each Underwriter severally agrees that, as an
-23-
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in Section 7(b)
hereof which relates to information furnished to the Company pursuant to
Section 7(b) hereof, it will reimburse the Company Indemnified Parties (as
defined herein) and the ARC Indemnified Parties (as defined herein) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company Indemnified Parties and
the ARC Indemnified Parties for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Company Indemnified Parties and the ARC
Indemnified Parties shall promptly return it to the Underwriters together
with interest, compounded daily, determined on the basis of the Prime Rate.
Any such interim reimbursement payments which are not made within thirty
(30) days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in paragraph
(c) and/or (d) of this Section 6, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Constitution
and Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does
not make such designation of an arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to
do so. Such an arbitration would be limited to the operation of the interim
reimbursement provisions contained in paragraph (c) and/or (d) of this
Section 6 and would not resolve the ultimate propriety or enforceability of
the obligation to reimburse expenses created by the provisions of Section
7.
7. Indemnification and Contribution. (a) The Company and each ARC Party,
--------------------------------
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls such Underwriter within the meaning of the
Securities Act and the respective officers, directors, partners, employees,
representatives and agents of each such Underwriter (collectively, the
"Underwriter Indemnified Parties" and, each, an "Underwriter Indemnified
Party"), against any losses, claims, damages,
-24-
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefor and, subject to the provisions of this
Section 7(a), counsel fees incurred in connection therewith), joint or several,
which may be based upon the Securities Act, the Exchange Act or any other
federal, state, local or foreign statute or regulation, or at common law, on the
ground or alleged ground that any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the Registration
Statement or the Prospectus as from time to time amended or supplemented)
includes or allegedly includes an untrue statement of a material fact or omits
or allegedly omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, unless such statement or omission
was made in reliance upon, and in conformity with, written information furnished
to the Company by any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof; provided, that with respect to
any untrue statement or omission or alleged untrue statement or omission made in
any Preeffective Prospectus, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Underwriter Indemnified
Party from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the shares of Stock concerned to the extent
that any such loss, claim, damage, liability or expense of such Underwriter
Indemnified Party results from the fact that a copy of the Prospectus, excluding
documents incorporated by reference therein, was not sent or given to such
person at or prior to the written confirmation of the sale of such shares of
Stock to such person as required by the Securities Act and if the untrue
statement or omission concerned has been corrected in the Prospectus, unless
such failure to deliver was the result of the breach by the Company of Sections
5(c) or 5(d) hereof. The Company and the ARC Parties will be entitled to
participate at their own expense in the defense or, if they so elect, to assume
the defense of any suit brought to enforce any such liability, but, if the
Company and the ARC Parties elect to assume the defense, such defense shall be
conducted by counsel chosen by them. In the event the Company or any ARC Party
elects to assume the defense of any such suit and retain such counsel, any
Underwriter Indemnified Parties, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) the Company or such ARC Party shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit include any such
Underwriter Indemnified Parties and the Company or any of the ARC Parties, and
such Underwriter Indemnified Parties have been advised by counsel to the
Underwriters that one or more legal defenses at law or in equity may be
available to it or them which may not be available to the Company or such ARC
Party, in which case the Company or such ARC Party shall not be entitled to
assume the defense of such suit notwithstanding its obligation to bear the fees
and expenses of such counsel. This indemnity agreement is not exclusive and will
be in addition to any liability which the Company or any ARC Party
-25-
might otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to each Underwriter Indemnified
Party. The liability of Xxxxxx, Arnmart and Chelin under this Section 7(a) and
Section 6(c) shall not exceed the net proceeds (before deducting offering
expenses) received by them and their affiliates from the sale of Stock in the
offering. The Company and the ARC Parties may agree, as among themselves and
without limiting the rights of the Underwriters or the obligations of the
Company and the ARC parties under this agreement, as to their respective amounts
of such liability for which they each shall be responsible.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its officers, directors and
employees and each person, if any, who controls the Company within the meaning
of the Securities Act (collectively, the "Company Indemnified Parties") and each
ARC Party, the respective officers, directors and employees of each ARC Party,
and each person, if any, who controls an ARC Party within the meaning of the
Securities Act (collectively, the "ARC Indemnified Parties") against any losses,
claims, damages, liabilities or expenses (including, unless the Underwriter or
Underwriters elect to assume the defense, the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other federal,
state, local or foreign statute or regulation, or at common law, on the ground
or alleged ground that any Preeffective Prospectus, the Registration Statement
or the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus, as from time to time amended and supplemented) includes or
allegedly includes an untrue statement of a material fact or omits or allegedly
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company by such Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof; provided, that in no case is
such Underwriter to be liable with respect to any claims made against any
Company Indemnified Party or ARC Indemnified Party against whom the action is
brought unless such Company Indemnified Party or ARC Indemnified Party shall
have notified such Underwriter in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Company Indemnified Party or ARC
Indemnified Party, but failure to notify such Underwriter of such claim shall
not relieve it from any liability which it may have to any Company Indemnified
Party or ARC Indemnified Party otherwise than on account of its indemnity
agreement contained in this paragraph. Such Underwriter shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but, if such
Underwriter elects to assume
-26-
the defense, such defense shall be conducted by counsel chosen by it. In the
event that any Underwriter elects to assume the defense of any such suit and
retain such counsel, the Company Indemnified Parties, ARC Indemnified Parties
and any other Underwriter Indemnified Parties, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, respectively. The Underwriter against whom indemnity may be sought shall
not be liable to indemnify any person for any settlement of any such claim
effected without such Underwriter's consent. This indemnity agreement is not
exclusive and will be in addition to any liability which such Underwriter might
otherwise have and shall not limit any rights or remedies which may otherwise be
available at law or in equity to any Company Indemnified Party or ARC
Indemnified Party.
(c) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the ARC Parties and the
other Selling Shareholders, on the one hand, and the Underwriters, on the other,
from the offering of the Stock. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, 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, the ARC Parties
and other Selling Shareholders on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Selling Shareholders 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 Selling
Shareholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the ARC Parties and the other Selling
Shareholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The indemnifying parties agree that it would not be just and equitable
if contribution 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
-27-
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating,
defending, settling or compromising any such claim. Notwithstanding the
provisions of this subsection (c), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the shares of the Stock 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. The Underwriters' obligations to
contribute are several in proportion to their respective underwriting
obligations and not joint. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) Each party indemnified under the provisions of Sections 7(a)
or 7(b) agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceedings against, it in respect of which indemnity may be sought on
account of any indemnity agreement contained in such paragraphs, it will
promptly give written notice (herein called the "Notice") of such service or
notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if the party to whom such
Notice was not given was unaware of the action, suit, investigation, inquiry or
proceedings to which the Notice would have related to the extent such
indemnifying party was materially prejudiced by the failure to give the Notice,
but the omission to notify such indemnifying party or parties of any such
service or notification shall not relieve such indemnifying party or parties
from any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of its indemnity agreement contained
in Sections 7(a) or 7(b).
8. Survival of Indemnities, Representations, Warranties, etc. The
---------------------------------------------------------
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Shareholders, Canrad Delaware, ARC
and the several Underwriters, as set forth in this Agreement or made by them
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, the
Selling Shareholders, the Company or any of its officers or directors or any
controlling person, and shall survive delivery of and payment for the Stock.
-28-
9. Conditions of Underwriters' Obligations. The respective
---------------------------------------
obligations of the several Underwriters hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof and
at and as of the Closing Dates, of the representations and warranties made
herein by the Company, Canrad Delaware, ARC and the Selling Shareholders, to
compliance at and as of the Closing Dates by the Company and the Selling
Shareholders with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to the Closing Dates, and to the
following additional conditions:
(a) The Registration Statement shall have become effective
and no stop order suspending the effectiveness thereof shall have
been issued and no proceedings for that purpose shall have been
initiated or, to the knowledge of the Company or the
Representatives, shall be threatened by the Commission, and any
request for additional information on the part of the Commission (to
be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable
satisfaction of the Representatives. Any filings of the Prospectus,
or any supplement thereto, required pursuant to Rule 424(b) or Rule
434 of the Rules and Regulations, shall have been made in the manner
and within the time period required by Rule 424(b) and Rule 434 of
the Rules and Regulations, as the case may be.
(b) The Representatives shall have been satisfied that
there shall not have occurred any change prior to the Closing Dates
in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the
Company and its subsidiaries considered as a whole, or any change in
the capital stock, short-term or long-term debt of the Company and
its subsidiaries considered as a whole, such that (i) the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact which, in
the opinion of the Representatives, is material, or omits to state a
fact which, in the opinion of the Representatives, is required to be
stated therein or is necessary to make the statements therein not
misleading, or (ii) it is impracticable in the reasonable judgment
of the Representatives to proceed with the public offering or
purchase the Stock as contemplated hereby.
(c) The Representatives shall be satisfied that no legal
or governmental action, suit or proceeding affecting the Company
which is material and adverse to the Company or which affects or may
affect the Company's or the Selling Shareholders' ability to perform
their respective obligations under this Agreement shall have been
instituted or threatened and there shall have
-29-
occurred no material and adverse development in any existing such
action, suit or proceeding.
(d) At the time of execution of this Agreement, the
Representatives shall have received from KPMG Peat Marwick LLP,
independent certified public accountants, a letter, dated the date
hereof, in form and substance satisfactory to the Underwriters.
(e) The Representatives shall have received from KPMG Peat
Marwick LLP, independent certified public accountants, letters,
dated the Closing Dates, to the effect that such accountants
reaffirm, as of the Closing Dates, and as though made on the Closing
Dates, the statements made in the letter furnished by such
accountants pursuant to paragraph (d) of this Section 9.
(f) The Representatives shall have received opinions,
dated the Closing Dates, which shall be in forms satisfactory to
counsel for the Underwriters, from (i) Xxxxxx Xxxxxx Butowsky
Xxxxxxx Shalov & Xxxx, counsel for the Company, the Selling
Shareholders and the other ARC Parties, to the effect set forth in
Exhibit I hereto, and (ii) Xxxxx and Lardner, special intellectual
property counsel for the Company, to the effect set forth in Exhibit
II hereto.
(g) The Representatives shall have received from Xxxxxxx
Xxxx & Xxxxxxxxx, counsel for the Underwriters, their opinion or
opinions dated the Closing Dates with respect to the incorporation
of the Company, the validity of the Stock, the Registration
Statement and the Prospectus and such other related matters as it
may reasonably request, and the Company, the Selling Shareholders,
Canrad Delaware and ARC shall have furnished to such counsel such
documents as they may request for the purpose of enabling them to
pass upon such matters.
(h) The Representatives shall have received a certificate,
dated the Closing Dates, of the chief executive officer or the
President and the chief financial or accounting officer of the
Company to the effect that:
(i) No stop order suspending the effectiveness of
the Registration Statement has been issued, and, to the best
of the knowledge of the signers, no proceedings for that
purpose have been instituted or are pending or contemplated
under the Securities Act;
(ii) Neither any Preeffective Prospectus, as of
its date, nor the Registration
-30-
Statement nor the Prospectus, nor any amendment or supplement
thereto, as of the time when the Registration Statement became
effective and at all times subsequent thereto up to the
delivery of such certificate, included any untrue statement of
a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
(iii) Subsequent to the respective dates as of
which information is given in the Registration Statement and
the Prospectus, and except as set forth or contemplated in the
Prospectus, neither the Company nor any of its subsidiaries
has incurred any material liabilities or obligations, direct
or contingent, nor entered into any material transactions not
in the ordinary course of business and there has not been any
material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its
subsidiaries considered as a whole, or, except for the
exercise of outstanding options or warrants described in the
Prospectus in accordance with past practice, any change in the
capital stock, short-term or long-term debt of the Company and
its subsidiaries considered as a whole;
(iv) The representations and warranties of the
Company in this Agreement are true and correct at and as of
the Closing Dates, and the Company has complied with all the
agreements and performed or satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing Dates; and
(v) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, and except as disclosed in or contemplated by the
Prospectus, (i) there has not been any material adverse change
or a development involving a material adverse change in the
condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of
the Company and its subsidiaries considered as a whole; (ii)
the business and operations conducted by the Company and its
subsidiaries have not sustained a loss by strike, fire, flood,
accident or other calamity (whether or not insured) of such a
character as to interfere materially with the conduct of the
business and operations of the Company and its
-31-
subsidiaries considered as a whole; (iii) no legal or
governmental action, suit or proceeding is pending or
threatened against the Company which is material to the
Company, whether or not arising from transactions in the
ordinary course of business, or which may materially and
adversely affect the transactions contemplated by this
Agreement; and (iv) the Company has not declared or paid any
dividend, or made any other distribution, upon its outstanding
capital stock payable to stockholders of record on a date
prior to the Closing Date.
(i) The Representatives shall have received a certificate
or certificates, dated each of the Closing Dates, of each of the
Selling Shareholders, Canrad Delaware and ARC to the effect that as
of each of the Closing Dates, its representations and warranties in
this Agreement are true and correct as if made on and as of each of
the Closing Dates, and that it has performed all its obligations and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Dates.
(j) The Company and each of the Selling Shareholders,
Canrad Delaware and ARC shall have furnished to the Representatives
such additional certificates as the Representatives may have
reasonably requested as to the accuracy, at and as of the Closing
Dates, of the representations and warranties made herein by them and
as to compliance at and as of the Closing Dates by them with their
covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to the Closing Dates, and as to
satisfaction of the other conditions to the obligations of the
Underwriters hereunder.
(k) Cowen shall have received the written agreements,
substantially in the forms heretofore provided to the Company, of
the officers, directors and holders of Common Stock or warrants or
options to purchase Common Stock listed in Schedule C that each will
not offer, sell, assign, transfer, encumber, contract to sell, grant
an option to purchase or otherwise dispose of (except for certain
exceptions provided therein upon the foreclosure of shares pledged
to BNY as described in the Prospectus) any shares of Common Stock or
warrants or options to purchase Common Stock (including, without
limitation, Common Stock of the Company which may be deemed to be
beneficially owned by the undersigned in accordance with the Rules
and Regulations) during the ninety (90) days following the date of
the final Prospectus except for the Stock being sold hereunder by
the Selling Shareholders.
-32-
The American Stock Exchange shall have approved the Stock for
listing.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company will
furnish to the Representatives conformed copies of such opinions, certificates,
letters and other documents as the Representatives shall reasonably request. If
any of the conditions hereinabove provided for in this Section shall not have
been satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such termination
in writing or by telegram at or prior to the Closing Dates, but Cowen shall be
entitled to waive any of such conditions.
10. Effective Date. This Agreement shall become effective
--------------
immediately as to Sections 6, 7, 8, 10, 11, 12, 14, 15, 16, 17, 18, 19 and 20
and, as to all other provisions, at 11:00 a.m. New York City time on the first
full business day following the effectiveness of the Registration Statement or
at such earlier time after the Registration Statement becomes effective as the
Representatives may determine on and by notice to the Company or by release of
any of the Stock for sale to the public. For the purposes of this Section 10,
the Stock shall be deemed to have been so released upon the release for
publication of any newspaper advertisement relating to the Stock or upon the
release by you of telegrams (i) advising Underwriters that the shares of Stock
are released for public offering or (ii) offering the Stock for sale to
securities dealers, whichever may occur first.
11. Termination. This Agreement (except for the provisions of
-----------
Section 6) may be terminated by the Company at any time before it becomes
effective in accordance with Section 10 by notice to the Representatives and may
be terminated by the Representatives at any time before it becomes effective in
accordance with Section 10 by notice to the Company. In the event of any
termination of this Agreement under this or any other provision of this
Agreement, there shall be no liability of any party to this Agreement to any
other party, other than as provided in Sections 6, 7 and 12 and other than as
provided in Section 13 as to the liability of defaulting Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the First Closing
Date or the Option Closing Date trading in securities on any of the New York
Stock Exchange, American Stock Exchange, the NASDAQ National Market System,
Chicago Board of Options Exchange, Chicago Mercantile Exchange or Chicago Board
of Trade shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market, or a banking moratorium shall have
been declared by New York or United States authorities; (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-
-33-
the-counter market; (iii) if at or prior to the First Closing Date or the Option
Closing Date there shall have been (A) an outbreak or escalation of hostilities
between the United States and any foreign power or of any other insurrection or
armed conflict involving the United States or (B) any change in financial
markets or any calamity or crisis which, in the reasonable judgment of the
Representatives, makes it impractical or inadvisable to offer or sell the Firm
Stock or Optional Stock, as applicable on the terms contemplated by the
Prospectus; (iv) if 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 reasonable judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the Firm Stock or the Optional
Stock, as applicable on the terms contemplated by the Prospectus; (v) if there
shall be any litigation or proceeding, pending or threatened, which, in the
reasonable judgment of the Representatives, makes it impracticable or
inadvisable to offer or deliver the Firm Stock or Optional Stock, as applicable,
on the terms contemplated by the Prospectus; or (vi) if there shall have
occurred any of the events specified in the immediately preceding clauses (i) -
(v) together with any other such event that makes it, in the reasonable judgment
of the Representatives, impractical or inadvisable to offer or deliver the Firm
Stock or Optional Stock, as applicable on the terms contemplated by the
Prospectus.
12. Reimbursement of Underwriters. Notwithstanding any other
-----------------------------
provisions hereof, if this Agreement shall not become effective by reason of any
election of the Company pursuant to the first paragraph of Section 11 or shall
be terminated by the Representatives under Section 9 or Section 11, ARC Ice and
the Selling Shareholders will bear and pay the expenses specified in Section 6
hereof and, in addition to their obligations pursuant to Section 7 hereof, ARC
Ice, Canrad Delaware and ARC, jointly and severally, will reimburse the
reasonable out-of-pocket expenses of the several Underwriters (including
reasonable fees and disbursements of counsel for the Underwriters) incurred in
connection with this Agreement and the proposed purchase of the Stock, and
promptly upon demand ARC Ice, Canrad Delaware and ARC, jointly and severally,
will pay such amounts to you as Representatives.
13. Substitution of Underwriters. If any Underwriter or Underwriters
----------------------------
shall default in its or their obligations to purchase shares of Stock hereunder
and the aggregate number of shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the total number of shares underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
-34-
arrangements satisfactory to the Representatives, the Company and the Selling
Shareholders for the purchase of such shares by other persons are not made
within forty-eight (48) hours after such default, this Agreement shall
terminate.
If the remaining Underwriters or substituted Underwriters are
required hereby or agree to take up all or part of the shares of Stock of a
defaulting Underwriter or Underwriters as provided in this Section 13, (i) the
Company and the Selling Shareholders shall have the right to postpone the
Closing Dates for a period of not more than five (5) full business days in order
that the Company and the Selling Shareholders may 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 promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of shares to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Company, the Selling Shareholders or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 13 shall be without liability on the part of
any non-defaulting Underwriter, the Selling Shareholders or the Company, except
for expenses to be paid or reimbursed pursuant to Section 6 and except for the
provisions of Section 7.
14. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you, as their Representatives c/o Cowen & Company at Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, with a copy to counsel to Xxxxxxx Xxxx &
Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxx, except that notices given to an Underwriter pursuant
to Section 6 hereof shall be sent to such Underwriter at the address furnished
by the Representatives, in each case, with a copy as provided above, or, if sent
to the Company, any Selling Shareholder or any ARC Party, shall be mailed,
delivered or telegraphed and confirmed c/o Ballantyne of Omaha, Inc., 0000
XxXxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000, Attention: Chief Executive Officer, with
a copy to Xxxxxx Xxxxxx Butowsky Xxxxxxx Xxxxxx & Xxxx, 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Etna.
15. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the several Underwriters, the Company, the Selling Shareholders,
the ARC Parties and their respective successors and legal representatives.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person other than the persons mentioned in the preceding
sentence any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended
-35-
to be and being for the sole and exclusive benefit of such persons and for the
benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company, the Selling Shareholders
and the ARC Parties contained in this Agreement shall also be for the benefit of
the Company Indemnified Parties, ARC Indemnified Parties and Underwriter
Indemnified Parties.
16. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of New York without regard to
its principles of conflicts of laws.
17. Authority of the Representatives. In connection with this
--------------------------------
Agreement, you will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by Cowen, as Representative, will be binding
on all the Underwriters; and any action taken under this Agreement by either of
the Attorneys-in-fact will be binding on all the Selling Shareholders.
18. Partial Unenforceability. The invalidity or unenforceability
------------------------
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
19. General. This Agreement constitutes the entire agreement of the
-------
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Shareholders, the ARC
Parties and the Representatives.
20. Counterparts. This Agreement may be signed in two (2) or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Any person executing and delivering this Agreement as
Attorney-in-fact for a Selling Shareholder represents by so doing that he has
been duly appointed as Attorney-in-fact by such Selling Shareholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action.
-36-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
among us.
Very truly yours,
BALLANTYNE OF OMAHA, INC.
By: ____________________________
Xxxx X. Xxxxxxx
President and Chief
Executive Officer
ARC INTERNATIONAL CORPORATION
By: ____________________________
Xxxxxx X. Xxxxxx
Chairman
CANRAD OF DELAWARE INC.
By: ____________________________
Xxxxxx X. Xxxxxx
Chairman
SELLING SHAREHOLDERS LISTED IN
SCHEDULE B
By: ____________________________
Attorney-in-fact
Acting on his own
behalf and on behalf of the
Selling Shareholders listed
in Schedule B
Accepted and delivered in New York, New York as of the date first above written.
XXXXX & COMPANY
PRUDENTIAL SECURITIES INCORPORATED
Acting on their own behalf and as Representatives of several Underwriters
referred to in the foregoing Agreement.
By: Cowen Incorporated,
its general partner
By _________________________
Xxxx X. Xxxxxx
Managing Director
-37-
SCHEDULE A
Number of
Number of Shares of
Shares of Optional
Firm Stock Stock
To Be To Be
Name Purchased Purchased
---- --------- ---------
Xxxxx & Company...........................
Prudential Securities
Incorporated...........................
--------- -------
Total.................................. 2,224,860 333,729
========= =======
SCHEDULE B
Number of
Number of Shares of
Shares of Optional
Firm Stock Stock
Name To Be Sold To Be Sold
---- ---------- ----------
ARC Ice Corp............................. 1,932,860 333,729
Xxxxxx Bank Ltd.......................... 108,000 __
Xxxxxx X. Xxxxxx......................... 71,750 __
Arnmart Investments Limited.............. 11,250 __
Xxxxxx & Friend Capital Partners, Inc. .. 46,714 __
Xxxxx X. Xxxxxxxx........................ 12,000 __
Xxxxxxx X. Xxxxxx........................ 12,000 __
Xxxxxxxx X. Xxxxxx....................... 12,000 __
Xxxxxxx Xxxxxxxxxx....................... 10,000 __
Xxxx Xxxxxxxx............................ 3,503 __
Xxxx Xxxxxxx............................. 3,503 __
Xxxxx Xxxxxxxx........................... 1,130 __
Xxxxxxx Xxxxx............................ 75 __
Xxxxx Xxxxxxx............................ 75 __
Total................................. 2,224,860 333,729
========= =======
SCHEDULE C
ARC Ice Corp.
ARC International Corporation
ARC U.S.A. Corporation
Xxxxxx X. Xxxxxx
Arnmart Investments Limited
Xxx X. Xxxxxxx
Canrad Inc.
Canrad of Delaware Inc.
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Xxxxxx & Friend Capital Partners, Inc.
Jaffoni & Xxxxxxx Incorporated
Xxxxxxx X. Xxxxxxxxxx
Xxxxxx Bank Ltd
Yale Xxxxxxxx
Xxxx X. Xxxxxxx